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Utah UPP Litigation 2015
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Circuit Court Grants Injunction of Utah UPP Ban
May 18, 2015 | Healio
The 10th Circuit Court of Appeals entered a temporary injunction on a Utah law that would prohibit the use of unilateral pricing policies for contact lenses sold in the state. -
Federal Appeals Court Stops Utah’s Anti-UPP Law
May 15, 2016 | Vision Monday
A federal appeals court late yesterday stopped a Utah law that would have banned contact lens manufacturers from using Unilateral Pricing Policies to set minimum retail prices on certain products. The law, scheduled to go into effect in Utah on Tuesday May 12, 2015, was halted yesterday, May 14, 2015, by the 10th U.S. Circuit Court of Appeals in Denver. At stake is control of the roughly $4 billion contact lens market with some 38 million American customers. -
Discount Retailer for Contact Lenses Wins Big in Utah
May 15, 2016 | The Daily Rover
A law banning price fixing for contact lenses which came into effect in the state of Utah is being seen as a huge headache for the largest manufacturers and could have a ripple effect across the country amid an increasingly bitter fight with discount retailers. The new law appears to clear the way for the biggest online retailer 1-800-Contacts to disregard the minimum prices set by manufacturers and sell at a discount across state lines. -
US Court Halts Contentious Law on Contact Lens Price-Fixing
May 15, 2015 | Associated Press
By Lindsay Whitehurst
A federal appeals court has halted a new Utah law banning price-fixing for contact lenses that could have wide-ranging implications for the industry amid a fight between manufacturers and discount retailers. -
Appeals Court Holds Up Utah’s Ban on Unilateral Pricing Policies for Contact Lenses
May 15, 2015 | Optical CEU
By Joseph Conlin
"A federal appeals court has halted a new Utah law banning price-fixing for contact lenses that could have wide-ranging implications for the industry amid a fight between manufacturers and discount retailers," reports WRAL. "Lens maker Alcon Laboratories cheered the order Thursday. Along with Johnson & Johnson and Bausch & Lomb, the company says the law is an unconstitutional overreach written to benefit Utah-based online discount retailer 1-800 Contacts." Read more. -
Appeals Court Blocks Utah Law That Would Have Banned Price-Fixing on Contact Lenses
May 14, 2015 | The Consumerist
By Chris Morran
In recent years, many of the country’s biggest contact lens manufacturers moved to set minimum sale prices for their products, meaning any retailer wishing to discount these lenses couldn’t go below that price floor. The practice — which would have been illegal until a 2007 Supreme Court ruling — has come under scrutiny from federal lawmakers, and Utah state legislators passed a bill earlier this year that would outlaw this form of price-fixing in the state. However, a federal appeals court has temporarily sided with the lens makers and blocked that law from being enforced. -
10th Circ. Calls Timeout On Utah Contact Lens Pricing Law
May 14, 2016 | Law360
By Kat Greene
The Tenth Circuit put a hold on Utah’s law banning contact lens manufacturers’ unilateral pricing agreements, granting a request by Alcon Inc., Bausch & Lomb Inc. and a unit of Johnson & Johnson to temporarily stop the state from enforcing the law while their appeal is pending.
Utah Litigation/Ruling
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Circuit Court Grants Injunction of Utah UPP Ban
May 18, 2015 | Healio
The 10th Circuit Court of Appeals entered a temporary injunction on a Utah law that would prohibit the use of unilateral pricing policies for contact lenses sold in the state.
In response to an appeal filed jointly by Johnson & Johnson Vision Care, Alcon Laboratories and Bausch + Lomb, circuit judges Holmes and Phillips ordered the State of Utah and 1-800 CONTACTS “to respond to the motions for injunction pending appeal,” the order read.
Costco Wholesale Corp. was also invited to respond “if they intend to participate in these appeals,” it continued.
The responses must be filed by May 26, and “the temporary injunction will be in effect until further order of this court,” the order read.
Johnson & Johnson, Alcon and Bausch + Lomb provided statements to Primary Care Optometry News saying they believe the Utah law violates the Commerce Clause of the U.S. Constitution.
“We stand behind our lawful business policy that makes pricing on Acuvue brand products simpler and more transparent and allows consumers to make purchasing decisions based on quality, clinical need and cost,” Johnson & Johnson stated. “This policy gets rid of complicated and seldom-redeemed rebates and has resulted in lower prices for 65% of Acuvue brand wearers. We remain committed to providing innovative and accessible eye care options to patients.”
