FTC Sues 1-800 Contacts for Restraint of Trade

"A leading proponent of the Coalition for Contact Lens Consumer Choice, 1-800 Contacts has been called to task over business practices found to undermine contact lens marketplace competition, antitrust regulators say." That's the post from the American Optometric Assn. (AOA). "The U.S. Federal Trade Commission (FTC) filed suit against 1-800 Contacts on Aug. 8, alleging that the company unlawfully used its market power to orchestrate and maintain anti-consumer agreements with rival online contact lens retailers. These agreements not only suppress competition in online search advertisements, but also "restrict truthful and non-misleading internet advertising to consumers, resulting in some consumers paying higher retail prices for contact lenses," according to the FTC's administrative complaint." Read more.

Major Retailers Launch a Contact Lens Campaign

Several leading national retailers today announced the launch of a new coalition and advocacy campaign reportedly to serve as a voice for American contact lens consumers. The new group, the Coalition for Contact Lens Consumer Choice, will oppose legislation recently introduced in the U.S. Senate that would severely restrict where consumers can purchase their contact lenses. The group's initial members include 1-800 Contacts, Costco Wholesale, and Lens.com. Contact lens wearers, optometrists and other eye care professionals, consumer groups, good government advocacy organizations and other retailers and industry stakeholders with diverse perspectives are being invited to join the coalition. Read more.

This follows action on Capitol Hill. "Costco Wholesale Corp., 1-800 Contacts and other retailers attacked newly proposed legislation they say would water down a federal law that opened eye doctors to competition from online sellers and discounters," says Market Watch. "The U.S. Senate bill concerning contact lens was introduced this week by Sen. Bill Cassidy (R., La.), a physician, and Sen. John Boozman (R., Ark.), a former optometrist, and is backed by the American Optometric Association as well as Johnson & Johnson and Alcon, the eye-care unit of Novartis AG." Read more. (J&J, however, has withdrawn its UPP.)


Health Care Dive reports that "the seemingly simple process of ordering contact lenses has become a tangled debate between retailers, optometric groups, and lawmakers. At the core of the debate is the contact lens prescription, a ticket to 20/20 vision for an estimated 40 million American consumers. Although the FTC enforces the requirement eye care professionals provide patients a copy of their contact lens prescriptions, as required by the Contact Lens Rule (CLR), it seems many may not be complying. 1-800-Contacts, the largest U.S. contact lens retailer, announced it filed 27,725 potential violations earlier this month with the agency related to optometrists not releasing patient prescriptions.
Cindy Williams, general counsel at 1-800-Contacts, told Healthcare Dive those violations were compiled over from December 2015 to March 2016 showing 'how extensive and widespread this problem is.'" Read more.

1-800 Contacts Blasts AOA Attempt to Reform Federal Contact Lens Laws

"Legislation being pushed by the American Optometric Association (AOA) and introduced today in the U.S. Senate would rewrite current law to undermine competition in the contact lens marketplace to increase profits for optometrists at the expense of consumers. The legislation would reduce choice, increase costs and jeopardize eye health," according to a press release from 1-800 Contacts. "The misleadingly-named Contact Lens Consumer Health Protection Act (CLCHPA), introduced by Senator Bill Cassidy, R-La., would gut the existing Fairness to Contact Lens Consumers Act (FCLCA), which eliminated barriers to retail competition making contact lenses easier to replace and less expensive to purchase. Since the Act became law in 2003, competition among contact lens retailers has provided consumers with more choice, greater convenience and lower prices." Read more.

1-800 Contacts Files Complaints against Arizona ODs

"One of the nation’s largest contact lens retail companies filed complaints Monday against hundreds of Arizona optometrists for allegedly failing to turn over patients’ prescriptions so they can sell them lenses," according to a Casa Grande Dispatch post. "Draper, Utah-based 1-800 Contacts filed 3,200 complaints with the state Board of Optometry, asking the board to censure or fine the optometrists or suspend or revoke their licenses. The complaints mark a new tack by the discount contact lens supplier in an ongoing battle with contact lens manufacturers and retailers over pricing.
The company alleges the optometrists failed to follow federal and state laws requiring them to provide prescriptions to a patient’s designated representative upon request. Stacey Meier, president of the state optometric association, said his members know and follow the law and that there’s no requirement that optometrists respond if the prescription is valid. He said 1-800-Contacts can fill a prescription if they don’t hear back within eight business hours under 'passive verification' rules." Read more.

