[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]
CONTACT LENS SALES: IS MARKET
REGULATION THE PRESCRIPTION?
______________________________________________________________________
HEARING
BEFORE THE
SUBCOMMITTEE ON COMMERCE, TRADE,
AND CONSUMER PROTECTION
OF THE
COMMITTEE ON ENERGY AND
COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED NINTH CONGRESS
SECOND SESSION
________
SEPTEMBER 15, 2006
________
Serial No. 109-139
________
Printed for the use of the Committee on Energy and Commerce
Available via the World Wide Web: http://www.access.gpo.gov/congress/house
________
U.S. GOVERNMENT PRINTING OFFICE
31-465 PDF WASHINGTON : 2006
______________________________________________________________________
For sale by the Superintendent of Documents, U.S. Government Printing
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800;
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COMMITTEE ON ENERGY AND COMMERCE
Joe Barton, Texas, Chairman
Ralph M. Hall, Texas John D. Dingell, Michigan
Michael Bilirakis, Florida Ranking Member
Vice Chairman Henry A. Waxman, California
Fred Upton, Michigan Edward J. Markey, Massachusetts
Cliff Stearns, Florida Rick Boucher, Virginia
Paul E. Gillmor, Ohio Edolphus Towns, New York
Nathan Deal, Georgia Frank Pallone, Jr., New Jersey
Ed Whitfield, Kentucky Sherrod Brown, Ohio
Charlie Norwood, Georgia Bart Gordon, Tennessee
Barbara Cubin, Wyoming Bobby L. Rush, Illinois
John Shimkus, Illinois Anna G. Eshoo, California
Heather Wilson, New Mexico Bart Stupak, Michigan
John B. Shadegg, Arizona Eliot L. Engel, New York
Charles W. "Chip" Pickering, Mississippi Albert R. Wynn, Maryland
Vice Chairman Gene Green, Texas
Vito Fossella, New York Ted Strickland, Ohio
Roy Blunt, Missouri Diana DeGette, Colorado
Steve Buyer, Indiana Lois Capps, California
George Radanovich, California Mike Doyle, Pennsylvania
Charles F. Bass, New Hampshire Tom Allen, Maine
Joseph R. Pitts, Pennsylvania Jim Davis, Florida
Mary Bono, California Jan Schakowsky, Illinois
Greg Walden, Oregon Hilda L. Solis, California
Lee Terry, Nebraska Charles A. Gonzalez, Texas
Mike Ferguson, New Jersey Jay Inslee, Washington
Mike Rogers, Michigan Tammy Baldwin, Wisconsin
C.L. "Butch" Otter, Idaho Mike Ross, Arkansas
Sue Myrick, North Carolina
John Sullivan, Oklahoma
Tim Murphy, Pennsylvania
Michael C. Burgess, Texas
Marsha Blackburn, Tennessee
Bud Albright, Staff Director
David Cavicke, General Counsel
Reid P. F. Stuntz, Minority Staff Director and Chief Counsel
__________
SUBCOMMITTEE ON COMMERCE, TRADE, AND CONSUMER PROTECTION
Cliff Stearns, Florida, Chairman
Fred Upton, Michigan Jan Schakowsky, Illinois
Nathan Deal, Georgia Ranking Member
Barbara Cubin, Wyoming Mike Ross, Arkansas
George Radanovich, California Edward J. Markey, Massachusetts
Charles F. Bass, New Hampshire Edolphus Towns, New York
Joseph R. Pitts, Pennsylvania Sherrod Brown, Ohio
Mary Bono, California Bobby L. Rush, Illionois
Lee Terry, Nebraska Gene Green, Texas
Mike Ferguson, New Jersy Ted Strickland, Ohio
Mike Rogers, Michigan Diana DeGette, Colorado
C.L. `Butch` Otter, Idaho Jim Davis, Florida
Sue Myrick, North Carolina Charles A. Gonzalex, Texas
Tim Murphy, Pennsylvania Tammy Baldwin, Wisconsin
Marsha Blackburn, Tennessee John D. Dingell, Michigan
Joe Barton, Texas (Ex Officio)
(Ex Officio)
CONTENTS
Page
Testimony of:
Ohlhausen, Maureen, Director, Office of Policy Planning,
Federal Trade Commission............................... 13
Klein, Wayne, Assistant Attorney General, Office of the
Attorney General, State of Utah....................... 28
Coon, Jonathan C., Chairman and Chief Executive Officer,
1-800 Contacts, Inc.................................. 47
Fryling, Gregory A., Chief Operating Officer,
CooperVision, Inc.................................... 54
Schein, Dr. Oliver D., M.D., M.P.H., Burton E. Grossman
Professor of Ophthalmology, Johns Hopkins University,
on behalf of the American Academy of Ophthalmology... 62
Curtis, Dr. Wiley, O.D., Member, American Optometric
Association.......................................... 68
Additional material submitted for the record:
CIBA Vision, prepared statement of..................... 88
CONTACT LENS SALES: IS MARKET
REGULATION THE PRESCRIPTION?
____________
FRIDAY, SEPTEMBER 15, 2006
House of Representatives,
Committee on Energy and Commerce,
Subcommittee on Commerce, Trade,
and Consumer Protection,
Washington, DC.
The subcommittee met, pursuant to call, at 9:30 a.m., in Room 2123 of
the Rayburn House Office Building, Hon Cliff Stearns [Chairman]
presiding.
Representatives Present: Stearns, Terry, Schakowsky, and Gonzalez.
Staff Present: David Cavicke, General Counsel; Chris Leahy, Policy
Coordinator; Shannon Weinberg, Counsel; Will Carty, Profession Staff
Member; Brian McCullough, Professional Staff Member; Billy Harvard,
Legislative Clerk; Jonathan Cordone, Minority Counsel; and Jonathan
Brater, Minority Staff Assistant.
Mr. Stearns. Good morning, everybody. The subcommittee will come to
order.
I am pleased that this subcommittee has found time to revisit the
issue of contact lens regulation, an issue we addressed in the 108th
Congress which resulted in the creation of a public law.
Unfortunately, according to some companies in the contact lens market,
including 1-800 Contacts, there remains a problem with regard to how
contact lenses are distributed to retailers, from prescribers to
wholesale clubs and mail order or Internet retailers, the so-called
alternative channels of distribution.
This committee has a long and distinguished history of addressing
market failure problems, but only as a last resort, preferring the
invisible hand of the free market to work out inequities over
government intervention. At the outset, I hope that this will be the
case, but I am pleased to have an opportunity to take a closer look
at this issue, understand it better, including the status of a 1996
consent decree, and on the alleged evidence of market failure.
Therefore, I welcome this opportunity to hear the testimony before us
this morning.
My colleagues, with over 36 million Americans wearing some form of
contact lens, this is not a small issue. There are essentially two
types of mass marketed lenses for consumer purchase, those distributed
exclusively to eye care professionals by a contact lens manufacturer
and those distributed freely to all retailers, including eye care
professionals and aftercare providers like 1-800 Contacts. The
concerns precipitating this hearing arose because of those
manufacturers; namely CooperVision, that sell their lenses exclusively
to eye care professionals. Aftercare providers feel that such
arrangements limit competition and ultimately harm consumers.
So it is important to note that the Federal Trade Commission conducted
a study in 2005, as required by legislation passed by this committee,
and concluded there was no market failure in the industry. The Federal
Trade Commission found exclusive manufacturer-retail relationships
pose no threat to competition nor did any harm to consumers. So I
look forward to the FTC elaborating on their findings today, and
commenting on the case before us.
I am not resigned to a conclusion at this point. My primary concern
in holding this hearing is to walk out of this room with a better and
clear understanding of the actual problem and how the legislation
introduced and referred to this committee will solve it.
I also want to be certain that by solving an alleged commercial
problem, we are not in turn creating a health-related problem.
Prescription verification is a very important component of
doctor-patient-seller interaction in this area, and I want to
understand better how aftercare providers like 1-800 Contacts handle
that function. So I thank all the witnesses for being here.
The House went out of session yesterday, so perhaps not all the members
will be here this morning, but I to want thank the Ranking Member,
Jan Schakowsky, for participating and being here--and others that do
show--so we can have that hearing this morning. And with that, I
recognize the Ranking Member.
[The Prepared Statement of Hon. Cliff Stearns follows:]
Prepared Statement of the Hon. Cliff Stearns, Chairman, Subcommittee
on Commerce, Trade, and Consumer Protection
Good morning.� I�m pleased that this Committee is finding time to
revisit the issue of contact lens regulation -- an issue we addressed
in the 108th Congress, which resulted in the creation of a public law.
Unfortunately, according to some companies in the contact lens
market, namely 1-800-Contacts, there remains a problem with regard to
how contact lenses are distributed to retailers -- from prescribers
to wholesale clubs and mail order or internet retailers (the so-called
"alternate channels of distribution").
This Committee has a long and distinguished history of addressing
market failure problems, but only as a last resort -- preferring the
invisible hand of the free market to work out inequities over
government intervention. At the outset, I hope that will be the case
here but I�m pleased to have an opportunity to take a closer look at
the issue, including the status of the 1996 consent decree, and on the
alleged evidence of market failure. Therefore, I welcome the
opportunity to hear the testimony before us this morning.
With over 36 million Americans wearing some form of contact lens, this
is no small issue. There are essentially two types of mass-marketed
lenses for consumer purchase - those distributed exclusively to eye
care professionals by a contact lens manufacturer and those distributed
freely to all retailers, including eye care professionals and
"aftercare providers" like 1-800-Contacts. The concerns precipitating
this hearing arose because of those few manufacturers, namely
CooperVision, that sell their lens exclusively to eye care
professionals. Aftercare providers feel that such arrangements
limit competition and harm consumers.
It is important to note that the Federal Trade Commission conducted a
study in 2005, as required by legislation passed by this Committee,
and concluded there was no market failure in the industry. The FTC
found exclusive manufacturer-retailer relationships pose no threat
to competition nor harm consumers. I look forward to the FTC
elaborating on those findings today and commenting on the specific
case before us.
Because I am not resigned to a conclusion at this point, my primary
goal in holding this hearing is to walk out of this room with a clear
understanding of the actual problem and how the legislation
introduced and referred to this Subcommittee will solve it. I also
want to be certain that by solving an alleged commercial problem, we
are not, in turn, creating a health-related problem. Prescription
verification is a very important component of doctor-patient-seller
interaction in this area, and I want to understand better how
aftercare providers like 1-800-Contacts handle that function.
Again, I thank everyone for joining us this morning and I look forward
to the testimony of this distinguished panel.
Thank you.
Ms. Schakowsky. Thank you, Chairman Stearns, for holding today�s
hearing to examine the status of contact lens sales, now that the
Fairness to Contact Lens Consumers Act has been law for nearly 3 years.
As you mention, that bill went through our subcommittee; I am proud to
have been a co-sponsor of it. It is a pro-consumer law that guarantees
the 36 million contact users in this country--guarantees that they are
provided with a copy of their prescription from their doctor so they
will have the freedom to shop for the best deal possible if they choose
when filling their contact lens needs.
Despite the success for consumers this law represents, reports have been
surfacing from eye care practitioners, manufacturers, and contact lens
sellers that there are still problems in the prescription lens business.
Eye care practitioners are concerned that sellers are abusing the
verification system by making it difficult for eye doctors to
authenticate prescriptions, and also by filling prescriptions without
ensuring their validity. Manufacturers are concerned about legislation
that would force them to offer their product to any distributor that
wants them, regardless of their reliability. No other manufacturer
field has such a restriction. And online distributors claim that
because we did not include language in the Fairness to Contact Lens
Consumers Act to require that all lenses are made available to them,
eye doctors and manufacturers are trying to keep them out of the loop,
they say.
Since the passage of the legislation, the Federal Trade Commission has
had to issue warning letters in a number of instances. In the early
days of this law, some were issued to eye care practitioners for not
providing prescriptions to consumers. In 2004, online sellers were
issued warnings for not having open fax lines for eye care practitioners
to verify prescriptions or for falsely claiming that cosmetic or color
lenses are nonprescription. The FTC has also had to take law
enforcement action against sellers who were found to be not verifying
prescriptions.
These problems, whether they represent widespread problems or are
attributable to a few bad actors, are quite serious. It is
consumers� health, safety and choice that are jeopardized by those
violations, and it is never acceptable to compromise consumers in the
desire to make a buck by a multibillion dollar industry.
As legislators, we have a duty to make sure that consumers� interests
are being met, that they have access to safe and affordable contact
lenses, and that those principles guide us in whatever we decide to
do. And as key players in the eye care industry, it is the
practitioners, manufacturers, and sellers� duty to also be guided by
those principles and not try to push the law to its limit.
We have run into some bumps in the road, but I believe that since the
FTC has been able to take action under the Fairness to Contact Lens
Consumers Act, we can�t claim that the law is not working or that we
need new legislation at this point. Consumers are getting their
prescriptions and are able to shop around for their lenses.
I am glad that we are holding today�s hearing to investigate these
complaints to determine what needs to be done to ensure that we
protect consumers� health and safety, and I thank the witnesses here
for shedding light on this important issue. Thanks.
Mr. Stearns. I thank the gentlelady.
Mr.�Terry.
Mr. Terry. Thank you, Mr. Chairman, for holding this hearing and our
witnesses for appearing here today.
My concern, it was brought to my attention and the basis for
introducing what is H.R. 5762, the Contact Lens Consumer Protection Act,
appears to me to be an anti-competitive, anti-consumer practice that
has emerged as a loophole to what some of us fondly refer to as the
Burr bill, a contact lens bill of about 3 years ago, of which there was
a great deal of discussion and--I won�t say angst, but handwringing and
compromise that went into this bill to reach a delicate balance. Then
there appears to be a system of marketing that gets around what at
least the intention of that bill was, and that is to provide consumers
the ability to take a prescription and go then to a place where they
want to go, whether it is like the Wall Street Journal article that
says that this lady wanted to go to Wal-Mart to fill her contact lens
or go online. And I think we should give consumers that freedom. That
was the intention of that bill 3 years ago, as well as to ensure the
patient�s eye safety and health.
So I want to look and explore this tying marketing agreement that
appears where a physician can prescribe a contact lens that only that
physician sells. So I want to explore that, see if there is health
reasons for something like that or whether it is what it appears on
the surface, to just simply be a marketing ploy to get around the
current law.
With that, Mr. Chairman, I will put my full statement into the record,
and if I could also attach a copy of the Wall Street Journal.
Mr. Stearns. By unanimous consent, so ordered.
Mr. Terry. Then I yield back.
[The Prepared Statement of Hon. Lee Terry follows:]
Prepared Statement of the Hon. Lee Terry, a Representative in Congress
from the State of Nebraska
Mr. Chairman, thank you for holding today�s hearing.
Recently, I introduced H.R. 5762, the Contact Lens Consumer
Protection Act, because I believe legislation is needed to fix a
loophole that prevents millions of consumers from having more choices
when purchasing contact lenses prescribed by their eye doctor.
In 2003, Congress passed the Fairness to Contact Lens Consumers
Act which many of my colleagues on this committee helped write and
supported. Under that law, eye doctors are required to hand patients
a copy of their prescription after the exam so that the patient can
shop around for the most affordable contact lenses. What patients
have found is that the brand they were prescribed was only available
at the eye doctor�s office at a cost much higher than at an alternative
distributor. Why is this happening? Because the major contact lens
makers were entering into exclusive arrangements with eye doctors
requiring patients to buy their lenses from the doctor, and
discouraging purchases from alternative contact lens distributors.
