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SALT LAKE CITY—Friday afternoon, Utah Governor Gary R. Herbert signed into law the “Contact Lens Consumer Protection Act,” which bans contact lens manufacturers from utilizing Unilateral Product Pricing (UPP). The law will go into effect May 2015. The Utah law is one of a group of anti-UPP bills supported by 1-800 CONTACTS, based in Draper, Utah, and introduced in 14 states. (See What’s the Status of State Bills Opposing UPP Policies? for more information.)

The debate and discussion about UPP policies, which have been implemented by the four major contact lens manufacturers for some of their products over the past two years, has taken on national focus with multiple class action lawsuits filed this month and legislation introduced in several states to stop the practice.

The battle brewing over the past year—underscored by Senate antitrust hearings, litigation, and proposed legislation—made national news on Friday with the signing of the law in Utah and when The New York Times turned its attention to the story. 

"The Utah Legislature should be applauded for passing a law that puts consumer interests before manufacturers' profits. We are hopeful that the various federal and state government investigations, private lawsuits and legislative initiatives around the country will put an end to this clearly anticompetitive practice in our industry," said Brian Bethers, CEO of 1-800-CONTACTS, after the law was signed.

As the Utah law was headed for Governor Herbert’s signature and with the posting of The Times story on Friday, VMail checked with the major contact lens manufacturers, 1-800 CONTACTS and the other companies involved, to determine the status of pending litigation and proposed legislation.

“UPP in the contact lens industry is now under investigation both by the Federal Trade Commission and by several State Attorneys General,” a 1-800 CONTACTS spokesperson told VMail. “During the past two weeks, at least 15 consumer class action suits naming all four contact lens manufacturers have been filed asserting that UPP has caused consumers to pay substantially higher prices for their replacement contact lenses with no corresponding benefit.

“Several retailers, such as Costco, Walmart and 1-800 CONTACTS, have also been named as defendants in two of the 15 class action lawsuits. Claims made widely in the industry that 1-800 CONTACTS has proposed legislation to prevent optometrists from selling contact lenses, to allow retailers to substitute the brand on the prescription, or to take a brand off a prescription are false. The legislation proposed relates specifically to manufacturers preventing retailers from selling below a fixed price and discriminating among channels of trade.”

To stop the practice of using UPP policies, 1-800 CONTACTS has backed legislation in 14 states—Arizona, California, Florida, Idaho, Illinois, Louisiana, Minnesota, Mississippi, New York, Oregon, Rhode Island, Tennessee, Utah and Washington. (See What’s the Status of State Bills Opposing UPP Policies? for more information.)

In opposition to these bills and in favor of UPP policies, the American Optometric Association www.aoa.org (AOA) has rallied its state optometric associations and optometrists to oppose the legislation introduced in these 14 states. “We are watching Louisiana and Tennessee, but neither has had a bill introduced yet,” an AOA spokesperson told VMail.

David Cockrell, OD, AOA president, said, “Although the recent back and forth between companies over pricing policies appears likely to be decided in court, there is no dispute over the fact that contact lenses are medical devices with unique properties that an eye doctor must fully evaluate in order to meet the needs of each individual patient. Optometrists provide essential and cost-effective care for our patients who choose contact lenses and, as they are not risk-free, we help avoid complications, some of which can result in vision loss and even blindness.”

While the AOA fights against these bills, many of the 15 recent class action suits have been aimed at UPP policies. One class action lawsuit was filed March 3, 2015, in U.S. District Court for the Northern District of California-San Francisco Division against CooperVision, Alcon, Bausch + Lomb, Johnson & Johnson Vision Care, and ABB Optical Group, alleging that they violated federal and state antitrust laws.

The lawsuit (Machikawa v. Cooper Vision, Inc., et al., Case No. 3:15-cv-1001) claims that UPP policies eliminate price competition from big box and internet retailers. According to the plaintiffs, the UPP policies violate the Sherman Act, the Clayton Act, and state laws. The plaintiffs accuse the defendants of conspiring with the AOA to “impose minimum resale prices on certain contact lens lines” and eliminating “price competition on those products by ‘big box’ stores, buying clubs, and internet-based retailers by substantially preventing them from discounting those products.”

The lawsuit explains, “Over the course of 15 months commencing in June of 2013, each Manufacturer Defendant implemented this strategy in the form of minimum resale price maintenance (MRPM) scheme that it called a ‘UPP.’ Under this MRPM scheme, each Manufacturer Defendant promulgated a minimum retail price for its affected product(s) and threatened to curtail the supply of some of its contact lens lines to retailers who sell below the mandated price.”

Contact lens manufacturers argue that UPP policies are common practices permitted by the Supreme Court and that the bills introduced single out one product in support of one special interest group.

In a statement provided to VMail by Johnson & Johnson Vision Care, the company asserts, “Johnson & Johnson Vision Care, Inc. stands behind our pricing policy on Acuvue Brand contact lenses because it makes pricing simpler and more transparent and allows consumers to make purchasing decisions based on quality, clinical need and cost. The policy is lawful, and it is working: initial pricing data shows that more than 60 percent of consumers have seen a price reduction on Acuvue Brand products.

“We are defending against litigation and opposing potential legislation related to UPP. Legislation banning UPP would prohibit lower and transparent prices for consumers. Two states introduced and subsequently defeated bills banning UPP, and we are educating legislators in other states where bills are at various points in the legislative process. These bills single out one product, contact lenses, and would eliminate a commonly used pricing policy that has been permitted by the Supreme Court since 1919.”

Bausch + Lomb shared the following statement with VMail: “Bausch + Lomb is aware of the industrywide lawsuits that have been brought challenging the use of Unilateral Pricing Policies as well as the pending legislation in various states directed against these policies. We will be defending our practices in these lawsuits and oppose the pending state bills as they seek to make an exception to established antitrust principles for one industry at the behest of one special interest group. We are working to make this position known to government officials.”

Alcon provided the following statement to VMail: “Alcon’s limited unilateral pricing policy was put into place to encourage eyecare professionals to discuss new technology contact lenses with their patients. The policy helps create an environment in which eyecare professionals are more likely to invest time learning about innovative contact lens technologies and educating patients about new options.

“Online sellers and mass merchandise stores do not make this same time investment and are able to underprice eyecare professionals on contact lenses. If eyecare professionals must reduce contact lens prices to compete against online sellers and other discounters, they may be less likely to continue to educate patients about new technology contact lenses as a viable option for vision correction.”

CooperVision declined to comment, telling VMail, “CooperVision does not comment on matters of ongoing litigation or legislation.”