Utah State Attorneys Defend State's Position on UPP of Contact Lenses

"Utah attorneys defending a hotly contested law banning minimum prices for contact lenses argued this week that the state has the right to regulate industry price-fixing even if the products are sold to customers elsewhere," starts the Associated Press post in the San Luis Obispo Tribune. "Any sales by Utah-based retailers are in-state transactions, no matter where the contacts are shipped, the Utah Attorney General's Office said in court documents filed Thursday. State attorneys specifically cite Utah-based 1-800 Contacts, one of the country's largest discount retailers, in their defense of the law.

"Three of the nation's biggest contact-lens manufacturers sued to block the law they say violates interstate commerce rules. Alcon, Johnson & Johnson and Bausch & Lomb argue it was written to help 1-800 Contacts in a bitter pricing war. The three manufacturers sued to block the law and won a temporary injunction, but a federal appeals court allowed the law to go into effect in June.

"The two sides are set to argue before the Denver-based 10th Circuit Court of Appeals in August." Read more.

1-800 Contacts Wins! Federal Appeals Court Will Allow Ban on UPP of Contact Lenses

"A federal appeals court ruling has cleared the way for discount contact lens retailers to drop prices while a legal battle is waged between the state of Utah and manufacturers who want to impose minimum prices on their products," reports U.S. News & World Report. "The decision handed down from the 10th Circuit Court of Appeals in Denver on Friday comes after three of the nation's largest contact lens manufacturers sued to halt a hotly contested law. Supporters, including Utah-based discount seller 1-800 Contacts, say the newly enacted legislation bans price fixing for contact lenses. But opponents, including Alcon Laboratories, Johnson & Johnson and Bausch & Lomb, say it's a brazen overreach that allows discount sellers to violate interstate commerce regulations and skirt industry price standards. Utah's attorney general has said the companies are wrongly driving up prices, and the law is a legitimate antitrust measure designed to enhance competition and help customers. Attorney General Sean Reyes' office didn't have a comment on the decision Friday." Read more.

Attorneys for State of Utah and Contact Lens Manufacturers Parry in Appeals Court

"Utah state attorneys have asked an appeals court to clear the way for a contentious law that bans price fixing by contact lens makers and could have wide-ranging implications for the $4 billion industry," reports the Standard Examiner. "The Utah Attorney General’s Office argued in court documents that the law banning minimum prices set by the country’s biggest contact lens makers is an antitrust measure designed to increase competition and help customers.State attorneys asked the 10th U.S. Circuit Court of Appeals in Denver to lift an injunction blocking the law Tuesday. They were joined by the discount retailers Costco and Utah-based 1-800 Contacts. Suing to block the law are lens makers Alcon Laboratories, Johnson & Johnson, and Bausch & Lomb. They say minimum price are good for customers and eye doctors, and the law was written specifically to benefit 1-800 Contacts." Read more.

Campaign for Utah's AG Reportedly Received a Donation from 1-800 Contacts

"Utah Attorney General Sean Reyes accepted a $5,000 campaign donation from a contact lens seller based in the state after his office began defending a new law that critics say was written at the company's behest," according to an Associated Press report on ABC News. "Three of the nation's biggest contact lens makers are suing Utah over the law, which bans price-fixing for lenses and could have wide-ranging implications for the industry. They argue it is unconstitutional and was written to benefit discount retailers like 1-800 Contacts. The companies filed suit April 13. On May 1, Reyes' campaign deposited a $5,000 check from 1-800 Contacts, which by that time had joined the lawsuit in favor of the law." Read more. What is the significance? In this era of multimillion political campaigns, five grand ain't much. Besides it was the legislature that passed the law banning unilateral pricing by contact lens manufacturers.

Fight against Unilateral Pricing Policies of Contact Lenses Grows

"Costco and online sellers like 1-800 Contacts would love to sell you cheaper contact lenses. But in recent years, the country’s biggest contact manufacturers have instituted minimum prices for their products that make it impossible for retailers to offer them at lower price points," reports Time magazine. "In testimony before Congress last summer, the Consumers Union declared such policies 'uncompetitive' and tantamount to price fixing: 'Consumers are denied more affordable alternatives. They pay more than they need to, and sellers who would like to make those affordable alternatives available are denied the opportunity to do so.'" Read more.