By allowing eye doctors to prescribe doctor-only, or limited-
distribution lenses, a loophole has been created forcing millions of
consumers to buy their lenses only through eye-care professionals. A
recent report issued by the Federal Trade Commission showed that an
average user of contact lenses can save up to 20% by buying from
alternative distributors of contact lenses.
The practice of limiting consumers to the purchase of doctor-
only contact lenses has been found to be harmful to consumers by 39
state attorney generals. According to the state attorney generals,
the practice of doctor-only prescribed contact lenses "threatens to
thwart the purposes" of the Contact Lens Consumers Act and "puts the
eye-care providers� profit motive ahead of patient welfare." Those
are their words, not mine.
Congress, as well as the medical community, recognizes that a
conflict of interest can be created when doctors sell what they
prescribe to consumers. That is why when my doctor writes me a drug
prescription, I can go to Walgreens, CVS, or a locally owned pharmacy
to purchase my prescription. What I want the subcommittee to explore
this morning is why should eye doctors not be held to the same business
practices?
My legislation makes two simple changes in the current law.
First, it would require a manufacturer to make any contact lens it
produces, markets, distributes or sells available in a commercially
reasonable and non-discriminatory manner to prescribers or other
specified alternative channels of distribution. Second, it exempts
prescriptions for lenses that are not mass marketed or produced that
are custom designed to meet the different optometric needs of
individuals.
Mr. Chairman, I again thank you for holding this hearing and
look forward to hearing from our panel of witnesses.
[The information follows:]
Mr. Stearns. And I thank the gentleman. And I also, by unanimous
consent, put Mr.�Ed Whitfield�s statement in the record, and anyone
else who seeks.
[The information follows:]
Prepared Statement of the Hon. Joe Barton, Chairman, Committee on
Energy and Commerce
Thank you, Chairman Stearns for holding this hearing. We have received
much interest in this topic and particularly on the various legislative
proposals addressing the contact lens market before both chambers. I
hope that today�s hearing will give us a chance to look at market
regulation and how it affects consumers, and at whether now is the time
for Congressional action.
Regulation of consumer markets is an area in which the Federal government
traditionally treads lightly-and with good reason. However, when
conditions command action-when consumers are being harmed by the actions
of a particular market participant-Congress has acted.
The Federal Trade Commission reports 36 million Americans wear contact
lenses. Assuring fair access to lenses and ensuring healthy competition
among lens manufacturers and retailers are important goals. But the
matter is not as cut and dried as it seems. There are numerous
competing interests here. Manufacturers assert a right to decide with
whom they want to do business, and doctors want to protect their
businesses. Consumers certainly have a right to choose their optical
care providers and to benefit from competition in the contact lens
marketplace. Overlaying the issue we have patient health concerns,
too. This hearing will examine these arguments. I hope it will help
us to determine whether the contact lens business is free and
competitive, or whether some intervention is required.
More competition and less government is the ideal, and I believe in it,
but occasionally it takes a nudge from people like us to remind
competitors that it�s their job to compete.
I look forward to the expert testimony our distinguished panel of
leaders will provide today. Thank you all for your time today and
welcome.
Thank you, Mr. Chairman, and I yield back.
Prepared Statement of the Hon. Ed. Whitfield, a Representative in
Congress from the State of Kentucky
Mr. Chairman, thank you for agreeing to hold this timely hearing on
an issue affecting many of my constituents.
In 2003, the Fairness to Contact Lens Consumers Act (FCLCA) was signed
into law, allowing consumers greater access to their prescription
records so they can more easily purchase contact lenses from
third-party vendors.� Under the law, a third-party vendor must confirm
the validity of a prescription with the prescribing doctor before
dispensing contact lenses to a patient, and a prescribing doctor has
up to eight hours to respond to the inquiry.� If the doctor does not
respond within the allotted time, the vendor may assume the
prescription is valid and proceed with the sale.
In practice, the prescription verification requirements of the FCLCA
have been routinely ignored and abused by some third-party vendors.�
Doctors report numerous instances of third-party vendors using
automated phone systems that often provide inadequate information for
verifying patient prescriptions.� Attempts to communicate with these
phone systems are frequently met with busy signals, unattended voice
mailboxes, and disconnected calls.
Other vendors make no attempt to verify prescriptions at all.� In one
major instance, a doctor in Texas found that 17 consecutive contact
lens sales by a third-party vendor took place for his patients without
any verification of his patients� prescriptions whatsoever.� The
Federal Trade Commission recognizes these problems, and earlier this
year issued warnings to several third-party vendors advising that
their practices are illegal and deceptive to consumers.
Contact lenses are regulated medical devices requiring a valid
prescription from a licensed doctor.� Third-party vendors that
overfill prescriptions or who do not verify that the prescriptions
they are filling endanger the health and welfare of the customers
they purport to serve.� Completing contact lens sales regardless of
a patient�s medical history is an unacceptable business practice
and clearly contrary to the best interest of consumers� health and
well-being.
Verifying patient prescriptions requires a good-faith effort on the
part of both doctors and third-party vendors.� There needs to be
better communication between these parties, ensuring that patients
receive products that are safe and compatible with their documented
medical history.
I am currently working on legislation that will create a "Patient
Safety Hotline" for optometrists with patient health concerns related
to a prescription verification request. A call to the hotline would
suspend the transaction until the vendor addressed the specified
health concern.
In addition, the bill would allow optometrists to specify to third-party
vendors their preference for fax, e-mail or telephone prescription
verification purposes.� Vendors would then be required to attempt at
least two of the three communication choices.�
Thank you again for holding this hearing and for your consideration of
my remarks.
Mr. Stearns. Yes, sir.
Mr. Gonzalez. Thank you very much, Mr. Chairman, and good morning to
one and all. And I know you are saying attendance is not great, but
let me explain when we set these hearings, we had folks scheduled for
today. Seventy five percent of the Members of the House of
Representative do not have their families in Washington, so along with
the wonderful old adage of Harry Truman that if you want a friend in
Washington, get a dog, if you want a family life, go back to the
district. And that is what happens as soon as they tell us we are not
going to have votes. So in the way of explanation. But please
understand that your testimony is important. Obviously we have someone
that is taking it down, and we can always refer to it, and we ask for a
copy of the record; but your written statements are actually reviewed
by staff and Members of Congress for future use. So don�t think for a
second that your presence here today is not important because it is.
Some of the Members that are here present this morning will have to
leave to catch flights and such. I hope I can say for the duration
until I have another commitment.
The way I look at this particular issue is really quite simple. I hate
for everything to always be one side versus another. Some think it is
consumer choice versus health safety concerns. I would like to think
that it is going to be consumer choice with health safety concerns.
And I understand that we have different advocates here today and that
is what you should be doing, but our job really is to kind of sift
through it all and see if we can come up with something that really
addresses legitimate concerns that are out there. And for that, I
thank you for your testimony today and I yield back.
Mr. Stearns. I thank my colleague.
With that, we will go to our witnesses. And we have Ms.�Maureen
Ohlhausen, Director of the Office of Policy Planning at the Federal
Trade Commission, and we have Mr.�Wayne Klein, Assistant Attorney
General, Office of the Attorney General, State of Utah. And we have
Mr.�Jonathan Coon, CEO of 1-800 Contacts. We have Mr.�Gregory
Fryling, who is Chief Operating Officer of CooperVision, and
Dr. Oliver Schein, Burton E. Grossman Professor of Ophthalmology at
John Hopkins. And we have Dr. Wiley Curtis, a member of the American
Optometric Association.
I thank all of you. And Ms. Ohlhausen, we appreciate your opening
statement.
STATEMENTS OF MAUREEN OHLHAUSEN, DIRECTOR, OFFICE OF POLICY PLANNING,
FEDERAL TRADE COMMISSION; WAYNE KLEIN, ASSISTANT ATTORNEY GENERAL,
OFFICE OF THE ATTORNEY GENERAL, STATE OF UTAH; JONATHAN C. COON,
CHAIRMAN AND CHIEF EXECUTIVE OFFICER, 1 800 CONTACTS, INC.; GREGORY
A. FRYLING, CHIEF OPERATING OFFICER, COOPERVISION, INC.; DR. OLIVER
D. SCHEIN, M.D., M.P.H., PROFESSOR OF OPHTHALMOLOGY, JOHNS HOPKINS
UNIVERSITY, ON BEHALF OF THE AMERICAN ACADEMY OF OPHTHALMOLOGY; AND
DR. WILEY CURTIS, O.D., MEMBER, AMERICAN OPTOMETRIC ASSOCIATION
Ms. Ohlhausen. Good morning. Thank you, Chairman Stearns, Ranking
Member Schakowsky, and members of the subcommittee. I am Maureen
Ohlhausen, Director of the Federal Trade Commission�s Office of
Policy Planning.
I am pleased to present the Commission�s testimony on consumer
protection and competition issues concerning the contact lens industry.
The Commission�s full testimony has been submitted for the hearing
record, and my statement and any answers I give to your questions
today reflect my own views and not necessarily those of the Commission.
Over the years, the Commission has engaged in a wide variety of
activities concerning the eye care industry. These activities include
law enforcement, rule making, business and consumer education, and
advocating public policies relating to the marketing and sale of eye
care goods and services.
The FTC�s activities are all directed toward the same fundamental
objective, the promotion of vigorous competition and informed consumer
choice, thereby increasing consumer welfare.
In 2003, Congress enacted the Fairness to Contact Lens Consumers Act,
which we now call FCLCA, to increase competition and computer choice
in the sale of contact lenses using an approach similar to that of the
eyeglasses rule which also require prescription release. To implement
FCLCA, the FTC issued its Contact Lens Rule, which closely tracks the
Act�s provisions. Since the rule was issued, the Commission has
undertaken substantial efforts to educate sellers and eye care
practitioners about its requirements. The FTC staff has also issued
warning letters to individual companies to alert them that they may
be in violation of the rule, and request that they modify their
practices as necessary to come into compliance with the law.
In appropriate circumstances, the FTC initiates investigations and
takes law enforcement action against those who violate the rule. For
example, in August, 2006, the Department of Justice, at the request
of the FTC, filed a complaint and settlement agreement with operators
of three Websites that sell contact lenses directly to consumers. We
alleged that the defendants violated the Contact Lens Rule by selling
lenses to consumers without first obtaining prescriptions or verifying
prescriptions with the prescribing eye care practitioners. The
consent decree requires the defendants to pay $40,000 in civil
penalties and, among other things, prohibits them from violating the
rule in the future.
When Congress passed FCLCA, it required the FTC to undertake a study
to examine the strengthen of competition in the sale of prescription
contact lenses, including, in particular, two contact lens
distribution policies, private labeling and limited distribution, that
some have argued allow prescribing eye care practitioners to lock
their patients into lenses that must be purchased from them at
inflated prices. The FTC study, released in February 2005, found no
evidence that either of these practices was harming consumers.
Regarding private label lenses, data from the FTC study showed average
prices for private label lenses to be statistically equivalent to their
national name brand counterparts. As for limited distribution lenses,
the study found them to be available through many distribution
channels, making it unlikely that limited distribution policies are
allowing retailers to raise prices.
Specifically, the Commission found that the two most popular limited
distribution lenses were available to consumers at most on and offline
sellers sampled, including optical chains, discount retailers such as
Wal-Mart and Target, warehouse clubs, such as BJs and Sam�s, and many of
these outlets� Websites. As in the case of private labeling, the
Commission study found no evidence that limited distribution policies
are likely to harm consumers.
Because FCLCA requires eye care practitioners to release prescriptions
to patients and permit sellers to fill private label prescriptions with
either brand name or other private label equivalent, it appears that eye
care practitioners face significant competition in the sale of these
limited distribution lenses. Moreover, warehouse clubs tend to offer
lowest prices, making it even less likely that an eye care provider
would be able to raise prices for a limited distribution lens. Thus,
consumers who receive a prescription specifying a limited distribution
lens do not appear to be forced to purchase that lens from their
prescribing eye care provider, and instead have several online and
offline options. Consistent with this observation, the Commission�s
examination of the data did not suggest that limited distribution
lenses were sold at prices any higher than similar lenses that were
not subject to such a distribution policy.
It is important to note that limited distribution policies, including
those that limit online distribution, are common across industries,
and often are intended to spur competition among rival manufacturers,
which ultimately can lead to greater quality, enhanced variety, or
lower prices. It is widely recognized in law and economics that
placing limits on distribution can allow a manufacturer who relies
on retailers to provide customer service or quality assurance efforts
to compete more effectively against rival manufacturers.
Typically, therefore, a supplier�s unilateral decision to restrict
the distribution channels in which its product is available raises
antitrust concerns only if such a restraint is likely to harm
competition among rival manufacturers and if this harm outweighs any
pro-competitive benefits.
As the Supreme Court has stated, "a manufacturer of course generally
has a right to deal or refuse to deal with whomever it likes as long
as it does so independently." At the same time, it is important to
distinguish unilaterally imposed distribution restraints from those
that manufacturers adopt at the behest of a group of retailers acting
in concert. Joint efforts by retailers to coerce manufacturers to
disadvantage discounters are a per se violation of the antitrust laws
because such agreements among competitors suspend the normal give and
take of the marketplace.
The Commission remains committed to promoting competition and consumer
protection in the contact lens industry. We are willing to assist your
subcommittee in any way that we can. Thank you.
[The prepared statement of Ms. Ohlhausen follows:]
Prepared Statement of Maureen Ohlhausen, Director, Office of Policy
Planning, Federal Trade Commission
Mr. Stearns. I thank the gentlelady.
Mr. Klein.
Mr. Klein. Thank you, Mr. Chairman.
My name is Wayne Klein, and I represent the Utah Attorney General
today. He, unfortunately, was delayed in a flight from overseas and
could not be here, and so I ask that my written statement, along with
his statement, be included in the record.
Mr. Stearns. By unanimous consent, so ordered.
Mr. Klein. Helping consumers maximize the value of their contact lens
purchases is important both to buyers of the lenses and the creation of
a competitive market for the sale of replacement lenses.
I thank this committee for adopting the Fairness to Contact Lens
Consumers Act in 2003. I am here to say that more needs to be done to
promote consumer choice and to protect buyers of replacement contact
lenses. Some competition is the best means of delivering the highest
number of goods to consumers at the lowest price, while rewarding
innovation and high quality. Removing artificial restraints on
competition and computer choice maximizes the number of sellers.
Ten years ago, competition was restrained by collusion among contact
lens manufacturers and optometric trade associations who forced
consumers to purchase replacement contact lenses from their
prescribing optometrist rather than from cheaper suppliers. Consumers
paid 20 to 40 percent more. That problem was solved by the Fairness
to Contact Lens Consumers Act and the injunction entered in the
litigation by the Attorney General�s Office. Now we face a new threat.
It is a shame that health care professionals, manufacturers, and their
associations are so afraid of competition that they engage in
artifices to deny choices to consumers and put their own financial
interests ahead of patient interests. Some contact lens manufacturers
have grown rapidly by promising optometrists that the optometrists can
increase their profits by forcing consumers to purchase high price
lenses available only from the optometrist that writes the prescription.