“We are pleased that the court has provided this temporary relief while it assesses our appeal,” the statement from Alcon read. “Alcon … is hopeful the court will overturn the previous ruling.”
Bausch + Lomb declined to comment on the temporary injunction given the ongoing litigation, but the company previously released the following statement: “Bausch + Lomb’s consumer-focused policy is intended to promote investment and enhance innovation in the contact lens industry, and the U.S. Supreme Court has recently recognized the benefits of similar policies.”
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Federal Appeals Court Stops Utah’s Anti-UPP Law
May 15, 2016 | Vision Monday
A federal appeals court late yesterday stopped a Utah law that would have banned contact lens manufacturers from using Unilateral Pricing Policies to set minimum retail prices on certain products. The law, scheduled to go into effect in Utah on Tuesday May 12, 2015, was halted yesterday, May 14, 2015, by the 10th U.S. Circuit Court of Appeals in Denver. At stake is control of the roughly $4 billion contact lens market with some 38 million American customers.
Alcon, Bausch + Lomb, and Johnson & Johnson Vision Care asserted that the Utah law is unconstitutional and succeeded in federal appeals court yesterday to have it stopped while their appeal is considered. Alcon told VMail, “We are pleased that the court has provided this temporary relief while it assesses our appeal. Alcon believes the Utah law violates the Commerce Clause of the U.S. Constitution and is hopeful the Court will overturn the previous ruling.” Utah's state attorneys declined to comment.
The order, issued late Wednesday, puts the Utah law on hold as a legal challenge plays out. It reverses a lower court ruling from U.S. District Judge Dee Benson for the District of Utah, who had allowed the law to go into effect on Wednesday based on his opinion that the “plaintiffs have failed to satisfy the court that they have met the requirements for a preliminary injunction” and “the court is not persuaded at this stage in the litigation that the plaintiffs are likely to succeed on the merits.”
Bills similar to Utah’s anti-UPP law were also introduced in 14 other states, and while some remain pending, others have failed. (See “What’s the Status of State Bills Opposing UPP Policies?”) In addition, in related lawsuits, Costco Wholesale Corp. filed an anti-trust lawsuit in a California federal court against Johnson & Johnson Vision Care, and at least 15 anti-UPP class action lawsuits have also been filed in states throughout the country, as reported by VMail.
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Discount Retailer for Contact Lenses Wins Big in Utah
May 15, 2016 | The Daily Rover
A law banning price fixing for contact lenses which came into effect in the state of Utah is being seen as a huge headache for the largest manufacturers and could have a ripple effect across the country amid an increasingly bitter fight with discount retailers. The new law appears to clear the way for the biggest online retailer 1-800-Contacts to disregard the minimum prices set by manufacturers and sell at a discount across state lines. Many believe it’s a huge positive for consumers who would pay less for their contacts if they buy from the Utah based suppliers. But large manufacturers like Johnson and Johnson, Bausch and Lomb and Alcon Laboratories disagree and has added to the legal limbo. The manufactures have called the law unconstitutional and say would fight the law in court.
Lawmakers in Utah have been vague on whether they would allow 1-800-Utah to sell the discounted lenses outside the state lines. On the other hand the discount retailer, it said that they would reduce prices but haven’t responded to question regarding whether they would sell the contact lenses to customers from different states at discounted rates. At stake is the control of a market which is roughly $4 billion and has 38 million customers in the country. Much of the demand for contact lenses comes from eye doctors who give prescriptions for a specific type and model but discount retailers like 1-800-Contacts have been able to capture 10 percent of the total national market.
The discount retailers argue that by fixing minimum prices, manufacturers are making contact lenses expensive for customers. The manufactures on the other hand believe that minimum prices provide doctors the safety without having to worry about the prices. Minimum prices have had consumer groups up in arms against manufacturers in other areas of the country.
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US Court Halts Contentious Law on Contact Lens Price-Fixing
May 15, 2015 | Associated Press
By Lindsay Whitehurst
A federal appeals court has halted a new Utah law banning price-fixing for contact lenses that could have wide-ranging implications for the industry amid a fight between manufacturers and discount retailers.
Lens maker Alcon Laboratories cheered the order Thursday. Along with Johnson & Johnson and Bausch & Lomb, the company says the law is an unconstitutional overreach written to benefit Utah-based online discount retailer 1-800 Contacts.