Alcon, B&L, and J&J Sue Utah Over Contact Lens Bill

"Three leading national contact lens manufacturers are ganging up in federal court to try to prevent enforcement of new amendments to Utah law that they say are aimed at protecting Utah-based 1-800 Contacts at the expense of the U.S. Constitution," reports the Salt Lake Tribune. "Alcon Laboratories Inc., of Fort Worth, Texas; Bausch & Lomb Inc., of Bridgewater, N.J.; and Johnson & Johnson Vision Care Inc., of Jacksonville, Fla., are asking the U.S. District Court in Utah to stop state Attorney General Sean Reyes from enforcing SB169, which was signed last month by Gov. Gary Herbert.
In its lawsuit, Alcon said the passage of SB169 was under "the specter of protectionism" with 1-800 Contacts' officials offering testimony in support of the bill during its legislative passage. Bauch & Lomb, in a separate lawsuit, said the measure was "motivated by a parochial desire to protect a major in-state business at the expense of a targeted class of out-of-state corporations." Read more.

Read more about the Utah ban and potential bands in Idaho, Illinois, and California and similar legislative efforts in New Jersey and Oregon.

New Jersey and Oregon Fight Anti-Unilateral Pricing Programs for Contact Lenses

"Oregon has become a battleground," reports KGW.com. "'As more and more consumers figure out what's going on, they're going to be more and more outraged,' said Bryan Kohler, a lobbyist for 1-800 Contacts. The company is pushing legislation in Oregon that would stop contact lens makers from setting a minimum price on contacts. Over the past year and a half, all four major contact lens manufacturers enacted policies that restrict what retailers can charge for contact lenses. These new minimum pricing policies mean discounters like 1-800 Contacts and Costco can no longer sell contacts at a lower price than their competitors. Costco argues these new policies are anti-competitive because they limit buying choices for the roughly 39 million Americans who wear contacts." Read more.

In New Jersey, "putative class action suit filed in federal court in Newark accuses four manufacturers and a distributor of disposable contact lenses of conspiring to eliminate price competition by entering into illegal resale price maintenance agreements with retailers," reports a NJ Law Journal post. Read more.

These two states join a growing list of states looking to ban unilateral pricing programs, such as Idaho, Illinois, and California. and Utah, which has already signed a ban into law.

Idaho and Utah Legislatures Consider Banning Current Contact Lens Pricing Policies; Law Suit Filed in California

"A company that sells contact lenses online has cleared its first hurdle in persuading the Idaho Legislature to ban manufacturers from cutting off retailers that don't sell their product at a set minimum price," reports the Idaho Statesman. "The Idaho House and Welfare Committee unanimously voted Thursday to send the bill to the House floor for a full vote.

"Online retailer 1-800 Contacts says consumers are paying more under a new pricing policy by the nation's top contact lens makers. Johnson & Johnson, the country's largest lens maker, countered that the pricing strategy has reduced contact lens prices and has made it more convenient to purchase their products. Three of the top four contact lens manufacturers — which make up 90 percent of the market — have implemented some sort of pricing floors, known as 'unilateral pricing policies.' This means retailers and optometry providers will be cut off unless they sell contact lenses at the price the manufacturer sets." Read more.

"Contact lens makers would not be allowed to set the sale price of lenses in Utah under a bill approved Monday by the Utah Senate," according to a Salt Lake Tribune post. "The bill comes in response to an announcement by Johnson & Johnson that the company planned to set a floor on the price that retailers can charge for lenses.

"'There should be some ability for consumers to have a choice,' said Sen. Diedre Henderson, R-Spanish Fork, who noted that China fined Johnson & Johnson over the policy. 'If it's too anti-competitive and too predatory for China, we certainly should not be doing it in the state of Utah.'" Read more.

Law 360 reports that "Johnson & Johnson, Alcon Laboratories Inc. and other contact lens manufacturers were hit with a proposed class action on Tuesday in a California court over industry policies that allegedly create illegal price floors on lenses sold at Wal-Mart Stores Inc. and other major retailers. The complaint was brought by three customers who say the use of so-called unilateral pricing policies, or UPPs, by contact lens manufacturers have forced customers to pay artificially high prices for the product." Read more.You also can find more details about the law suit at Courthouse News Service.

