Contact lens discounter tells Congress that price floors will hurt consumers

WASHINGTON, July 30 Wed Jul 30, 2014 6:17pm EDT

WASHINGTON, July 30 (Reuters) - An executive at 1-800 CONTACTS told Congress on Wednesday that decisions by three of the four top U.S. contact lens makers to set price minimums for some products would push up the prices of the medical devices.

Alcon, owned by Novartis AG ; Bausch & Lomb, owned by Valeant Pharmaceuticals ; and Johnson & Johnson all put in place minimum sale prices for some of their products in the past 14 months.

"They (consumers) will see higher prices. They will lose their ability to shop around," said Joe Zeidner, general counsel at 1-800 CONTACTS in a hearing of the Senate Judiciary Committee's antitrust panel.

Senator Amy Klobuchar, chair of the subcommittee, said she was concerned about the effect of the actions on the more than 35 million Americans who wear contacts.

"This does raise legitimate questions about what these policies do to competition," she said.

While the minimums prevent discounting, Millicent Knight, an official at Johnson & Johnson, argued that her company's prices would be lower for most people who buy their ACUVUE lenses.

"By institution a UPP (uniform prices), lowering our prices and making the process by which we make those prices available, we believe we can better compete in the contact lens market," she told lawmakers.

Setting a price floor, thus shutting off the possibility of discounting, was illegal until 2007, when the Supreme Court said it was acceptable in some situations.

Alcon set a minimum price for some contacts on June 1, 2013, a Novartis spokeswoman said in an email. Bausch & Lomb followed, and Johnson & Johnson is in the process of implementing a similar policy.

J&J is the top U.S. contact lens maker with 47.1 percent of the market, followed by Cooper Companies with 21.4 percent, Alcon at 20 percent and Bausch & Lomb at 9.8 percent, according to Euromonitor International, a market intelligence company.

Novartis said it implemented the policy to combat "showrooming" - the practice of having optometrists learn about their products then educating customers, only to have the patient go to an online discounter to buy the lenses for a lower price.

An estimated 10 percent of contact lenses were sold online, Euromonitor said in a blog post dated in December. (Reporting by Diane Bartz)

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

Find your dream retirement town

Florida? Hawaii? Reuters has teamed up with Zillow to give you the power to customize a list of your best places to retire.  Video | Full Article