This hijacking of consumer interest is possible only because of two
factors that are unique to the contact lens industry. First, contact
lenses can be sold only by prescription, and that prescription must
identify the contact lens by brand name. Second, optometrists not
only treat patients, they also sell lenses to those patients. Unlike
physicians prescribing medications, optometrists sell what they
prescribe. These two factors permit optometrists� business interests
to override the optometrist�s duty to serve the interest of their
patients.
Promoting consumer choice in the health care industry is exceedingly
tricky. The difficulty lies in separating medical decisions from the
financial decisions. If a way can be found to divorce those two
categories from each other, it is possible to maximize the consumer
welfare, while leaving medical decisions to health care providers. We
want to prevent health care providers from disguising their economic
interests as health care concerns. This separation of economic and
medical influences can be accomplished in the contact lens market, and
this involves three steps: One, separating the demand for
prescriptions from the demand for replacement lenses; second,
eliminating optometrists� ability to tie the eye exam to the purchase of
replacement contact lenses; third, increasing competition for the sale
of replacement lenses. The larger the number of sellers, the lower the
prices that will be offered to consumers.
This solution does not limit an optometrist�s ability to prescribe the
product that is best for the patient. What it does do is limit the
optometrist�s ability to charge his patient supra competitive prices
for a product that is available only from that practitioner. The best
way to ensure that an optometrist truly believes that one particular
brand is the best product for a patient is to let that patient buy
additional lenses from other sellers.
The legislation proposed, H.R. 5762, is a skillful device to separate
the medical and financial influences that affect a patient�s purchase
of replacement lenses. Optometrists would remain free to sell what
they prescribe, but it would not be able to prescribe what they alone
sell. The bill would increase competition and consumer choice in
three important ways: One, increase competition between manufacturers
of contact lenses; two, increase competition between prescribers of
contact lenses; and, three, increase competition between contact lens
sellers who do not prescribe lenses and contact lens prescribers who
both prescribe and sell lenses.
Antitrust enforcers seek to eliminate artificial influences that
restrain competitive market forces. This bill would accomplish that
goal in a manner that would directly benefit and substantially
benefit millions of consumers.
Thank you, Mr. Chairman.
[The prepared statement of Mr. Klein follows:]
Prepared Statement of Wayne Klein, Assistant Attorney General, Office
of the Attorney General, State of Utah
My name is Wayne Klein. I am a special Assistant Attorney General
prosecuting antitrust violations for the State of Utah. I appreciate
the opportunity to testify here today on H.R. 5762. Helping consumers
maximize the value of their contact lens purchases is important both
to buyers of lenses and to the creation of a competitive market for the
sale of replacement lenses. This Subcommittee is familiar with the
anticompetitive and abusive practices that have been prevalent in this
industry. Thank you for adopting the Fairness to Contact Lens Consumers
Act in 2002.
This topic has consumed many years of my professional life as
an antitrust enforcer. First was the six-year litigation against the
then-dominant contact lens manufacturers. Utah was one of 32 states
that sued contact lens manufacturers and others alleging conspiracies
to prevent consumers from obtaining prescriptions and conspiracies to
prevent discount suppliers of replacement contact lenses from
obtaining lenses to sell. Second was our support for passage of the
Fairness to Contact Lens Consumers Act in 2003. Third, in 2004, the
Utah Attorney General submitted comments to the Federal Trade
Commission on behalf of 31 states urging improvements to the proposed
Contact Lens Rule. The FTC adopted our recommendations. Fourth was
helping draft the Utah Contact Lens Consumer Protection Act, which is
a forerunner to H.R. 5762.
I am here to say that more needs to be done to promote consumer
choice and to protect buyers of replacement contact lenses.
Antitrust Laws and Anticompetitive Conduct by Sellers of Contact Lenses
The antitrust laws, often referred to as the Magna Carta of the
free enterprise system, are designed to maximize consumer welfare and
promote consumer choice. Strong competition is the best means of
delivering the highest number of goods to consumers at the lowest prices
while rewarding innovation and high quality. Removing artificial
restraints on competition and consumer choice maximizes the number of
sellers.
Ten years ago, competition was restrained by collusion among
the contact lens manufacturers and optometric trade associations who
forced consumers to purchase all replacement contact lenses from the
prescribing optometrist rather than from cheaper mail-order suppliers.
The result was that consumers paid 20-40% more than the competitive
price for replacement lenses. That problem was solved by the Fairness
to Contact Lens Consumers Act and the injunction entered against the
defendants in the states� enforcement action.
Now we face a new threat. It is a shame that health care
practitioners, manufacturers, and their associations are so afraid of
competition that they engage in artifices to deny choices to consumers
and put their own financial interests ahead of patient interests. Some
contact lens manufacturers have grown rapidly by promising optometrists
that they can increase their profits by forcing consumers to purchase
high-priced lenses available only from the optometrist that writes the
prescription.
This hijacking of consumer interest is possible only because of
two factors that are unique to the contact lens industry. First:
contact lenses can be sold only by prescription. That prescription
must identify the contact lens by brand name; no substitutions are
allowed or generic equivalents. Second: optometrists not only treat
patients, they also sell lenses to those patients. Unlike physicians
prescribing medications, optometrists sell what they prescribe. The
combination of these two factors permits optometrists� business
interests to distort the optometrists� duty to serve the interests of
their patients. In that situation, the optometrist can charge
whatever price the optometrist chooses. This is the antithesis of
consumer choice.
Consumer Welfare, Patient Health, and Improper Financial Motivations
Applying the antitrust laws in the health care industry is
exceedingly tricky. The difficulty lies in separating the medical
decisions from the financial ones. If a way can be found to divorce
those two categories from each other, it is possible to use the
antitrust laws to maximize the consumer decisions while leaving the
medical decisions to the health care providers. We seek to maximize
the economic benefits of competition without negatively affecting the
legitimate health-related decisions. This principle also can be
stated in the converse: we seek to prevent health care providers from
disguising their economic interests as health care concerns. This
concept was stated well in a June 2006 letter from the American
Optometric Association to the contact lens manufacturer CooperVision.
The letter is attached.
We are very fortunate that this separation of economic and
medical influences can be accomplished in the contact lens market.
This involves three steps:
Separating the demand for prescriptions from the demand for replacement
contact lenses.
Eliminating an optometrist�s ability to tie eye examinations to the
purchase of replacement contact lenses. An optometrist remains free to
do both: provide eye examinations and sell lenses. But the optometrist
should not be able to force a customer to buy both products from the
optometrist.
Increasing competition for the sale of replacement lenses. Once a
patient is freed from the compulsion of buying lenses only from the
examining optometrist, all sellers of those lenses can compete for the
customer�s business. The larger the number of sellers, the lower the
prices that will be offered to consumers.
Health Care Concerns Are Protected
This solution does not limit an optometrist�s ability to
prescribe the product that is best for the patient. What it does do is
limit an optometrist�s ability to charge his patient supracompetitive
prices for a product available only from that optometrist. Under the
Act, an optometrist can prescribe any contact lens brand, so long as
the manufacturer of that lens makes that brand available to a
reasonable number of other sellers of replacement contact lenses. The
best way to ensure that an optometrist truly believes that one
particular brand is the best product for a patient is to empower that
patient with the ability to buy additional lenses from other sellers �
who may compete with the examining optometrist.
Competitive Markets May Increase Health Benefits
In the antitrust conspiracies of the last decade, sellers made
the false claim that buying replacement lenses from alternative channels
raised the health risks to patients. No evidence was ever presented in
support of that claim and the defendants agreed not to make that
assertion absent scientific evidence of health risks. State antitrust
enforcers believe that lower prices and greater convenience for
patients will actually increase the likelihood that patients will
replace their lenses at the frequency recommended by their optometrists.
Summary
This legislation is a skillful device to separate the medical
and financial influences that affect a patient�s purchase of
replacement contact lenses. Optometrists would remain free to sell what
they prescribe, but they would not be able to prescribe what they alone
sell. The bill would increase competition and consumer choice in three
important ways:
Increased competition between manufacturers of contact lenses;
Increased competition between prescribers of contact lenses
(optometrists); and
Increased competition between contact lens sellers who do not prescribe
lenses and contact lens prescribers who prescribe and sell lenses.
Antitrust enforcers seek to eliminate artificial influences
that restrain competitive market forces. This bill accomplishes that
goal in a manner that will directly and substantially benefit millions
of consumers. I urge this Subcommittee to push adoption of this
legislation.
[The statement of Mr. Shurtleff submitted for the record follows:]
Mr. Chairman, and Members of the Subcommittee, my name is Mark
Shurtleff and I am the Attorney General of Utah. I appreciate the
opportunity to appear before you today on these important issues.
For many years, the state attorneys general have fought to provide
consumers with lower prices and more choices when purchasing contact
lenses. In the 1990s, a majority of attorneys general sued the
American Optometric Association (AOA), the Contact Lens Association
of Ophthalmology (CLAO), and the largest contact lens manufacturers
for colluding to restrict competition.
Many of these same attorneys general strongly supported the Fairness
to Contact Lens Consumers Act (FCLCA), a law that gives consumers a
right to their contact lens prescription and the freedom to choose
where to buy their lenses.
As part of our long-standing efforts to protect contact lens wearers,
the attorneys general strongly support H.R. 5762. This legislation is
necessary to end a practice that threatens competition, threatens
ocular health, and threatens to undermine the FCLCA.
Certain manufacturers are limiting distribution of their contact
lenses solely to eye doctors. This practice is designed to lock
consumers into purchasing contact lenses from the eye doctor writing
the prescription.
The so-called "doctors only" marketing scheme puts the eye doctor�s
profit motive ahead of patient health. It is designed to insulate eye
doctors from the increased competition the FCLCA intended to spur and
to limit consumer choice.
This same anti-consumer, anti-competitive practice was the subject of
the multi-state litigation I previously referenced. The central issue
in that case was the manufacturers� refusal to sell contact lenses to
retailers not affiliated with an eye doctor.
The attorneys general believe manufacturers engaged in the "doctors
only" marketing scheme to entice eye doctors, who also sell the lenses
they prescribe, to write prescriptions for restricted lenses. In
their dual role as both prescriber and retailer, eye doctors have an
inherent conflict of interest which makes them more likely to prescribe
lenses that restrict competition and maximize profits.
During nearly seven years of litigation, over 200 depositions, 45
motions for summary judgment, a docket sheet with over 1,400 entries and
five weeks of trial before a jury, no evidence surfaced to demonstrate
any consumer benefit resulting from limiting distribution of contact
lenses only to eye doctors. In fact, the evidence indicated that
"doctors only" lenses run counter to the health interests of consumers.
Easier access to, and lower prices for, contact lenses encourage
patients to replace their lenses more frequently.
To settle this litigation, the named manufacturers agreed to sell
their lenses in a commercially reasonable and non-discriminatory manner
to mail order, Internet, pharmacies, and other retailers not affiliated
with an eye doctor. With these consent decrees in force, competition
has flourished and consumers have benefited from lower prices and more
choices.
While these consent decrees were a significant victory for consumers,
litigation alone cannot address all threats to competition in the
contact lens market. Litigation is particularly ineffective in
addressing the fundamental structural problem in the contact lens
industry -- doctors selling the lenses they prescribe.
Congress attempted to regulate this inherent conflict of interest in
passing the FCLCA. However, the competitive and consumer protection
benefits of the FCLCA are currently at risk.
Since passage of the FCLCA, certain manufacturers have engaged in an
aggressive effort to entice eye doctors to prescribe patients lenses
only available at the doctor�s own store. The attorneys general are
concerned that, unless all manufacturers abandon these restrictive
distribution policies, the effect will be to harm consumers.
Consumers will pay more for contact lenses and may suffer adverse
health consequences if higher prices cause them to replace lenses
less frequently than recommended.
Mr. Chairman, H.R. 5762 is necessary to ensure that all contact lens
wearers enjoy the benefits of the FCLCA and the attorneys general
litigation. The legislation effectively codifies the consent decrees
to prevent manufacturers from engaging in an anti-competitive practice.
This will advance the public interest by promoting competition and
patient safety.
You will likely hear today that H.R. 5762 will compromise patient
health. This argument is baseless, and one more example of the false
health claims that the optometric community has made repeatedly over
the years.
It bears highlighting that, in addition to suing the contact lens
manufacturers, the attorneys general also sued the national associations
of optometry and ophthalmology -- the same groups testifying here today.
Optometry and ophthalmology settled the attorneys general action by
paying fines and agreeing not to make claims that consumers could
suffer adverse health events if they did not buy contact lenses from
their eye doctor.
Specifically, optometry and ophthalmology agree that they:
(a) will not ask or encourage any contact lens manufacturer to refuse
to sell contact lenses to any channel of trade;
(b) will not make an agreement with any manufacturer to restrict the
supply of contact lenses to any channel of trade;
(c) will resist any invitation by any contact lens manufacturer to
enlist the eye doctor�s aid in enforcing any manufacturer�s
distribution policy refusing to sell contact lenses to any channel of
trade; and
(d) will not represent directly or indirectly that increased eye
health risk is inherent in the distribution of replacement disposable
contact lenses by mail order, or pharmacy or drug stores.
I would like to submit these settlement agreements for the record.
Mr. Chairman, in conclusion, Congress should finish the job it started
in passing the FCLCA. H.R. 5762 will ensure that America�s 36 million
contact lens wearers have the freedom to purchase contact lenses from
their chosen supplier, regardless of whether that supplier is
affiliated with an eye doctor.
Thank you for considering these views. I would be happy to answer
any questions that Members of the Subcommittee may have for me.
Mr. Stearns. Thank you.
Mr.�Coon, welcome.
Mr. Coon. Thank you, Mr. Chairman. My name is Jonathan Coon. I am
the CEO of 1-800 Contacts. I started the business in college in 1992,
shortly after I began wearing contact lenses. I just felt like
someone could offer a better price and better service than I
experienced when I got my contact lenses, and as it turns out, I wasn�t
alone. In the last 14 years we have shipped 15 million orders to more
than 5 million customers.
In passing the Fairness to Contact Lens Consumers Act in 2003, this
committee clearly intended that prescriptions be more than just a
piece of paper. The report this committee filed with the FCLCA read,
and I quote, "the consumer�s right to a copy of their contact lens
prescription means nothing unless consumers can fill that prescription
at the business of their choice." And again, that is the report this
committee filed with the FCLCA.
Unfortunately, some manufacturers are offering doctors a way to give
patients a prescription, but prevent them from buying from the business
of their choice. The best illustration of this is the ads that promote
the practice. These are trade ads that are focused at doctors who are
supposed to be focused on the health interests of their patient.
Clearly this is an intent and effort to get around the release of a
prescription. This is an ad on the left paid for by a company called
Ocular Sciences, which is now owned by CooperVision. It says, quote,
"we would get calls for patients from 1-800 Contacts asking us for their
prescription; I wanted to use another strategy to prevent that from
happening." So the strategy best described in another ad, "a lens
that cannot be shopped around." It is interesting that a doctor would
be interested in a lens that cannot be shopped around, but that is
because they not only prescribe lenses, they also want to sell them.
Another ad is even more explicit. It says since ProClear lenses are
only available through your practice, you will get what you are
looking for, increased patient loyalty and greater profitability. And
that ad bears the headline, "Let�s see, you will make more money." And
again, that ad is directed to doctors. There is a new entrant that has
entered this market recently, and they have adopted the same strategy.