1-800 Contacts Fights in Oregon for No Minimum Pricing

"An Internet firm that sells contact lenses is trying to persuade Oregon legislators to stop manufacturers from setting a minimum price on their products," reports Oregon Online. "The Internet firm 1-800 Contacts says a new pricing strategy by major contact lens manufacturers is driving up prices to consumers. In recent weeks, the Utah-based firm has distributed $24,000 in political contributions to 19 Oregon legislators as part of a lobbying effort to change the law in about a dozen states and force the manufacturers to reverse course." Read more.

WellPoint Sells Off 1-800-Contacts

WellPoint has completed sale of 1-800 Contacts to private equity firm Thomas H. Lee Partners. The company already has finished the sale of glasses.com and its virtual try-on technology to Luxottica. Read more.

WellPoint to Drop 1-800 Contacts and to Pick Up Assets from Glasses.com

WellPoint (WLP) signed an agreement to sell its online contact lens retail subsidiary 1-800 Contacts to private equity firm Thomas H. Lee Partners, according to a press release on Yahoo!Finance. Additionally, the company--with Luxottica--has entered into an asset-purchase agreement for glasses.com and its virtual try-on technology. Each agreement is subject to customary closing conditions and each transaction should close by March's end. Read more.

Online Retailers Duke It Out over Virtual Try-On Program

Online eyewear retailer, Ditto.com, announced today that it will defend itself against a patent infringement lawsuit filed by a competitor who is using a recently purchased patent to seek an injunction on Ditto’s 3D virtual try-on technology for eyewear. The lawsuit (Case No. 2:13-cv-00145) was filed in the District of Utah by 1-800-Contacts, whose division Glasses.com, directly competes with Ditto. 1-800-Contacts is a division of managed care giant, WellPoint. Jonathan Coon, cofounder and CEO of 1-800-Contacts, tried Ditto's virtual fitting technology soon after the launch of DITTO’s website in April 2012, according to Ditto’s press release. Soon thereafter, in May 2012, 1-800-Contacts moved to acquire rights to a patent, which it’s now using to sue Ditto (Case No. 2:13-cv-00145). Read more.

Anthem Blue Cross/Blue Shield Hooks Up with 1-800 Contacts and Glasses.com

Anthem Blue Cross and Blue Shield has teamed up with 1-800 Contacts and Glasses.com to give its members exclusive savings on their vision needs. This offer will make it easy for members to use unspent Flexible Spending Account and Health Savings Account dollars before the end of the year. Anthem members reportedly can save $20 off a purchase of $100 or more, plus free shipping at 1-800 CONTACTS and Glasses.com. Anthem members do not have to have vision coverage to take advantage of the deal. This offer is available to all plan members.Read more.

Coastal Contacts Gets Slapped for Misleading Facebook Promo

"Coastal Contacts encouraged Facebook users to “like” its page and in doing so, promised them a free pair of glasses," according to a New York Times post. "It also promised discounts of 70 percent on contact lenses. The rival, 1-800 Contacts, said that Coastal Contacts did not disclose the shipping and handling fees associated with the offer for free glasses and that not all styles of glasses or lenses were available in the offer. In addition, the company contended that users who 'liked' the Coastal Contacts page in order to get the free glasses were inadvertently endorsing the company. The National Advertising Division ruled that all claims for free merchandise must clearly disclose any hidden fees and conditions at the outset of the offer, including increasing the font size of the message that 'conditions apply.' Facebook likes can be interpreted as 'conveying a message of general social endorsement'  the ruling said."  Read more.

WellPoint Finalizes 1-800 Contacts Buy Out

WellPoint, Inc., finalized its acquisition of 1-800 CONTACTS, Inc., reportedly the largest direct-to-consumer retailer of contact lenses in the U.S. The company serves approximately 3.3 million customers.Read more.

WellPoint Wants to Use 1-800 Contacts as a Starting Point

"WellPoint, [the parent of Anthem] and based in Indianapolis, said Monday that the eyewear company will help diversify its revenue sources with a high-margin business," reports Business Week. "The insurer typically generates an after-tax profit margin of around 4 percent. 1-800 Contacts can generate margins in the double-digit range, said Ken Goulet, WellPoint's president of commercial and specialty companies....1-800 Contacts currently has about 3.3 million customers. WellPoint Chairwoman and CEO Angela Braly said in a statement that the business comes with a significant growth opportunity because there are more than 38 million people wearing eye contact lenses and more than 140 million people wearing eye glasses in the United States." Read more.