The measure halted by the appeals court would allow 1-800 Contacts, one of the nation's biggest lens suppliers, to disregard minimum prices set by the manufacturers and sell discount lenses across state lines, according to Steve DelBianco, executive director of the trade group NetChoice.
That would be good for customers because they'd be paying less for their contacts, he says. But the manufacturers argue setting minimum prices protects eye doctors from being undercut.
At stake is control of a roughly $4 billion market with some 38 million American customers.
Many contact lens sales come from eye doctors. But discount retailers have been growing in recent years, and 1-800 Contacts has captured about 10 percent of the national market, according to court papers.
The order issued late Wednesday from the 10th U.S. Circuit Court of Appeals in Denver puts the Utah law on hold as a legal challenge plays out. It reverses a lower court ruling from U.S. District Judge Dee Benson, who found the law is a legal antitrust measure and allowed it to take effect this week.
Utah's state attorneys declined to comment.
The law targets a pricing program that the manufacturers started using about two years ago. If retailers sell lenses cheaper than the minimum prices, the manufacturers that dominate the market pull their products.
Republican state Sen. Deidre Henderson, who sponsored the measure, has called the pricing minimums predatory and anticompetitive.
Discount giant Costco says the rules forced it to raise prices by more than 20 percent on some brands. The popular Acuvue Oasys brand increased from about $52 for a 12-pack to about $68 last year, according to court papers.
The minimum price rules also have drawn ire elsewhere, sparking 40 class-action lawsuits across the country and scrutiny from Congress since the manufacturers started setting them about two years ago, according to Benson's ruling. Nine states have considered legislation similar to that passed in Utah.
Henderson said the measure was written to bolster competition rather than help 1-800 Contacts, but he has been vague on whether it will allow Utah-based companies like 1-800 Contacts to sell at discounted rates to customers outside the state. The manufacturers say that would violate interstate commerce regulations.
A constitutional law expert said the law doesn't appear to violate those rules because it doesn't give perks to a local company or clash with laws in other states.
But University of Michigan law professor Richard Primus says a provision that allows Utah's attorney general to sue manufacturers who withhold their product from discount sellers could be on shakier legal ground.
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Appeals Court Holds Up Utah’s Ban on Unilateral Pricing Policies for Contact Lenses
May 15, 2015 | Optical CEU
By Joseph Conlin
"A federal appeals court has halted a new Utah law banning price-fixing for contact lenses that could have wide-ranging implications for the industry amid a fight between manufacturers and discount retailers," reports WRAL. "Lens maker Alcon Laboratories cheered the order Thursday. Along with Johnson & Johnson and Bausch & Lomb, the company says the law is an unconstitutional overreach written to benefit Utah-based online discount retailer 1-800 Contacts." Read more.
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Appeals Court Blocks Utah Law That Would Have Banned Price-Fixing on Contact Lenses
May 14, 2015 | The Consumerist
By Chris Morran
In recent years, many of the country’s biggest contact lens manufacturers moved to set minimum sale prices for their products, meaning any retailer wishing to discount these lenses couldn’t go below that price floor. The practice — which would have been illegal until a 2007 Supreme Court ruling — has come under scrutiny from federal lawmakers, and Utah state legislators passed a bill earlier this year that would outlaw this form of price-fixing in the state. However, a federal appeals court has temporarily sided with the lens makers and blocked that law from being enforced.
Utah’s Contact Lens Consumer Protection Act [PDF] would prohibit contact lens companies from any practice that “has the effect of fixing or otherwise controlling the price that a contact lens retailer charges or advertises.” Lens companies would also not be allowed to discriminate against a retailer based on its retail price for lenses.
Bausch & Lomb, Alcon, and Johnson & Johnson have all begun to implement these price floors. Together, these three manufacturers account for nearly 80% of the U.S. contact lens market.
While physicians may recommend and prescribe specific brands of medication for their patients, they are not allowed to sell to them directly. Optometrists, on the other hand, can provide both the diagnostic work to determine a prescription and sell contact lenses directly to consumers.
Additionally, most contact lens prescriptions are brand/model-specific, without any sort of generic equivalent. Thus, the only way for a retailer to compete with an eye care professional was on price.
In 2013, Alcon, owned by drug giant Novartis, was the first to set price floors for its products. It explained at the time that it was trying to combat “showrooming.” That’s where the patient gets the prescription and other relevant information from the optometrist, but rather than by from the eye doctor, the patient goes online or to a discount retailer to get their lenses for less.