In fact, in the last 5 years, no new manufacturer has entered this
market with anything other than a purely doctors-only strategy.
The intent of Congress and doctors-only lenses are clearly at odds
with each other. The purpose of the law was to allow consumers to
choose; the purpose of this practice is to deny them that choice.
This doesn�t happen with drugs. No one goes to Walgreen�s only to
find out they can�t get their prescription filled because the doctor
prescribed something that only the doctor can sell. This committee
got it right in the report language, "the prescription means nothing
if the patient can�t fill it at the business of their choice."
In granting consumers the right to choose where they purchase, Congress
was also very clear that third party sellers must verify prescriptions,
wait 8 hours to hear from the doctor, cancel an order if the eye doctor
tells them the prescription is invalid.
Verification is the single most important thing our company does. Since
the law went into effect in early 2004, we have processed and verified
prescriptions for 5 million orders. We have canceled 861,000 of those
orders. An average order is around a hundred dollars. A single
violation of the FCLCA bears a fine of $11,000. There is nothing to be
gained by anything less than full and unconditional compliance with the
Act.
We employ 50 people in our verification department and have made
substantial investment in redundant phone systems, databases, and
hardware. We keep detailed records of every verification and every
response from the doctor. We go beyond what is required by the law and
beyond what is required by the FTC rule. That is why we are able to
respond this morning with the facts about allegations that I learned
for the first time last night as I read Dr. Curtis� written testimony.
Dr. Curtis claims that 1-800 Contacts sold lenses with no verification
or contact with his office on 17 of the 18 orders he supposedly tracked.
We keep detailed records and recordings of every single order and
every interaction with the doctor. Our records with Dr. Curtis� office
show that in the last 12 months we have received 117 orders from Dr.
Curtis� patients. We have made 192 phone calls to Dr. Curtis� office
and sent 3 faxes. We spent a total of 8 hours and 32 minutes on the
phone with his staff. For each of these 192 phone calls we have a
separate digital recording of the person in Dr. Curtis� office
answering the phone, so we know who we spoke with.
After navigating Dr. Curtis� automated phone system that answered most
of our calls, our agents spoke predominantly with Gail, Kim, Lori, and
Liz. I ask to submit for the record a log of all of our communications
with Dr. Curtis� office for the last 12 months.
Mr. Stearns. By unanimous consent, so ordered.
[The information follows:]
Mr. Coon. Thank you, Mr. Chairman. I would also add that if the
committee has interest we can also provide copies of our phone bill
from Verizon that will match and verify every call, time, and the
duration of each of these 192 phone calls to Dr. Curtis� office.
Despite this and other unsupported claims that have been leveled
against our company, we want to have a good relationship with eye
doctors, and in fact do with most doctors and with most manufacturers.
The reason for the conflict today is the same as when I testified
before this committee in 2003, it is that eye doctors sell what they
prescribe and they compete with anyone else trying to fill that
prescription. That inherent conflict of interest either has to be
eliminated or managed in order to ensure that 38 million contact
lens wearers don�t get caught in the middle.
That said, I believe there is actually more common ground here than
it might appear from everyone�s written testimony. I thank the
committee for your time, and I look forward to your questions.
[The prepared statement of Mr. Coon follows:]
Prepared Statement of Jonathan C. Coon, Chairman and Chief Executive
Officer, 1-800 Contacts, Inc.
Mr. Chairman and Members of the Subcommittee, my name is Jonathan Coon
and I am the CEO of 1-800 CONTACTS. Our company is the largest direct
marketer of prescription contact lenses, serving approximately two
million consumers.
I appreciate the opportunity to appear before the Subcommittee today.
I am grateful to the Subcommittee for investing time on the important
issues facing America�s 38 million contact lens wearers.
Our company believes that contact lens wearers should be afforded two
basic consumer protections:
Every contact lens wearer holding a valid prescription should have the
freedom to choose where her prescription is filled.
Every contact lens wearer should feel confident that her prescription
is based on health needs and not influenced by the prescriber�s
financial interests.
Unlike most pharmaceuticals, contact lenses are regulated medical
products that are sold by the prescriber, creating an inherent conflict
of interest. Congress reviewed this conflict in detail in the 2003
hearings held before the passage of the Fairness to Contact Lens
Consumers Act (FCLCA). In the FCLCA report, Congress recognized this
conflict of interest when this committee concluded:
"Consumers continue to face a difficult time getting prescriptions
filled by alternative third party sellers due to prescription
verification obstacles. Unlike medical doctors who are prohibited
from selling the drugs they prescribe, eye doctors and optometrists
("doctors") are able to fill the contact lens prescriptions they
write. This sets up an inherent conflict of interest because third
party sellers are forced to compete for the sale of lenses with the
individual who is writing the prescription."
The committee recommended, and Congress agreed, that based on an
"unusually high number of consumer complaints in states that rely on
active verification schemes" that "a passive verification system
ensures that consumers are not caught in the competitive tug-of-war
between doctors and third party sellers for the sale of contact lenses."
Congress understood in passing the FCLCA that having a copy of the
prescription is meaningless if the retailer chosen by the consumer
cannot get the prescription verified. For example, when consumers
seek to refill their prescriptions for medicines, it�s generally a
simple process -- the consumer goes to his or her local pharmacy, the
pharmacy calls into the prescribing physician and the physician�s
office then promptly confirms, corrects or rejects the refill. That�s
the way it should work with refills of contact lens prescriptions --
but in most cases it does not.
Since eye care professionals both prescribe and sell contact lenses,
verification amounts to the consumer asking their doctor�s permission
to buy lenses from a competitor. Before the FCLCA, these verification
requests were ignored more than half the time. After the FCLCA, these
verification requests are still ignored more than half the time, but
this lack of response does not prevent the consumer from buying from
the doctor�s competitor. Several states examined this issue closely
and some enacted different verification systems before Congress
enacting the FCLCA and created a federal standard. The state laws at
the time fell into basically two different verification systems.
1. "Positive verification" requires a competing seller to wait
indefinitely for the eye doctor, who sells contacts, to respond to the
verification request. The seller must wait until a response is
received and the patient has no recourse other than to complain when
the doctor refuses to grant permission to a competitor to make a sale.
This method has proven to result in a very large number of consumer
complaints.
2. "Presumed verification" defines how long an eye doctor has to
respond to a verification request when a consumer chooses to purchase
from a seller that is not an eye doctor and prevents a doctor from
blocking access to competitors by simply ignoring the request. This
system requires a seller to verify the prescription directly with the
prescriber and gives the prescriber a reasonable time period in which
to reply. If the prescriber tells the seller within that time period
that the prescription is expired or invalid, the seller must cancel the
order. If the prescriber does not respond to the seller within the
defined time period, the seller can assume the prescription information
is correct and fill the order.
Presumed verification was described by the FTC at the 2003 hearing as
a self enforcing system because doctors have a financial interest to
enforce the law and prevent invalid prescriptions from being filled by
competitors. However, unlike a positive verification system in which
the doctor�s refusal to respond can stop a patient�s order from a third
party, a presumed verification system requires the doctor to actively
do something to cancel the patient�s order.
A positive, or active verification system can work where the prescriber
has no conflict of interest and does not compete with others filling the
prescription. The verification process, communication methods, and
time frame for response between medical doctors and pharmacies are not
defined. This system works despite the lack of defined rules because
medical doctors do not sell drugs and pharmacies do not prescribe. The
roles of medical doctors and pharmacies are defined and limited in such
a way that cooperation is not a problem. Pharmacies are not asking a
competitor for permission to fill an order. Medical doctors are not
losing income by cooperating with pharmacies.
Where positive verification systems have been implemented for the sale
of replacement contact lenses, the result has been widespread consumer
dissatisfaction. Thousands of consumers waited so long for a
verification response that more than half ultimately canceled their
orders. Most of these customers give up and went back to the doctor
to purchase lenses. Many just kept wearing their old lenses.
In just Texas alone, where an indefinite time period system had been
in place for more than a year, our company canceled more than 40,000
customer orders solely for non-response by the eye doctor. Consumers
filed more than 4,300 hand-signed complaints with the optometry board.
Additional complaints were filed by consumer groups. The optometry
board (made up of optometrists) took no action on any of the consumer
complaints. The result was an unmitigated disaster for Texas
consumers with more than half of all third party seller orders
canceled simply because the eye doctor never responded - in any time
period.
A presumed verification system was first called for by the Federal
Trade Commission ("FTC") staff in its comments before the Connecticut
Opticians Board in 2002. FTC proposed that the right way to deal
with the conflict of interest of doctors selling what they prescribe
and the competitive relationship between eye doctors and third party
sellers was a presumed or passive verification system. The FTC
stated that the right verification system for this market was one in
which "a valid prescription, communicated to the seller by the patient,
can be presumed verified if the doctor is contacted and given
sufficient opportunity to correct any errors."
This compromise system was enacted into law in California in 2002. The
system was developed with the involvement of ophthalmologists,
optometrists, consumer groups, the California Medical Board, and the
California Optometric Association. In their written statement
supporting the California bill, the California Optometric Association
concluded that the law "supports safe and responsible patient access
to contact lens prescriptions" and "strikes a reasonable balance
between access and accountability." Our Company processed more than
several hundred thousand orders under this system before the FCLCA was
enacted and did so without any complaints being received by the medical
board from consumers, online sellers, or eye doctors.
Based on the above mentioned testimony, evidence and hearings, the FCLCA
was enacted and the passive verification system has been the law of the
land since December of 2003. To date there has been no meaningful
evidence that the law is not working or that passive verification is
not the right system to manage the conflict of interest of a doctor
selling what they prescribe. Although some on today�s panel will
probably make unsubstantiated claims to the contrary, Congress did not
make a mistake in adopting a passive verification system as there is
no evidence to support their assertion that this provision of the law
should be repealed and replaced with the already tested and failed
positive verification system. Instead, the verification system under
the FCLCA has allowed millions of consumers the right to purchase their
contact lenses at the retailer of their choice. However, a loophole
to the FCLCA has surfaced which threatens to erase all the freedoms
Congress gave to consumers as part of the Act.
Unlike pharmaceuticals, contact lens prescriptions are brand specific
-- with no generic lenses and no substitution allowed.
Once prescribed a specific lens, federal law only allows the patient
to be sold the "same contact lens . . . manufactured by the same
company" (15 U.S.C. 7603(f)). Unlike pharmaceuticals, the prescriber
can specify a lens sold only to doctors and effectively force the
patient to purchase lenses at the doctor�s store or through an
affiliated retailer. Trade advertisements promise these benefits to
doctors who prescribe restricted lenses.
To provide patients with basic consumer protections, the FCLCA seeks
to provide consumers with the right to purchase from any retailer,
including those not affiliated with a prescribing doctor. The
Committee report accompanying the FCLCA states that the law "allows
consumers to purchase contact lenses from the provider of their
choice."
The FCLCA has had many positive impacts on the marketplace, and has
provided many consumers with real benefit. Despite the law�s
fundamental goals, patients prescribed so-called "doctors only"
lenses continue to be locked into buying lenses from the prescribing
doctor or a doctor-affiliated retailer. This loophole allows a doctor
to comply with the FCLCA by releasing the prescription, but avoid the
intent of the law by prescribing a lens that is only available from a
doctor or an affiliated retailer.
Mr. Chairman, millions of Americans who wear contact lenses have no
more right to choose where they buy lenses today than before the FCLCA
was passed. We agree with the Committee�s report which states that,
"The consumer�s right to a copy of their contact lens prescription
means nothing unless consumers can fill that prescription at the
business of their choice."
"Doctors only" lenses are marketed to eye doctors on their ability to
increase prescriber profits by limiting competition and compelling
patients to return to prescribers for lens purchases. A brochure for
Extreme H2O lenses promises doctors "a lens that cannot be shopped
around" and "a lens that will retain your replacement business."
An ad for ProClear lenses entices the doctor with its headline, "Let�s
see. You�ll make more money." The ad goes on to explain to the doctor
that "since ProClear Compatibles are only available through your
practice, you�ll get what you�re looking for: Increased patient
loyalty and greater profitability."
This is the same scheme that 32 state attorneys general sought to stop
in bringing multi-district litigation (MDL 1030) in 1997. At the time,
100 percent of the market was "doctors only," with all three major
manufacturers maintaining a "doctors only" distribution policy. The
lawsuit led to consent decrees with the then three largest
manufacturers -- Johnson & Johnson, CIBA Vision, and Bausch and
Lomb -- requiring them to abandon their "doctors only" policies and
sell to non-prescribers on the same terms as prescribers.
H.R. 5762, introduced by Congressman Lee Terry, is necessary to assure
that all consumers are afforded the protections of these consent decrees
and those promised by the FCLCA. The bill codifies the consent decrees,
under which 80 percent of all contact lenses have been successfully and
efficiently sold since 2001.
Like the consent decrees it seeks to codify, H.R. 5762 would protect
consumers and promote competition and would remove the ability of any
manufacturer to entice doctors to with offers of increased profits by
restricting consumer choice.
Thirty-nine state attorneys general said it best in endorsing the
legislation:
"We are very concerned that, unless all manufacturers abandon these
restrictive distribution policies, the effect will be to harm
consumers. Consumers will pay higher prices to purchase replacement
lenses and may suffer adverse health consequences if the higher prices
cause them to replace their lenses less frequently than recommended.
Because of these risks, the restrictive distribution policies are
undermining both the FCLCA and the MDL 1030 settlements."
Despite the fact that manufacturers market "doctors only" lenses on
their utility in restricting competition and locking in consumers, a
February 2005 FTC report concluded that the marketing practice does
not appear to harm competition and consumers. The FTC study is flawed
and best characterized as a snapshot in time of a contact lens market
that no longer exists. The reason the FTC study found competition for
most lenses is because 32 states sued to stop the three largest
manufacturers (at the time) from colluding with eye doctors. H.R. 5762
seeks to codify these settlements before they expire in November of this
year. The settlements have worked and have created a competitive
market for the lenses made by the companies that are subject to it.
The fundamental flaw in the FTC report is its failure to adequately
account for the two defining characteristics of the contact lens
market -- contact lenses are prescription devices and that eye doctors
sell the lenses they prescribe.
We do not dispute the FTC economist�s view that a manufacturer offering
a retailer increased profits or exclusivity to promote the
manufacturer�s over-the-counter products is a sound and reasonable
marketing strategy for the manufacturer. However, 39 state attorneys
general do see a problem for consumers when manufacturers offer doctors
increased profits to promote and prescribe a prescription product.
The FTC�s analysis ignores the fact that Federal law requires that a
contact lens prescription is brand specific and must be filled with the
same lens made by the same company as that specified by the doctor.
Once a patient pays to be fitted and receives a prescription, if the
lens is not available from her chosen retailer, there is no opportunity
for the patient to choose another lens made by another manufacturer
without paying for another exam and contact lens fitting.
The FTC report is based on the assumption that Internet sellers denied
direct access by the manufacture to "doctors only" lenses could obtain
these lenses on the so-called "grey" market. Since the report was
issued, the "grey" market for "doctors only" lenses has dried up.
Every week, our company turns away thousands of consumers with valid
prescriptions because we are not able to obtain the "doctors only"
lenses prescribed by their doctor.
