| WASHINGTON, July 29
WASHINGTON, July 29 Moves by three of the four
major U.S. contact lens makers to set price floors for many of
their products, preventing low-cost retailers from discounting
the expensive devices, have drawn scrutiny from lawmakers.
The Senate Judiciary Committee's nine-member antitrust panel
will meet on Wednesday to consider the decisions by Alcon, owned
by Novartis AG ; Bausch+Lomb, owned by Valeant
Pharmaceuticals ; and Johnson & Johnson to put
in place minimum sale prices for some of their products.
The practice would have been illegal just a decade ago but
became legal when the Supreme Court ruled in 2007 that
manufacturers can set minimum sale prices in some situations.
Lawmakers will seek to determine whether these policies
limit competition and lead to higher prices for consumers.
Alcon was first out of the gate, setting a minimum price for
some contacts on June 1, 2013, a Novartis spokeswoman said in an
email. Bausch & Lomb followed suit, and Johnson & Johnson is in
the process of implementing a similar policy.
J&J is the top U.S. seller of contact lenses 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 2012 data from Euromonitor International, a market
Johnson & Johnson got rid of rebates and lowered some prices
when it put its pricing policy into effect this summer, saying
that the combination meant a price cut for many consumers.
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
An estimated 10 percent of contact lenses were sold online,
Euromonitor said in a blog post dated in December.
"The online channel is beginning to garner considerable
attention from eyecare professionals. Many are seeing this
channel as a threat to traditional stores," said Euromonitor.
"The pricing strategies on the Internet usually mean a much
cheaper price than that found in physical stores."
Two antitrust experts who looked at the industry said the
motivation for the price floors may be to give optometrists an
incentive to prescribe their lenses instead of rivals' lenses.
With prices set by the companies, contact lens wearers would
buy from optometrists instead of discounters, the experts said.
Witnesses expected to testify include R. Joe Zeidner,
general counsel at discounter 1-800 CONTACTS Inc.; Millicent
Knight of Johnson & Johnson Vision Care; David Cockrell,
president of the American Optometric Association; and George
Slover, senior policy counsel of Consumers Union, the advocacy
group which publishes Consumer Reports.
(Reporting by Diane Bartz; Editing by Ros Krasny and Jonathan