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Contact Lens Makers Taking Fight Over Price Law to Court
Aug 27, 2015 | The Associated Press
By Kristen Wyatt
Contact lens makers struggled Thursday to defend their pricing policies in a federal appeals case that could have wide-ranging effects on the $4 billion industry. At issue is a Utah law banning minimum prices for contact lenses.The nation's largest contact lens companies — Alcon Laboratories, Johnson & Johnson and Bausch & Lomb — asked the 10th Circuit Court of Appeals in Denver to strike down the measure. They said the law was crafted to help a homegrown discounter, 1 800 Contacts, but has the effect of changing lens pricing nationwide. -
Contact Lens Price Battle
Aug 27, 2015 | CNBC: Squawk On The Street
By Meg Tirrell
Video: http://beta.criticalmention.com/app/#clip/view?15628477/token/40f78191-0760-456d-b647-f052c5ecb711 ROUGH TRANSCRIPT: Contact lens makers are taking a price war to court and the result could have a very big impact on you if you buy contact lenses. Meg Tirrell is here. Federal appeals court will hear this case which will have an impact on contact lenses. They are challenging a consumer protection act that aims to prevent contact lens manufacturers from setting a minimum price on contact lenses. I was just talking with JP Morgan analyst, Chris Pasqually. -
Contact lens makers see their day in court
Aug 27, 2015 | CNBC
VIDEO: http://video.cnbc.com/gallery/?video=3000411966&play=1 Contact lens manufacturers appeal Utah decision that bans minimum prices for contact lenses.
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Contact Lens Makers Taking Fight Over Price Law to Court
Aug 27, 2015 | The Associated Press
By Kristen Wyatt
Contact lens makers struggled Thursday to defend their pricing policies in a federal appeals case that could have wide-ranging effects on the $4 billion industry.
At issue is a Utah law banning minimum prices for contact lenses.
The nation's largest contact lens companies — Alcon Laboratories, Johnson & Johnson and Bausch & Lomb — asked the 10th Circuit Court of Appeals in Denver to strike down the measure. They said the law was crafted to help a homegrown discounter, 1 800 Contacts, but has the effect of changing lens pricing nationwide.
"It says to 1 800 Contacts, you can sell to a consumer in Florida, and you can utterly disregard what the manufacturer says the price should be," said David Marriott, lawyer for Alcon.
But the judges repeatedly challenged the lens makers' assertion that Utah's law bans price minimums in other states. The judges grilled the contact lens lawyers about why they don't simply stop doing business in Utah if they insist on price minimums.
"Where's the burden the state of Utah is conferring on out-of-state retailers?" asked Judge Jerome Holmes.
A lawyer for Utah accused the contact lens makers of nationwide price-fixing and said lens prices would drop as much as 35 percent nationally if the manufacturers dropped price minimums.
"The state of Utah has said, 'We are getting rid of a price-fixing scheme,'" said Parker Douglas, who called the lens makers "conspirators."
Judges asked Utah's lawyer about whether its law discriminates against out-of-state retailers, who wouldn't be allowed to use their price minimums at a hypothetical store in St. George.
Douglas insisted that the ban on price minimums is no different than states enforcing different minimum wages or other state-specific laws they're allowed to enforce.
After temporarily blocking the law earlier this year, the 10th Circuit allowed the measure to take effect as the case unfolds.
1 800 Contacts, one of the country's largest discount sellers, has since dropped its prices by up to $15 a box on some brands that were subject to the manufacturers' minimum prices.
The contact lens manufacturers say the Utah law violates interstate commerce regulations because it allows 1 800 Contacts to ignore price minimums in online sales to customers outside state. Utah argues those are considered in-state transactions, no matter where the customer is.
The contact lens makers started setting minimum prices about two years ago to protect eye doctors from being undercut by discount sellers. If a company sells at too steep of a discount, the manufacturers pull their products.
Though most contact sales still come through eye doctors who bring the manufacturers new customers with brand-specific prescriptions, discounters have taken a bigger slice of the market in recent years.
The companies say the pricing policies are good for customers, but they've also been scrutinized by Congress, consumer advocates and others.
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Aug 27, 2015 | CNBC: Squawk On The Street
By Meg Tirrell
Video: http://beta.criticalmention.com/app/#clip/view?15628477/token/40f78191-0760-456d-b647-f052c5ecb711
ROUGH TRANSCRIPT: Contact lens makers are taking a price war to court and the result could have a very big impact on you if you buy contact lenses. Meg Tirrell is here.
Federal appeals court will hear this case which will have an impact on contact lenses. They are challenging a consumer protection act that aims to prevent contact lens manufacturers from setting a minimum price on contact lenses. I was just talking with JP Morgan analyst, Chris Pasqually. He says that is a way for the manufacturers to enable optometrists to compete with the discounters like 1-800-Contacts and Costco. It makes sense for them to want to appeal to them. If you look at the total market, $7.5 billion. The biggest holder is Johnson & Johnson with ACUVUE® and after that, Novartis, Cooper. this doesn't necessarily have a huge impact on these companies’ businesses but it could have an impact on what they end up paying. The federal appeals court is hearing it later today. We should get a decision maybe in a couple of weeks.
>> So 1-800-Contacts, is based in Utah.
>> That's right.
>> The allegation is that basically they have manipulated local laws to ensure that they are able to undercut everybody from Utah around the rest of the country?
>> I have read that that is what the manufacturers are claiming. that's not what they told me. I did reach out to Johnson & Johnson. They gave us a statement says, the Utah state law prohibits to make it more transparent. It has resulted in lower prices.
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Contact lens makers see their day in court
Aug 27, 2015 | CNBC
Contact lens manufacturers appeal Utah decision that bans minimum prices for contact lenses.
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