It is important to note that CooperVision assures doctors that its
lenses are not available from non-prescribing retailers while at the
same time assuring the FTC and Congress that its lenses are widely
available from non-prescriber affiliated retailers.
CooperVision suggests that H.R. 5762 will adversely affect patient
safety by requiring manufacturers to sell "doctors only" lenses to
retailers not affiliated with eye doctors. The American Optometric
Association (AOA) repeatedly made this same unsubstantiated claim in
the multi-district lawsuit -- in which it was a defendant. This
argument was shown to be without merit. In fact, the AOA�s
settlement, Section 2(h) reads:
"The AOA shall not represent directly or indirectly that the incidence
or likelihood of eye health problems arising from the use of
replacement disposable contact lenses is affected by or causally related
to the channel of trade from which the buyer obtains such lenses."
In addition, the coordinated effort between CooperVision and the AOA
appears to run afoul of the AOA�s settlement, which clearly states in
Section 2(e):
"The AOA will resist any invitation by any contact lens manufacturer
to enlist the AOA�s aid in enforcing any manufacturer�s distribution
policy refusing to sell contact lenses to any channels of trade."
CooperVision�s president, Greg Fryling, is quoted in his company�s
hometown newspaper, The Rochester Democrat and Chronicle, July 25th,
2006:
"What we are also trying to do is push this more to optometrists and
the American Optometric Association and have them present the case,"
Fryling said. "In our view, it�s as much their battle as it is our
battle."
It is odd for a manufacturer to publicly invite doctors to defend the
manufacturer�s restrictive distribution policy. The AOA appears to
agree, and sent a letter to CooperVision (attached) regarding "an
immediate concern of the American Optometric Association" namely,
"marketing materials for contact lenses that emphasize factors
subordinate to what is clinically best for the health of the
patient�s eyes and vision" and asking CooperVision to "review your
company�s marketing and advertising policies." Even the AOA
recognizes that it cannot openly support CooperVision�s offer of
financial incentives to doctors to promote and prescribe CooperVision
lenses.
Medical doctors know that exclusive distribution deals between doctors
and manufacturers are wrong. The American Medical Association code of
ethics, 8.063, section 4 states:
"Physicians should not participate in exclusive distributorship of
health-related products which are available only through physician�s
offices. Physicians should encourage manufacturers to make products of
established benefit more widely accessible to patients than exclusive
distribution mechanisms will allow."
Despite their settlement with 32 states and the AMA code, the AOA is
opposing a bill that would eliminate exclusive distributorships between
eye doctors and manufacturers and protect consumer choice.
The AOA stated in a January 31, 2006 letter that "the AOA strongly
endorses the idea that patients should be able to purchase their contact
lenses from whomever they wish." And yet the AOA "strongly opposes" a
bill which would protect the patient�s right to do so. The bill does
not limit what a doctor can prescribe for any patient. The bill does
not limit the doctor�s ability to sell any lens to any patient. The
AOA cannot have it both ways. If they oppose a bill that has no affect
on doctors and protects patient choice, then they oppose patient choice.
We ask the Committee to reaffirm the intent of the Fairness to Contact
Lens Consumers Act - to allow consumers to fill their prescriptions for
contacts where they choose. Thirty nine state attorneys general have
signed a letter expressing the urgent need for this legislation in
order to ensure the consumer protection intended by the FCLCA and the
32 state settlements (MDL 1030). Please pass HR 5762 and close this
loophole before the settlements expire November 1st.
Mr. Chairman, thank you for the opportunity to testify. I would be
pleased to answer any questions you may have.
Mr. Stearns. Thank you.
Mr. Fryling, welcome.
Mr. Fryling. Mr. Chairman, and distinguished members of the
subcommittee. My name is Gregory Fryling. I am the Chief Operating
Officer of CooperVision, which is the manufacturer of soft contact
lenses based in Fairport, New York.
Let me begin by making a few central points about the nature of the
competition in our industry. First, the contact lens is one of the
most competitive pro consumer industries in the country. Quality has
steadily gone up, and prices, now less than 50 cents per day, have
steadily gone down over the past decade.
Second, the contact lens sales at the manufacturing levels are
characterized by extremely vigorous competition. We regularly
negotiate distribution contracts under intense pressure from our
competitors. The result is a wide variety of practices that benefits
competition and consumers, such as private labels, discounts, special
promotions.
Third, CooperVision has been successful because of our high quality
products and our policy of choosing distributors carefully. Other
major manufacturers spend a significant amount of money on national
advertising to influence consumers, we do not. Consequently, we sell
many of our products at lower prices. Our private label programs also
allow us to compete against the branded competitors, and these lenses
are usually sold at lower prices than the branded product. This
competitive dynamic is good for the consumer.
Fourth, like other manufacturers, we choose distributors that preserve
the reputation and image of our products for consumers. A Federal law
that tends to force CooperVision to sell to all persons in a certain
broad category would destroy this ability to control the quality and
ensure service.
Finally, some have argued that legal modest restrictions on the
distribution have undercut Congress� goal in passing the Fairness to
Contact Lens Consumers Act. This claim is far off the mark. The FTC
conducted an exhaustive study of the contact lens distribution and
found that the evidence does not support the conclusion that these
restrictions on the distribution harms competition and consumers.
The premise that there is a problem that needs to be fixed in the
contact lens is simply not supported by facts, and I am hoping later
on that I can give you specific facts that support this rather than
assumptions that were being presented earlier.
I want to also address claims that have been made about CooperVision
distribution practices, particularly the claim that one popular
family of CooperVision lens, ProClear, is sold only to doctors. This
claim is false. In addition to sales to prescribers, ProClear is sold
to over 30 retail chains, including Wal-Mart, Sears, Costco, and many
others which offer lenses to consumers at low prices at over 10,000
convenient locations.
The FTC looked specifically at ProClear Compatibles and found that the
data does not support an inference that manufacturing limited
distribution strategy affects the pricing of ProClear Compatibles.
CooperVision has been hesitant to sell ProClear lenses to Internet
suppliers and the retail outlets that have no relations with
prescribers. ProClear has a special FDA approval for late day dryness,
and we are very anxious to preserve the reputation of these lenses for
high quality.
We have also had the unfortunate experience of sales of counterfeit
ProClear lenses on the Internet by 1-800 Contacts. I am not saying
that 1-800 Contacts knew these lenses were counterfeit, but they
endangered patients� eye health and risked harm to the reputation of
this product and the entire company.
Despite this experience, we have recently reviewed our policy of
selling ProClear to Internet suppliers and have decided to offer
these lenses to certain Internet suppliers, provided that certain
assurance of quality and services can be met. For example, we have
made an offer to sell these lenses to 1-800 Contacts in the near
future, and we are currently in negotiations over this contract.
Let me comment on an important issue of patient safety.
As you know, contact lenses are a medical device regulated by the
Food and Drug Administration, and manufacturers must monitor sales
and take action if patient safety issues arise. For example, Bausch
& Lomb recently recalled a contact lens solution brand due to the risk
of fungal infection. And recently in France, CooperVision and Johnson
& Johnson worked together with the health and legal authority to stop
the sale of counterfeit contact lenses and to trace their source.
Our ability to choose high quality distributors is critical to
preventing patient safety problems and to effectively remedy problems
that may arise.
I understand that this hearing does not specifically focus on the bill,
H.R. 5762, but I would like to comment briefly on the problem with this
undoubtedly well-intentioned bill.
A fundamental problem is the attempt to impose intrusive regulations on
distribution decisions that have historically been left to the free
market. While antitrust laws bar manufacturing from colluding in their
choice of distributors, neither the Federal government nor the State
governments have required manufacturers to sell to everyone. To do
so would surely hurt consumers by undermining quality and service.
Second, the bill undercuts competition. The bill requires
manufacturers to sell to everyone in several categories in a
nondiscriminatory manner. I cannot stress enough that a law
barring discrimination is harmful to competition by potentially
foreclosing competitive practices that are followed widely in our
industry and many others, including volume discounts, private label
arrangement, special promotion, individually negotiated discounts,
and so on.
Third, the bill creates regulatory chaos. Manufacturers are required
to sell to every mail order company, Internet retailer, pharmacies,
buying clubs, department stores, or mass merchandising outlets. None
of these terms is defined. Confusion and arbitrary enforcement would
be the inevitable result.
Ultimately, bill 5762 represents a solution to a problem that does
not exist. It is no surprise that of all the States to have
considered similar legislation at 1-800�s urging, only Utah, 1-800�s
home State, has passed the bill. The House rejected 1-800 proposed
legislation in 2005 when it was included in the Senate appropriation
measure, and I urge the House to do so again.
Thank you for holding this important hearing and allowing CooperVision
to participate.
[The prepared statement of Mr. Fryling follows:]
Prepared Statement of Gregory A. Fryling, Chief Operating Officer,
CooperVision, Inc.
Mr. Chairman and Distinguished Members of the Subcommittee:
My name is Gregory Fryling. I am Chief Operating Officer of
CooperVision, Inc., which is a manufacturer of soft contact lenses
based in Fairport, New York. CooperVision sells contact lenses
throughout the United States and in many other countries. Thank you
for this opportunity to discuss possible federal regulation of contact
lens distribution.
The Contact Lens Industry
Let me begin by making four central points about the nature of
competition in our industry. First, the contact lens industry is one
of the most competitive, pro-consumer industries in the country.
Quality has steadily gone up and overall wholesale prices have gone
down over the past decade. There are literally hundreds of different
lenses available to consumers, and the technology for correcting all
kinds of vision problems with comfortable, long-wearing lenses has
continued to improve.
Second, contact lens sales at the manufacturing level is characterized
by extremely vigorous competition. We regularly negotiate distribution
contracts under intense pressure from our competitors. These
negotiations take place, as they should, behind closed doors so that
there is no opportunity for collusion. The result is a wide variety of
practices that benefit competition and consumers, such as private
labels, discounts, special promotions, and other common practices that
economists and antitrust lawyers will recognize are the signposts of
a vigorously competitive market. For example, the major proponent of
legislation to regulate contact lens distribution, 1-800 Contacts,
has recognized the values of private labels and uses them widely in
its sales in Europe. That is good for consumers in Europe, but it
seems 1-800 Contacts wants to restrict these practices in the United
States.
Third, there are four major contact lens manufacturers in the United
States and a number of smaller ones, including some foreign firms
that sell into the U.S.� We started as a small company competing
against the large companies.� CooperVision has been successful because
of our high-quality products and our policy of choosing distributors
carefully.� The other major manufacturers spend significant amounts
on national advertising to consumers. CooperVision does not.
Consequently, we sell many of our products at lower prices.� Our
private label program also allows us to compete against the branded
competitors, and these lenses are usually sold at lower prices than
the branded products.� This competitive dynamic is good for consumers.
Fourth, we want to sell as many lenses as possible, but we also want to
ensure that our distributors provide high quality service, comply with
all federal and state laws, and preserve the reputation of our lenses
for excellent quality at a great price. Like other manufacturers, we
choose distributors that preserve the reputation and image of our
product for consumers. A federal law that attempts to force
CooperVision to sell to all persons in several broad categories would
destroy this ability to control quality and ensure service. It will
hurt consumers, not help them.
Finally, some have argued that legal, modest restrictions on
distribution have somehow undercut Congress�s goals in passing the
Fairness to Contact Lens Consumers Act. That claim is far off the
mark. The FCLCA and the FTC�s rule implementing it are good for
consumers and CooperVision strongly supports them. But there is no
indication in the text of the law or the legislative history that
Congress intended to force manufacturers to distribute lenses to
anyone who wants to be a distributor. That kind of intrusive
regulation is completely unprecedented in federal or state law, with
the sole exception of Utah, which coincidentally happens to be the
home state of 1-800 Contacts.
The question is whether restrictions on distribution so limit choice
that consumers are hurt. The answer to that is clearly no. In response
to the claim by 1-800 Contacts that these restrictions harm consumers,
the FTC conducted an exhaustive study of contact lens distribution. It
expressly rejected this argument in a study released in February 2005.
The FTC found that the evidence does "not support the conclusion that
these restrictions on distribution harm competition and consumers.
CooperVision�s Distribution Practices
A number of claims have been made about CooperVision�s
distribution practices, particularly the claim that one popular family
of CooperVision�s lenses, Proclear, is sold only to doctors. The
suggestion is that consumers have nowhere to go after they get a
prescription for Proclear and, consequently, the prescribing
optometrist or ophthalmologist can jack up the price. This is supposed
to be a "loophole" in the FCLCA.
This claim bears no relationship to the facts. Proclear is sold
to over 30 retail chains, including Wal-Mart, Sears, Costco and many
others, which make up over 10,000 retail outlets. These retail chains
are shown in the Attachment to my testimony. These chains are
convenient to consumers, offer low prices, and have the ability to drive
hard bargains with manufacturers.
In response to complaints from 1-800 Contacts, the FTC looked
specifically at Proclear Compatibles, the CooperVision contact lens
that 1-800 Contacts has repeatedly identified as a "limited distribution
lens." The FTC report found that CooperVision or its authorized
distributors sell Proclear Compatibles to retailers ranging from
independent eye care professionals, to optical chains, to wholesale
clubs, and to mass merchandisers. An FTC sample found these lenses
were available to consumers in 86 percent of offline outlets sampled
and 88 percent of pure online outlets sampled. Most importantly, the
FTC found that whatever modest restrictions are placed on the
distribution of these lenses do not harm competition or consumers. The
FTC found that the data "do not support an inference that the
manufacturer�s limited distribution strategy affects the pricing of
Proclear Compatibles.
It is true that CooperVision has historically been hesitant to
sell Proclear lenses to Internet suppliers and to retail outlets that
have no relationship with prescribers. Proclear has a special FDA
approval for late-day dryness, which is a medical condition�that
requires�identification by�qualified�eye care professional when
the prescription is written, and we are very anxious to preserve the
reputation of these lenses for high quality. Internet suppliers
present potential concerns since they may have no optician on staff
for any consultation and there has been a record of some Internet
companies failing to actively review prescriptions. In addition, we
have had an unfortunate experience of counterfeit sales of Proclear by
at least one major Internet supplier, 1-800 Contacts. I am not saying
that 1-800 Contacts knew these lenses were counterfeit, but these sales
endangered patients� eye health and had the potential to harm
drastically the reputation of both Proclear and CooperVision itself. We
have recently reviewed our policy of selling Proclear to Internet
suppliers and�are considering providing�these lenses to�approved
Internet suppliers, provided that certain�conditions can be met,
including�assurances of quality and service. �For example, we have�made
an offer to�1-800 Contacts to begin selling Proclear lenses to them�in
the near future�and we are currently in negotiations over a contract.
Patient Safety
It is essential that contact lens manufacturers, like
manufacturers in other industries, retain the ability to choose
reputable distributors that have ethical, efficient, and safe
business practices. This allows manufacturers to protect and promote
quality and insure the reputation of their products. It is important
to remember that contact lenses are medical devices regulated by the
Food and Drug Administration, and manufacturers must monitor sales and
take action if a patient safety issue arises. For example, Bausch &
Lomb recently recalled a contact lens solution brand due to a risk of
fungal infection. And recently in France, CooperVision and Johnson &
Johnson worked together with health and legal authorities to stop the
sale of counterfeit contact lenses and to trace their source.
Therefore, the ability to choose high-quality distributors is critical
to preventing patient safety problems and to effectively remedying
problems that might arise.
