A Bad Deal on Contact Lenses
Too many corporate actors want a rigged system—Big Business manipulating the courts or the regulatory regime—to increase its profits and push out competitors. Such corporatism, exploiting the coercive powers of government and the legal system to gain a competitive advantage, should never be misconstrued as being pro-consumer.
In a recent post at RealClearHealth, the editors wrote, “frivolous lawsuits hurt every American. They increase the cost of everything we purchase. Unnecessary, excessive lawsuits limit consumer choice, and 79% of American voters see the number of frivolous lawsuits as a problem.”
In Alcon Vision v. Lens.com we see first-hand how large, multinational corporations leverage their resources to control competition and limit sales of their market competitors. Alcon has engaged in anti-competitive tactics to push contact lens discounters out of the market by implementing a Unilateral Pricing Policy (UPP) which mandates a minimum retail price for certain lenses. For non-economists, a UPP is a type of price fixing that keeps the cost of a product artificially high.
What’s more, “Alcon, the largest eye care device company in the world, has filed trademark infringement lawsuits against the nation’s second largest online contact lens discounter. Legal actions pursued not to defend Alcon’s property rights or to protect its customers. No, on the contrary, these lawsuits are meant to cripple Alcon’s competition, and force them into licensing agreements that will actually harm lens wearers. The alleged trademark issue is about packaging, not the actual contacts. Alcon’s lawsuit is over a triviality while their real goal is to make online discounters buy 100% of their lenses from Alcon at artificially high prices so lenses can no longer be sold at a discount. That will drive-up prices for millions of consumers.” Alcon has purposefully redesigned its packaging to prevent discounters from selling lenses at a lower wholesale price.
Alcon wants to demolish the discounters’ market for contact lenses, or what Alcon would call the problematic Gray market. It’s a problem for Alcon only because so called Gray-market prices are significantly lower than the prices charged by Eye Care Practitioners (ECPs).
Here’s the catch for those of us who need contact lenses. Without discounter sites, like Lens.com or 1800Contacts.com, patients would be compelled to purchase their lenses from ECPs. If more patients are forced to purchase their Alcon lenses from an ECP as opposed to a discount retailer, ECPs would be more likely to prescribe Alcon lenses – resulting in both higher prices and increased sales for Alcon.
At a time when we are still recovering from the coronavirus, patients/consumers need more options not fewer. The pandemic reshaped the economy in ways that we won’t fully understand for years to come. However, what we do know right now is that big businesses are post-Covid economic winners.
Huge corporations, like Texas-based Alcon, realized steady profits and sales last year. In fact, Alcon – in a terrible, no good, bad year – experienced sales in the billions of dollars in 2020 while many Americans experienced furloughs, layoffs, bankruptcies, and shutdowns. Even in a year with lockdowns and delayed healthcare procedures, Alcon’s worldwide sales for the fourth quarter were $1.9 billion, an increase of 2% compared to the fourth quarter of 2019.
With its economic prospects on the rise, Alcon, a dominant, global leader in the eye care industry, is still employing a kind of ‘lawfare’ – i.e., weaponizing the legal system – to enact anticompetitive practices in the contact lens market. It’s leveraging the legal system to restrict consumer choice, fix prices, and drive out discounters.
Millions of Americans need contact lenses. According to RealClearHealth and the Centers for Disease Control and Prevention (CDC), 45 million Americans wear contact lenses. These Americans wear contact lenses out of necessity, not indulgence. What’s more, with nearly 60% of the U.S. population needing vision correction, Alcon’s suit will have a negative impact, less choice, higher prices, on hard-working Americans who need a break after a bad year. For most people who require corrective vision, wearing contacts is required daily. Contact lenses are not a luxury item, yet Alcon’s litigation could potentially price-out countless consumers from buying the lenses they need to function, to work, to drive, and to live a regular life.
Daniel Patrick Moynihan famously once said, "Everyone is entitled to his own opinion, but not to his own facts." Here are the facts regarding Alcon’s anticompetitive behavior:
Alcon filed its lawsuit against contact lens discounters who sell to consumers at lower prices, and its claim of an alleged trademark infringement is nonsense. Indeed, Alcon’s suit has nothing to do with FDA violations or concerns over intellectual property. On the contrary, no one disputes that Alcon’s online competitors are selling legitimate, FDA-approved contact lenses. The truth is, however, these online stores are beating Alcon’s prices. That’s it. The real concern for Alcon is shutting off the competition.
For patients who require contact lenses, Alcon is seeking to cut out the competition from online discounters so it can lock-in higher prices and increase its sales. These higher prices come with no added benefits in terms of quality or safety. It’s a bad deal.
Robert Goldberg is vice president at the Center for Medicine in the Public Interest and co-host of the Patients Rising podcast.