Lens manufacturers claim that they go to great expense to educate and inform eye care professionals, only to see their lenses bought elsewhere.
By setting the price floor, it takes away much of that incentive for patients to look elsewhere for their lenses. Since there aren’t generics, the lenses would be the same price at the eye doctor as they would be from an online discounter who is barred from selling for less.
B&L and J&J soon followed suit with price floors of their own.
The new Utah statute sought to make price-fixing a misdemeanor offense, but only in terms of the contact lens market.
Alcon, J&J, and B&L sued the state of Utah [PDF] in federal court, seeking an injunction against the law being enforced and alleging that the Utah legislature had overstepped its authority in violation of the Commerce Clause of the U.S. Constitution.
Both Costco and 1-800-CONTACTS filed opposition briefs in the case, as they stand to lose contact lens customers if price floors remain in place. Costco claims that eye care professionals who don’t have to compete with discount retailers will be able to “leverage their control over prescriptions and brand selection to also control and monopolize contact lens sales.”
It’s not like the eyeglass market, where the price of the lens is only part of a consumer’s buying decision. A retailer can compete by offering a wider variety or more fashionable selection of frames, for example.
For nearly 100 years, most attempts at setting retail price-floor agreements were viewed as violating the Sherman Antitrust Act. But then in the 2007 case of Leegin Creative Leather Products, Inc. v. PSKS, Inc., the U.S. Supreme Court ruled that it manufacturers could indeed set price floors in some situations.
In overturning earlier precedent, SCOTUS had pointed out that retailers facing price floors could use the money they would have ceded through discounts and invest it in “greater customer service” so as to gain a competitive edge.
Costco counters that the lens companies’ pricing agreements “do not require or even encourage [eye care professionals] to invest in tangible or intangible services or promotional efforts that might improve patient care.”
Earlier this week, the District Court judge denied the request for a preliminary injunction, saying that the lens makers were unlikely to be successful at trial.
But only days later, the 10th Circuit Court of Appeals granted that injunction [PDF] while giving the state — and Costco and 1-800-CONTACTS — until May 26 to file responses with the court.
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10th Circ. Calls Timeout On Utah Contact Lens Pricing Law
May 14, 2016 | Law360
By Kat Greene
The Tenth Circuit put a hold on Utah’s law banning contact lens manufacturers’ unilateral pricing agreements, granting a request by Alcon Inc., Bausch & Lomb Inc. and a unit of Johnson & Johnson to temporarily stop the state from enforcing the law while their appeal is pending.
The court agreed to pause enforcement of the law while it considers the manufacturers’ appeal for a temporary injunction declawing the state’s 58-16a-905.1 amendment to the Contact Lens Consumer Protection Act, which would enable contact lens sellers to offer discount lenses across state lines. The two-judge panel didn’t elaborate on its decision.
“We hereby enter a temporary injunction enjoining enforcement of the statute pending our order on the emergency motion for injunction pending appeal,” the court wrote in its decision on Wednesday.
The companies all filed suits in mid-April against Utah Attorney General Sean D. Reyes, alleging that the state’s law violates the U.S. Constitution by regulating interstate commerce and controlling business activity that occurs well beyond the state’s borders, and sought a preliminary injunction barring its enforcement.
U.S. District Judge Dee Benson consolidated the suits later that month and granted retailers Costco Wholesale Corp. and 1-800 Contacts Inc. motions to intervene in the case, according to court records.
Judge Benson denied the injunction request earlier this week, saying that the companies’ claims that the statute would improperly affect sales outside of Utah did not pass muster. The judge agreed with Costco’s contention that out-of-state sales of contact lenses may be higher than those in Utah because of the companies’ unilateral pricing policies and not because of any action taken by the state.
The law, which passed Utah’s House and Senate by wide margins and had been set to take effect on May 12, seems specifically designed to address the contact lens industry’s use of unilateral pricing policies.
The largest contact lens manufacturers in the U.S. have all been hit with antitrust class actions in the past few months over the widespread use of the pricing policies. Major retailers Wal-Mart Stores Inc. and Costco have also been roped into litigation over contact lens pricing.
Representatives for the parties didn’t immediately respond to requests for comment on Thursday.
U.S. Circuit Judges Jerome A. Holmes and Gregory A. Phillips sat on the panel for the Tenth Circuit.
Utah Litigation/Ruling
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