The Problems with H.R. 5762
I understand that this hearing does not specifically focus on H.R.
5762, as introduced by Congressman Terry. However, since that is the
only bill addressing contact lens distribution that has been introduced
in the House, I would like to discuss briefly some of the problems with
this undoubtedly well-intentioned bill.
The fundamental flaw in the bill is its attempt to impose intrusive
regulation on distribution decisions that have historically been left to
the free market. The antitrust laws bar manufacturers from colluding in
their choice of distributors. However, neither the federal government
nor state governments have required manufacturers to sell to anyone who
wants to buy their product. For example, there is no law requiring
automobile manufacturers to sell their cars to anyone who wants to own
a car dealership even though many consumers would like to have a
dealership near their home or purchase a car on the Internet. Taking
away the right of manufacturers to choose distributors would represent
a drastic and harmful change in the legal environment.
Second, H.R. 5762 will undercut competition. The bill requires
manufacturers to sell to everyone in several distribution categories
and to treat them in a "commercially reasonable" and "nondiscriminatory
manner." I cannot stress enough that a law barring "discrimination"
in sales is harmful to competition by potentially foreclosing
competitive practices that are now followed widely in our industry and
many others, including volume discounts, private label arrangements,
special promotions, individually negotiated discounts, and so on.
The Robinson-Patman Act already prohibits certain types of price
discrimination, but it has a number of defenses and exceptions,
including, for example, a meeting competition defense. Most
antitrust lawyers and economists will tell you that Congress did no
favors for consumers by passing the Robinson-Patman Act, but at least
manufacturers can live with it because of the available defenses.
H.R. 5762 contains none of these. The result is one the most highly
regulatory and intrusive proposals one can imagine. If a
manufacturer refuses to sell to anyone in these categories, it is
subject to civil penalties. If a manufacturer tries to negotiate a
discount with a customer, other retailers can claim "discrimination."
If a manufacturer tries to sell a lens under a private label to a
discount chain -- a common industry practice that lowers prices to
consumers -- other potential distributors can also claim
"discrimination." As I discussed earlier, these practices greatly
benefit consumers and competition.
Third, the bill is a recipe for regulatory chaos.
Manufacturers are required to sell to every "mail order company,
Internet retailer, pharmacy, buying club, department store, or mass
merchandise outlet." None of these terms is defined. Wal-Mart is
certainly covered by the bill as a "mass merchandise outlet," but it
is not clear whether a small convenience store qualifies. Similarly,
does a "buying club" that is set up by a few friends qualify for
protection under the bill? Does everyone who sets ups an Internet
website and wants to sell lenses qualify as an "Internet retailer"?
If Congress mandates this intrusive, poorly thought-out regulatory
program, confusion and arbitrary enforcement are the inevitable result.
Finally, H.R. 5762 will promote litigation. If a manufacturer
turns down a retailer who wants to sell its lenses, the retailer can
demand that the FTC enforce these provisions by bringing an action
against a manufacturer. The FTC will then have to decide whether to
investigate these charges. In states where state law allows a
private action based on an alleged violation of FTC standards, a
disappointed retailer may file a lawsuit alleging that a manufacturer
has failed to sell lenses to it. The courts will then have to police
distribution decisions that have historically been left to
manufacturers� business judgment. Ultimately, this confusion and
potential litigation could prevent some lenses from being available
to consumers.
Conclusion
In conclusion, this bill is bad for consumers and competition
by reducing the quality of service, by reducing price competition, and
by creating a regulatory nightmare that will promote litigation. It
would force the FTC to implement a burdensome and costly regulatory
program and to become involved in policing decisions that have
historically been left to the free market.
Ultimately, H.R. 5762 represents a solution to a problem that
does not exist. It is no surprise that of all the states to have
considered similar legislation at 1-800�s urging, only Utah 1-800�s
home state-passed the bill. The FTC has already rejected 1-800�s
arguments. Former senior FTC officials and economic experts have
concluded that the legislation pushed by 1-800 at the federal level
would "likely lead to lower quality service and less promotional
activity and potentially higher prices." And the House already
rejected 1-800�s proposed legislation in 2005 when it was included
in a Senate Appropriations measure. We urge the House to do the same
this year.
Thank you for holding this important hearing and allowing
CooperVision to participate.
Mr. Stearns. Thank you.
Mr.�Schein, Dr. Schein.
Dr. Schein. Thank you, Chairman Stearns, Ranking Member Schakowsky,
and distinguished committee members for inviting me here to testify
on the Contact Lens Consumer Protection Act.
My name is Oliver Schein. I am Professor of Ophthalmology at the
Wilmer Eye Institute of John Hopkins University School of Medicine. I
am a specialist in corneal diseases, and my research expertise is in
public health and blindness prevention.
Contact lenses are the most commonly used medical devices in the
United States, and I have spent many years studying complications
associated with these contact lenses.
I am here today as a member of the American Academy of Ophthalmology,
the largest national membership association of IMDs. IMDs are medical
doctors who provide comprehensive medical, surgical, and optical care.
More than 90 percent of the 17,000 IMDs in the United States are members
of the Academy of Ophthalmology.
The Contact Lens Consumer Protection Act, H.R. 5762, seeks to amend
Public Law 108-164, the Fairness to Contact Lens Consumers Act. H.R.
5762 requires contact lens manufacturers to make any contact lens they
produce, market, distribute, or sell available to specified alternative
channels of distribution, such as mail order companies, Internet
retailers, pharmacies, buying clubs, department stores, and mass
merchandise outlets.
Under this system, no limited distribution programs could be
implemented by any contact lens manufacturer. As part of the Fairness
to Contact Lens Consumers Act, the FTC was required to examine
consumers� access to contact lens, and the study states, in quotations,
"it does not support the hypothesis that sellers are able to limit
competition or harm consumers by charging higher prices for limited
distribution or private label lenses."
After nearly 2 years of experience with the Contact Lens Rule, the
American Academy of Ophthalmology remains concerned that particular
provisions in the rule place the eye health of America�s more than
30 million contact lens wearers at risk. Of principal concern is the
so-called passive verification of contact lens prescriptions.
Unfortunately, under the current rule, a contact lens prescription
can be dispensed simply because a prescriber fails to communicate with
the seller within 8 business hours after a seller has contacted the
prescriber for the purpose of verifying a contact lens prescription.
This is what we refer to as passive or default contact lens
prescription verification. In practical terms, contract lens sellers
treat a nonresponse from a prescriber in exactly the same manner as
they would a positive response. The contact lens in both instances
are dispensed to the consumer. In other words, the prescription is
dispensed unless the seller is told otherwise within 8 business
hours.
The entire concept of passive or default verification is unprecedented
in medical practice. Prescriptions for pharmaceuticals and all other
medical devices are positively identified. Contact lenses are medical
devices and as such are regulated by the FDA. The Academy believes
that in the interest of patient safety contact lens prescriptions
should also be positively verified prior to being dispensed to the
contact lens wearer. When a contact lens wearer is required to
present a new or current prescription to order contact lenses, it
increases the likelihood that the patient will undergo an ophthalmic
evaluation by an eye care professional. This in turn increases the
likelihood of compliance with appropriate hygiene protocols.
It is critical that all contact lens wearers receive professional eye
care on a regular basis, at the very least to reinforce good contact
lens hygiene practices and for early detection and prevention of
adverse events.
Mr. Chairman, under the current Contact Lens Rule, the potential for
serious sight threatening ocular injury occurring as a direct result
of passive verification of contact lens prescriptions is significant
and real. In fact, the leading cause of consumer product related
trauma is in fact the contact lens. The responsible and ethical
contact lens practitioner endeavors to optimize the safety and comfort
of his or her patients by first evaluating the patient, fitting the
lenses, and then managing the patient�s contact lens wear.
Accordingly, ongoing periodic evaluations after the initial
prescription are very important to the patient�s overall eye health.
However, because patients can obtain replacement lenses so easily
from online providers, they often neglect follow-up examination.
One of my colleagues recently reported that a 45-year-old patient
had his contact lenses dispensed by a contact lens seller for 3 years
without an eye examination. The patient presented in August 2005 with
a severe bacterial corneal ulcer requiring a 3-day hospitalization.
Nine months later the corneal scars still exists with diminished visual
acuity to 20/30.
As recently as last week I treated a college student in Baltimore with
a severe contact lens related keratitis. She obtains her contact lenses
from Internet sources and has not had regular eye care in several years.
When I investigated her contact lens hygiene practices, I learned that
she has used the same small bottle of cleaning solution for more than
3 years. Whenever it approaches being empty, she simply refills it
from a larger bottle. The same bacteria that we harvested from her
cornea were grown from that small bottle.
These sorts of stories are familiar to corneal specialists across the
United States. The implication is not that Internet purchase causes
such infections, it is that Internet purchase reduces the likelihood
of periodic examinations and review of a sound contact lens practice.
Since the Contact Lens Rule went into effect in August of 2004,
dispensers have compiled a long history of verification abuses
that consistently place sales before patient safety.
Extended wear lenses are regulated as Class III devices, which is
the most highly regulated FDA medical device category. Passive or
default verification of contact lens prescriptions undermines the
status of contact lenses as FDA regulated devices and in essence
denigrates the need for a prescription at all. Passive verification
is a flaw in the FCLCA that the American Academy of Ophthalmology
believes lowers the bar for patient safety and opens the door for
prescription verification failures that can ultimately result in
patient harm. Unless the seller has a copy of the prescription or it
has been positively verified by the doctor, any other verification
system seems at odds with the FDA�s medically-based decision to
regulate contact lenses as medical devices. The Academy of
Ophthalmology remains hopeful that Congress will put the ocular
health of America�s contact lens wearers first by reexamining this
practice and occurrence of passive or default contact lens
prescription verification, and then opting to eliminate them
altogether. Thank you.
[The prepared statement of Dr. Schein follows:]
Prepared Statement of Dr. Oliver D. Schein, M.D., M.P.H., Burton E.
Grossman Professor of Ophthalmology, Johns Hopkins University, on
behalf of the American Academy of Ophthalmology
Thank you, Chairman Stearns, ranking member Schakowsky, and
distinguished committee members for inviting me here to testify on the
Contact Lens Consumer Protection Act.
I am Dr. Oliver Schein. I am a Professor of Ophthalmology at
the Wilmer Eye Institute of Johns Hopkins University School of
Medicine. I am a specialist in corneal diseases, and my research
expertise is in public health and blindness prevention. Contact
lenses are the most commonly used medical devices in the United States,
and I have spent many years studying complications associated with
contact lenses. I am here today as a member of the American Academy
of Ophthalmology, the largest national membership association of Eye
M.D.s. Eye M.D.s are medical doctors who provide comprehensive
medical, surgical, and optical eye care. More than 90 percent of
the 17,000 practicing Eye M.D.s in the United States are members of
the Academy
The Contact Lens Consumer Protection Act (H.R. 5762), seeks to
amend Public Law 108-164, the Fairness to Contact Lens Consumers Act
(FCLCA). H.R. 5762 requires contact lens manufacturers to make any
contact lens they produce, market, distribute, or sell available to
specified alternative channels of distribution such as mail order
companies, Internet retailers, pharmacies, buying clubs, department
stores, and mass merchandise outlets. Under this system, no limited
distribution programs could be implemented by any contact lens
manufacturer.
As part of the Fairness to Contact Lens Consumers Act (FCLCA), the
Federal Trade Commission was required to undertake a study-- to examine
the strength of competition in the sale of prescription contact lenses.
The study included these issues:
Incidence of exclusive relationships between prescribers or sellers and
manufacturers and the impact (if any) of such relationships and
competition
Difference between online and offline sellers of contact lenses,
including price, access, and availability
Incidence of, as well as the effect on consumers and competition of
contact lens prescriptions that specified brand name or custom labeled
lenses
Any other issue that has an impact on competition in the sale of
prescription contact lenses
In February of 2005, the Federal Trade Commission submitted the
results of that study to Congress and concluded: "Our examination
of these issues -- exclusive relationships, private label lenses,
and limited distribution lenses -- suggests that such relationships
are not prevalent in the market for contact lenses and are unlikely
to limit competition and harm consumers.
Exclusive relationships are rare; private label lenses, while more
common, still represent a small portion of all sales of soft contact
lenses; and limited distribution policies are not widely used.
Moreover, our inquiry showed that a common, limited distribution lens,
or its private label equivalent, was available from the overwhelming
majority of outlets sampled.
Given that the FCLCA permits sellers to fill prescriptions with
equivalent national brand or private label lenses, consumers have a
number of channels through which to obtain such lenses. In addition,
these relationships may be an efficient way for manufacturers to
provide beneficial incentives to their lens distributors, which in
turn may lead to increased competition among various brands of lenses.
In sum, the theory and the evidence examined do not support the
conclusion that these distribution practices harm competition and
consumers by allowing prescribers to lock in their patients to
supracompetitively priced lenses".
In light of these findings, the American Academy of Ophthalmology
wonders why there would be any need for H.R.5762.
The Fairness to Contact Lens Consumers Act was signed into law on
December 6, 2003 and took effect on February 4, 2004. The Federal
Trade Commission issued its Contact Lens Rule to implement the Act on
June 29, 2004 and the Rule became effective on August 2, 2004. After
nearly two years of experience with the Contact Lens Rule, the American
Academy of Ophthalmology remains concerned that this rule places the
eye health of America�s contact lens wearers at risk.
Of principal concern is the so-called "passive verification" of contact
lens prescriptions. Mr. Chairman, the entire concept of "passive" or
"default" prescription verification is unprecedented in medicine.
Prescriptions for pharmaceuticals and all other medical devices are
positively verified. Contact lenses are medical devices and as such,
are regulated by the FDA. The Academy believes that in the interest of
patient safety, contact lens prescriptions should also be positively
verified prior to being dispensed to the contact lens wearer.
Unfortunately, under the current the rule, a contact lens prescription
can be dispensed simply because a "prescriber fails to communicate with
the seller within eight business hours" after a seller has contacted
the prescriber for the purpose of verifying a contact lens
prescription. In practical terms, contact lens sellers treat a
non-response from a prescriber in exactly the same manner as they
would a positive response; the contact lenses in both instances are
dispensed to the consumer. In other words, the prescription is
dispensed unless the seller is told otherwise.
Prescriptions for pharmaceuticals and all other medical devices are
positively verified and are not dispensed until the prescription is
determined to be valid by the dispenser and in many if not all
instances, the DEA or Medical License number of the prescribing
physician is determined to be legitimate. Mr. Chairman, under the
current Contact Lens Rule, the potential for serious sight threatening
ocular injury occurring as a direct result of the passive verification
of contact lens prescriptions is significant and real. The potential
for injury is real because we know that the leading cause of consumer
product-related ocular trauma is from contact lenses.
There is little doubt that the passive or default verification of
contact lens prescriptions increases the likelihood that expired or
inaccurate prescriptions will ultimately be dispensed to consumers.
This likelihood is increased when some contact lens sellers make it
difficult, if not impossible, to be contacted by prescribers who are
trying to inform the seller that the prescription in question is not
valid or inaccurate and therefore should not be dispensed. The
inability of dispensers to be contacted by prescribers is a clear
violation of the FCLCA and FTC, to date, has issued several warning
letters to dispensers requesting that they provide prescribers with a
reasonable opportunity to communicate with them regarding prescription
verification requests.
Mr. Chairman, what concerns me as an ophthalmologist is the possibility
that countless contact lens prescriptions that are expired, are being
dispensed by sellers as a result of "passive" or "default" verification.
The responsible and ethical contact lens practitioner endeavors to
optimize the safety and comfort of his or her patients by first
evaluating the patient, fitting the lenses and then managing the
patient�s contact lens wear. Accordingly, ongoing periodic evaluations
after the initial prescription are very important to the patient�s
overall eye health. However, because patients can obtain replacement
lenses so easily from online providers, they often neglect follow-up
exams.
Unlike glasses, with contact lenses there is a greater opportunity to
endanger your eye health. Poorly fit contact lenses, along with poor
maintenance and hygiene leave patients susceptible to corneal
inflammation, bacterial, and other infections that can ultimately be
sight threatening.
It is not uncommon for an eye care professional to see patients that
have not maintained periodic follow up evaluations. Such patients
typically present with an assortment of chronic corneal conditions that
could easily have been prevented or ameliorated by regularly schedule
d evaluations by an eye care professional.
There is consensus in eye care practice that there is a direct
correlation between non-compliance and poor hygiene practices and
contact lens related adverse events. Moreover, it is understood that
50 percent of all contact lens wearers, to some degree, are non-
compliant with the hygiene instructions that they DO receive so it
should come as no surprise that up to 80 percent of contact lens
complications can be traced to poor patient compliance with recommended
lens care guidelines. Mr. Chairman, these statistics underscore the
importance of regularly scheduled evaluations for contact lens wearers
and why the dispensing of expired contact lens prescriptions by way of
passive verification undermines patient safety.
When a contact lens wearer is required to present a new or current
prescription to order contact lenses, it increases the likelihood that
the patient will undergo an ophthalmic evaluation by an eye care
professional. This, in turn allows for the early detection of contact
lens-associated adverse events. It also provides the opportunity to
evaluate and improve the patient�s compliance with optimal hygiene
protocols. It is important that all contact lens wearers receive
professional eye care on a regular basis, at the very least, to
reinforce good contact lens hygiene practices.
One of my colleagues recently reported that a 45 year-old patient had
his contact lenses dispensed by a contact lens seller for three years
without an eye exam. The patient presented in August of 2005 with a
severe bacterial corneal ulcer, requiring a three day hospitalization.
Nine months later, the corneal scar still exists with diminished
visual acuity to 20/30. As recently as last week, I treated a college
student in Baltimore with a severe contact lens-related keratitis.
She obtains her contact lenses from internet sources and has not had
regular care in several years. When I investigated her contact lens
hygiene practices, I learned that she has used the same small bottle
of cleaning solution for more than 3 years. Whenever, it approached
being empty, she refilled it from a larger bottle. The same bacteria
growing in her cornea was cultured from that small bottle. These
sorts of stories are familiar to corneal specialists across the United
States. The implication is not that internet purchase causes such
infections. It is that internet purchase reduces the likelihood of
periodic examinations and review of sound contact lens practice.
Extended wear lenses, are regulated as class-three medical devices,
which is the most highly regulated FDA medical device category.
Passive or default verification of contact lens prescriptions
undermines the status of contact lenses as FDA regulated devices and
in essence, denigrates the need for a prescription at all. Passive
verification is a flaw in the FCLCA that the American Academy of
Ophthalmology believes lowers the bar for patient safety and opens
the door for prescription verification failures that can ultimately
result in patient harm. Unless the seller has a copy of the
prescription or it has been positively verified by the doctor, any
other verification system seems at odds with FDA�s medically based
decision to regulate contact lenses as medical devices.
In conclusion, the ocular health of consumers should not be placed at
risk by methods used by contact lens sellers that are designed solely
to augment the sales and dispensing of contact lenses. Since the
Contact Lens Rule went into effect in August 2004, dispensers have
compiled a long history of verification abuses that consistently place
contact lens sales before patient safety.
The American Academy of Ophthalmology remains hopeful that Congress
will put the ocular health of America�s contact lens wearers first by
re-examining the practice and occurrence of passive or default contact
lens prescription verifications and then opting to eliminate them
altogether.
Oliver D. Schein, M.D.,M.P.H.
Burton E. Grossman Professor of Ophthalmology Johns Hopkins University
American Academy of Ophthalmology
Mr. Stearns. Thank you.
And Dr. Curtis, welcome.
Dr. Curtis. Thank you.
Good morning, Mr. Chairman and Ranking Member Schakowsky and members
of the subcommittee.
I am Dr. Wiley Curtis, a member of the American Optometric Association,
the AOA, and a private practice optometrist from Arlington, Texas.
On behalf of the 35,000 members of the AOA, America�s frontline
providers of eye and vision care, I want to thank you for this
opportunity to appear at today�s hearing.
The AOA was pleased to have played a very positive role in the debate
over the contact lens law enacted in 2003, the Fairness to Contact Lens
Consumers Act, the FCLCA. The AOA supported the legislation because we
felt it tried to balance the patient�s ability to get their prescription
with the need to assure that only properly verified prescriptions are
filled. In fact, then Congressman Richard Burr, the sponsor of the
FCLCA, specifically recognized the AOA in remarks on the floor of the
House of Representatives during the final consideration of the FCLCA
bill.
Since then, the AOA has taken a leading role in educating its members
about full compliance with the FCLCA. Our education materials have been
reviewed and even praised by the FTC. The primary concerns of the AOA
and its members today are the same ones we referenced before this panel
in 2003, only now we have clear evidence that those concerns have
materialized in a tangible form.
We do not want to see any interference with the ability of patients to
get their prescriptions and purchase their lenses wherever they choose.
We do want to make certain, however, as the FCLCA envisioned, that
lenses being sold by Internet and mail order sellers are being sold upon
verification with a valid prescription. The contained outbreak this
year of fungal keratitis among some contact lens wearers underscores the
fact that contact lenses are indeed prescription medical devices and can
cause serious injury when improperly fitted, worn, or cared for.
Just last year, after reviewing cases in which consumers were harmed by
the improper use of decorative noncorrective lenses that were widely
available online or at flea markets, Congress took decisive action to
safeguard public health. The passage of the Boozman-Barton-Waxman bill,
now Public Law 109-96, provides for the regulation of all contact lenses
as a medical device by the Food and Drug Administration and requires
that such lenses only be sold pursuant to a doctor�s examination and
prescription, just like corrective contact lenses.
Optometrists remain particularly proud of this leadership role played by
our colleague and your colleague, Dr. John Boozman, in making this a
priority issue on Capitol Hill and helping to get it to the President�s
desk.
It is the very real potential for harm when contact lenses are worn
improperly that makes the prescription verification safeguards the most
important part of the FCLCA. With this in mind, I will offer my own
experiences and the AOA�s recommendation for strengthening the law.
First, though, I know that there has been discussion of so-called
doctor-only lenses. Senator Bennett and Congressman Terry have
introduced legislation seeking to make changes to the FCLCA to govern
how contact lenses may be marketed by their manufacturers.
Congressman Terry, a long time friend of our profession, has informed
my Nebraska colleagues that he would welcome a hearing from optometry
on how his bill can be improved. We are most appreciative of that
and of his leadership in health care policy issues. With regard to
the competition issues, I will expect to look to the FTC today to
provide any relevant updates to their findings.
I would like now to return to the issue of prescription verification.
Simply stated, we believe that the time has come for some common
sense and pro-patient updates to the prescription verification
safeguards included in the FCLCA. Here is why. We are seeing
contact lens orders being filled by sellers without any verification
of the prescription by the prescribing optometrist. We are seeing
contact lens prescriptions being refilled well beyond the time
period that the prescription in question is valid. We are seeing
sellers use mechanisms like automated calling systems to verify
prescriptions which impose needless burdens on the doctors who want
to communicate important patient information to the seller.
Some of my own experiences are very relevant to this discussion.
Over the course of this year I have tracked 18 contact lens orders
placed with 1-800 Contacts. I am saddened to report that the first
17 orders were all filled by the company without any verification
contact with my office, in an apparent violation of the FCLCA: No
contact through the telephone, no contact through the fax machine,
and no contact through e-mail. A subsequent order, the 18th, did
generate a live automated telephone call request for a patient�s
prescription to be verified. Nevertheless, since then, I am aware
of additional cases in which patients received contact lenses
through my office and my office was not contacted for a
verification request.
I hope we can all agree that these results fall well short of what
this committee intended when it crafted prescription verification
safeguards for patients in the FCLCA. That is why the AOA is
encouraging Congress to examine the practices used by sellers and
take the following corrective actions: Allow eye care providers
the opportunity to receive verification requests from sellers
through e-mails and faxes rather than automated telephone calls;
ensure that all patient health considerations raised by an eye
care provider are addressed by the seller before a contact lens
order is filled; to increase the fines that could be imposed by
the FTC on an unscrupulous contact lens sellers that would
violate the law and endanger patients.
These proposals are contained in legislation being crafted by
Representative Ed Whitfield, the Chairman of the Oversight and
Investigation Subcommittee. Optometry--and I am pleased to
report ophthalmology--both support Congressman Whitfield�s bill
and his efforts to ensure that patients come first.
Thank you for this opportunity to present this testimony.
[The prepared statement of Dr. Curtis follows:]
Prepared Statement of Dr. Wiley Curtis, O.D., Member, American
Optometric Association
Good morning Mr. Chairman, Ranking Member Schakowsky and members of
the subcommittee. I am Dr. Wiley Curtis, a member of the American
Optometric Association (AOA) and a private practice optometrist
serving patients in Arlington, Texas and surrounding communities.
On behalf of the 35,000 members of the AOA, America�s frontline
providers of eye and vision care, I want to thank you for the
opportunity to appear at today�s hearing. It is a pleasure to have a
chance to report to you on the contact lens prescription verification
practices of the online and mail order contact lens sales industry,
and the concerns I have regarding their impact on the visual health
and well-being of my patients and the patients of my colleagues in
communities across the country.
The AOA was pleased to be very actively involved and to have played a
very positive role in the debate over the contact lens law enacted in
2003, the Fairness to Contact Lens Consumers Act (FCLCA).� The AOA
supported the legislation because we felt it tried to balance the
patient�s ability to get his or her prescription with the need to
assure that only properly verified prescriptions are filled.�
In fact, then-Congressman Richard Burr, once a member of the Energy
and Commerce Committee and the sponsor of the FCLCA, specifically
recognized the AOA and his own optometrist, my good friend Dr. Michael
Burke, in remarks on the floor of the House of Representatives during
final consideration of the FCLCA bill:
"I appreciate the support of the American Optometric Association,
especially my optometrist in Winston Salem, North Carolina, Dr. Burke,
who read through these drafts. He helped us as we put the bill
together. He improved the legislation and put us where we are today."
Three years ago, the President of my association appeared before this
panel and affirmed our position that the AOA supports a consumer�s
right to receive his or her contact lens prescription and have it
verified to a third party. Since then, the AOA has taken a leading
role in educating its members about full compliance with the FCLCA.
Our widely disseminated education materials have been reviewed, and
even praised, by the Federal Trade Commission (FTC). That�s why,
Mr. Chairman, it is not a coincidence that the FTC "test shops" have
found optometrists in compliance with the law, even as they have
identified serious compliance issues among contact lens sellers.
The primary concerns of the AOA and its members today are the same ones
we referenced before this panel in 2003, only now we have clear
evidence that those concerns have materialized in tangible form. We
do not want to see any interference with the ability of patients to
get their prescriptions and purchase their lenses wherever they
choose.� We do want to make certain however, as the FCLCA envisioned,
that lenses being sold by Internet and mail order sellers are being
sold upon verification that a valid prescription exists.�
It is important to remember that in spite of advances in safety
and convenience -- many of which my profession has played a role
in -- contact lenses are medical devices and must always be treated
as such.
The outbreak this year of fungal keratitis among some contact lens
wearers underscores the fact that contact lenses are indeed
prescription medical devices that can cause serious injury when
improperly fitted, worn or cared for.� The AOA was a leader in
responding to this health situation, providing detailed and
reliable information directly to our own members, consumers, Federal
and state government officials, manufacturers and sellers, including
1-800 CONTACTS.
Just last year, after reviewing cases in which consumers were harmed
by the improper use of decorative, non-corrective contact lenses that
were widely available online or at flea markets, Congress took
decisive action. The passage of the "Boozman-Barton-Waxman" bill,
now Public Law 109-96, provides for the regulation of all cosmetic
contact lenses as medical devices by the Food and Drug Administration
and requires that such lenses only be sold pursuant to a doctor�s
examination and prescription, just like corrective contact lenses.
Optometrists remain particularly proud of the leadership role played
by our colleague and your colleague, Dr. John Boozman of Arkansas, in
making this the priority issue it needed to be for legislation to be
enacted and signed into law by the President.
It is the very real potential for harm when contact lenses are worn
improperly that makes the prescription verification safeguards the
most important element of the FCLCA. We had, and continue to have,
reservations about the verification process in the law, and I will
offer my own experiences with it and suggestions for improvements to
it later in my testimony.
First though, I know that there has been much discussion of so-called
"doctor only" lenses. I am aware that Senator Bennett and Congressman
Terry have introduced legislation seeking to make changes to the FCLCA
to govern how contact lenses may be marketed by their manufacturers.
The FTC, under a directive included in the FCLCA, prepared and
delivered a report to Congress last year on contact lens marketplace
competition. With regard to so-called "doctor only lenses," the FTC
stated:
"Our examination of these issues -- exclusive relationships, private
label lenses, and limited distribution lenses --suggests that such
relationships are not prevalent in the market for contact lenses and
are unlikely to limit competition and harm consumers. Exclusive
relationships are rare; private label lenses while more common, still
represent a small portion of all sales of soft contact lenses; and
limited distribution policies are not widely used. Moreover, our
inquiry showed that a common, limited distribution lens or its private
label equivalent, was available from an overwhelming majority of
outlets sampled. Given that the FCLCA permits sellers to fill
prescriptions with equivalent national brand or private label lenses,
consumers have a number of channels through which to obtain such
lenses. In addition, these relationships may be an efficient way for
manufacturers to provide beneficial incentives to their lens
distributors, which in turn may lead to increased competition among
various brands of lenses. In sum, the theory and the evidence
examined do not support the conclusion that these distribution
practices harm competition and consumers by allowing prescribers to
lock in their patients to supracompetitively priced lenses."
The Strength of Competition in the Sale of Rx Contact Lenses: An FTC
Study February 2005, Page 33
I will expect to look to the FTC to provide any relevant updates to
this finding.
I would like now to return to the issue of prescription verification.
Mr. Chairman, this is an area of the FCLCA that is breaking down and,
as a result, patients are needlessly placed at risk. Over the last
year, the AOA has received hundreds of FCLCA violation complaints about
sellers, has evaluated them and, when necessary and appropriate,
forwarded them to the FTC. The FTC has also received many direct
complaints from doctors.
However, it�s not only optometrists and ophthalmologists who are
concerned about violations of the FCLCA:
Last October, after evaluating FCLCA complaints, the FTC issued a
warning letter to 1-800 CONTACTS, the nation�s largest Internet
seller. The FTC�s warning cited a "substantial number of complaints"
and urged the company to "review the Contact Lens Rule and revise its
practices as necessary to ensure that they comply with its
requirements."
In a press release issued last November, 1-800 CONTACTS charged that a
competing online seller, Coastal Contacts, was engaged in activities
"inconsistent with the prescription verification requirements of the
FCLCA and-practices that misled consumers."
In late June of this year, the FTC issued a series of 18 warning letters
to sellers of cosmetic contact lenses for failure to comply with the
FCLCA based on statements made on the sellers� Web sites.
More recently, in August, the FTC imposed formal sanctions on Walsh
Optical, an Internet contact lens seller.
In light of this and new complaints about deficient verification
practices, the AOA is urging a crackdown on unscrupulous contact lens
sellers. In addition, we believe the time has come for some common-
sense and pro-patient updates to the prescription verification
safeguards included in the FCLCA. Here�s why:
We are seeing contact lens orders being filled by sellers without
any verification of the prescription by the prescribing optometrist.
We are seeing contact lens prescriptions being overfilled, well beyond
the time period the prescription in question is valid.
We are seeing sellers use mechanisms like automated calling systems to
verify prescriptions, which impose needless burdens on doctors who
want to communicate important patient information to the seller.
Some of my own experiences are very relevant to this discussion. Over
the course of this year, I have tracked 18 contact lens orders placed
with 1-800 CONTACTS. I am saddened to report that the first 17 orders
were all filled by the company without any verification contact with
my office, in apparent violation of the FCLCA.
No contact through the telephone.
No contact through the fax machine.
No contact through an e-mail.
A subsequent order -- the 18th -- did generate a combination live /
automated telephone call request for a patient�s prescription to be
verified.
Since then I am aware of additional cases in which my patients
received contact lenses though my office was not contacted with a
verification request.
These are not the results this committee intended when it crafted what
were supposed to be prescription verification safeguards for patients
in the FCLCA. I can�t imagine that anyone on this committee
envisioned automated telephone calls would be the primary mechanism
used by a seller to verify a prescription. I can�t imagine that
anyone on this committee envisioned that a seller would undermine the
law�s intention of encouraging patient-focused prescriber-dispenser
communications. Unfortunately, that�s what�s happening.
That�s why the AOA is encouraging Congress to examine the practices
used by sellers and to take the following corrective actions:
Allow eye care providers the opportunity to choose to receive
verification requests from sellers through e-mails and faxes, rather
than automated telephone calls. This would help facilitate the type
of patient-focused communication that occurs between doctors and
pharmacists.
Ensure that all patient health considerations raised by an eye care
provider are addressed by the seller before a contact lens order is
filled.
To increase the fines that could be imposed by the FTC on unscrupulous
contact lens sellers that would violate the law and endanger patients.
These proposals are embodied in legislation we expect to be introduced
in Congress in the near future. Optometry and, I am pleased to report,
ophthalmology, are in agreement about these proposals and about the
need for patients to come first.
Again, Mr. Chairman, let me emphasize that the AOA supported passage of
the FCLCA in 2003 and continues to support it now. Our concern -- then
as now -- is that the Internet and mail order contact lens sales
industry must provide doctors with basic patient information, in an
appropriate manner, so we may respond efficiently, and require that
prescriptions be positively verified by the doctor before lenses are
sold. This is the balanced and reasonable approach to the competition
and health concerns that Congress intended and consumers now expect.
Thank you for the opportunity to present this testimony. We hope you
find our input useful and that we can work with you and the members of
the subcommittee to move forward with legislation to strengthen
prescription verification safeguards and crack down on the unscrupulous
sellers who place profits ahead of patients.
Mr. Stearns. I thank you. And I will be glad to allow the Ranking
Member, Ms.�Schakowsky, a few words here for a second.
Ms. Schakowsky. I just want to thank the witnesses very much for their
testimony.
As you heard Mr.�Gonzalez say, some of us do have obligations at home.
I am going to leave now and catch a flight, but I am glad that I stayed
this morning to hear from all of you and look forward, through my
office, to be in contact with each of you. Thank you.
Mr. Stearns. I will start with my questions.
Dr. Curtis, you heard Mr.�Coon say that they spent 8 hours and 32
minutes calling your office, 192 phone calls. They talked to Gail,
Lori, Liz, and someone else. Is your objection that they are automated
calls? Because in your opening statement you mention that there was a
little bit of a complaint about these automated calls. So it seems to
me that 1-800 Contacts is calling you, and they are not getting the
response they need. How do you answer Mr.�Coon�s comment that he has
called 192 phone calls over 8 hours and 32 minutes?
Dr. Curtis. Sir, I have an automated phone system in my office also,
and I have had it for 5 years. When you call my office, the automated
system answers and says thank you for calling the office of Vision
Source Arlington, and it starts into a menu that gives direction to
the patient to contact the appointment desk.
Mr. Stearns. Can you get ahold of an operator and talk with anybody?
Dr. Curtis. Yes, you can, by--you are instructed to press a button to
get ahold of whoever you wanted to, and at the end you are instructed
to press 0 to talk to an operator. So I think that it goes through a
timely--and his machine is talking to my machine and nobody is talking
to a human being.
Mr. Stearns. Mr.�Coon, is that true, it is basically two automated
machines talking to each other? I mean, in your complaint here, I just
want to give you a chance for the two of you to verify right here in a
public forum about your complaints against each another.
Mr. Coon. Yeah. Again, it is unfortunate that we are in this situation
where we are competitors that, you know--we need to cooperate with each
other, and the patient gets stuck in the middle.
I want to be cautious not to say I think that Dr. Curtis simply falsely
represented that he thinks that is the case. I think he actually
believes that is true or he wouldn�t have put it in his written
testimony. However, the facts don�t seem to support the allegation.
And I would very much welcome any data or any evidence that Dr. Curtis
has to the contrary. It is not uncommon for our competitors, the eye
doctors, to make unsubstantiated claims. They did it in the litigation
with the 32 States--
Mr. Stearns. Let me just interrupt you. Are your two machines talking
to each other, yes or no?
Mr. Coon. No, sir, they are not.
Mr. Stearns. So Dr. Curtis, how is 1-800 Contacts supposed to fulfill
their requirement if they can�t talk--
Mr. Coon. Sir, if I could, we use a live agent to make the phone call.
We don�t hand off to an automated system until after a live person
picks up at their office, which is why we know the names of the people
we spoke with.
Mr. Stearns. So the question is, can he fulfill his responsibility if
he spends all of this amount of time--he can�t spend all this amount
of time with one doctor. Don�t you think he has a legitimate complaint
here, that he can�t seem to get through to notify you according to the
procedures here?
Dr. Curtis. I would have to say that I see it completely on the other
side in the fact that I think I have a complaint that his automated
system is unable to get ahold of me.
I think he mentioned that there was 192 calls to my office.
Mr. Coon. Yes, sir.
Dr. Curtis. And I do know that there have been times that the operator
has gotten through. And there have been times that a live person gets
on the line, asks us to identify, is this the office of Dr. Wiley
Curtis, and when we say yes, then they start the automated phone system,
which we do follow. But I don�t think it happens every single time.
Mr. Stearns. Dr. Schein, both you and Dr. Curtis seem to talk about
ocular health and it is a national problem, and I think one of you,
Dr. Curtis, somebody mentioned unscrupulous vendors and so forth. In
the case you are talking about--I guess it was an after market provider,
a refill that disinfection occurred. Dr. Schein, what vendor was it
from? How did it occur? Was it from Wal-Mart, was it from 1-800
Contacts? Who was the person that--who did they buy their refill
contacts from that created this disease that you talked about?
Dr. Schein. I don�t know the name. I didn�t ask the name--
Mr. Stearns. But the point is that you go on about this ocular health
and all these problems, but you have got to be specific because we
can�t take what you are saying with credibility unless there are
specifics behind it and you can say this is how it occurred on this
date with this vendor. Because surely the patient would tell you
who the vendor is. Because if you just, as a blanket, say there is
an ocular health problem, that gives everybody a scare. But we would
like to know specifically who is at fault.
Dr. Schein. Right.
Mr. Stearns. If you don�t want to say anything, but I am just telling
you that you lose your credibility. In my case, if I don�t hear
specifically who is at fault--
Dr. Schein. I think you are perhaps misinterpreting the context in
which a patient is sent to you emergently with a potentially blinding
condition. I am their physician. I am not even aware of an opportunity
like today, and if I were, I wouldn�t impose that on a patient-doctor
relationship. The issue is not--
Mr. Stearns. But you could say it is due to people getting refills
from after market providers; is that what you are saying today?
Dr. Schein. No.
Mr. Stearns. So that could be done by the doctor himself because he
prescribed it and the doctor created this problem himself and the
patient created it. So it has nothing to do with after market
providers is what I am getting at.
Dr. Schein. Right. The point I am trying to make is that there is
a link between patient compliance and patient visit to an eye care
professional. So I am not at all sourcing the disease to a seller.
Mr. Stearns. Okay. Let me ask of the Federal Trade Commission here,
should these three major retailers begin marketing under exclusive
doctors-only arrangements once the consent decree expires? Do you
believe consumers could or might be harmed to the point where Federal
action is appropriate and necessary?
Ms. Ohlhausen. First, just to clarify, what we found is that there
weren�t actually doctors-only lenses, that wasn�t a major part of the
market. We looked at limited distribution lenses, which means that
the manufacturer makes a decision not to sell it to every seller. But
what we found were limited distribution lenses were actually available
through eye care practitioners and then other sellers that had a
relationship with eye care practitioners, which would include
Wal-Mart, Target, Costco, that typically would have a relationship--
Mr. Stearns. Well, my question is; do you think Federal objection is
going to be necessary after this consent decree? That is what I need,
yes or no.
Ms. Ohlhausen. We do not believe at this time that it would be
necessary. Our examination of limited service--
Mr. Stearns. So your facts show that it is not necessary after this
consent decree expires?
Ms. Ohlhausen. Right.
Mr. Stearns. Is that the 1st of November? What is the date for that
consent?
Ms. Ohlhausen. I believe that is right.
Mr. Stearns. Okay. Let me just--before I ask one more question here,
I want to give Mr. Fryling an opportunity. Well, I think my time has
expired. We can go around to a second round. I will go to
Mr. Gonzalez.
Mr. Gonzalez. I am going to defer to Mr. Terry.
Mr. Stearns. Sure, Mr.�Terry, go ahead.
Mr. Terry. I appreciate that, Mr.�Gonzalez, and Mr. Chairman.
Before I ask my question, I want to introduce my ophthalmologist,
Steve Wolf, who is in the audience. And even though my boyish face may
not be maturing, my eyes are right on in the maturation process, and I
just got my no-line bifocals from him. And I will state that I bought
them in his store, and that was my choice because, first of all, they
offer a real quality service, hands on, and also, I am busy and didn�t
want to drive around and shop around.
But again, that was my choice. But thanks for being here today, Steve.
Now, I have to admit on the issue of the limited distribution or doctor
only, which is the impetus of at least starting this discussion, and it
has certainly evolved into passive versus active verification, which I
also think is a legitimate discussion to if the 1993 Act is, or the 2003
Act, I am sorry, the Burr bill is actually being complied with. But I am
just focusing, for my question, on this limited prescription distribution.
And I hear the testimony from the FTC and from Mr. Fryling, and that
seems to be counterintuitive of what the advertising is.
So reading the advertising, something is just not connected. Either
Ocular Science is not being forthright with the doctors when they are
saying that we are going to limit this distribution just to you, so you
can get around 1-800 or whatever, on-line, but then, the testimony from
the FTC today is it is still widely distributed throughout the
community, including to the Wal-Marts and the Costcos and all of that.
So I have got to work through who is right here. Is it widely available,
or are you complying with what you are telling your doctors, that it is
only going to be their office that can sell this in a community.
Mr. Fryling, can you help me work through this apparent discrepancy?
Mr. Fryling. I definitely will. I will help with you that. To get a
little history of supervision is, during the last 4 or 5�years, we have
bought two companies, Biocompatible, which is the Pro Vision ad, and let
me quote Mr. Coon here, an ad for Proclear Lens entices the doctor with
the headline, "let�s see, you will make more money." That ad hasn�t run
for over 3�years. That ad was a marketing literature for, that was
developed by the company that we acquired, Biocompatible. We
discontinued that advertisement a long time ago for the same reason
that the FTC found.
It wasn�t true. You are absolutely right. And the reason it is not
true, and this goes back to what the FTC says, and let me quote on
their findings, is that they found that the eye care practitioner, I
am quoting off of one of the things, "caught taking advantage of the
consumer sacrifices future revenue, not only from selling the
replacement lenses to such patient, but also from eye examinations
which produce almost twice the revenue of the contact lens sale in
2002." Listening to what we have here, you have to understand the
facts. On Proclear, currently, it is 3�percent of the market. And
I look at it, we have 14,000 accounts with--
Mr. Terry. I am sorry. I only have a minute and 20 left. Well, let
me ask it more specifically and then I will let --
Mr. Fryling. Well, the other ad is also, we don�t run.
Mr. Terry. Well, what I want to get to is, are these only being
marketed to physicians today? If you go into it, I mean, here is The
Wall Street article that says that they aren�t being sold at Wal-Marts
or Costcos, and that is only September�5, so--
Mr. Fryling. Those articles, I mean Proclear, is sold at Wal-Mart. If
anyone can get on the Internet right now, type in Wal Mart, put the
vision center, ask for the Proclear lens, you can buy it at Wal-Mart
today.
Mr. Terry. Okay. Mr. Coon.
Mr. Coon. I think it is important that this committee does know the
facts and I have with my CooperVision�s current distribution policy
from December of�2005. I am going to read from it because he says
they don�t run the ads anymore, but this is what their contract with
doctors says. "Proclear, Proclear Toric, Proclear multi focal are
authorized for resale only to patients under the direct care of the
original purchaser and for the patient�s personal use. Trans shipment,
sale, or redistribution by you to purchasers other than patients under
your direct control would undermine this goal and is strictly
prohibited." This contract goes beyond even what the ad promises. This
says a doctor can�t even fill a prescription written by another doctor.
Even if he is authorized to sell Proclear, he would be violating their
current contract if he did.
Mr. Fryling. Can I respond to that?
Mr. Terry. Sure.
Mr. Fryling. That contract basically says to the eye care practitioner
that they can not resell the product, the Proclear product, to an
Internet type source. That contract does not restrict the doctor in
any way to sell the lens to anybody, and that contract does not provide
any of these restrictions.
Mr. Terry. All right. But my point is in any physician�s office, you
sell, as the manufacturer, have the right to sell to the physician. But
in any community then, pick one out of thin air, you will also have
distributed the same contact lenses to big box manufacturers as well,
the same.
Mr. Fryling. Pardon me?
Mr. Terry. The same contacts that you are supplying to the physicians
offices, pick any city randomly, we can go to the Wal-marts and
Costcos and the Walgreens or whatever and find the same contact lens.
Mr. Fryling. That is correct. And just going back to that agreement,
that restriction doesn�t restrict us from selling this lens, and we do
sell Proclear to all the retail outlets that were listed in my
attachment. There are over 10,000 locations. We have mass
merchandising, we have all the large locations there. So that product
is readily available throughout the market.
Mr. Terry. My time is up, Mr. Chairman, and perhaps we can--
Mr. Stearns. If the gentleman would yield--
Mr. Terry. I will.
Mr. Stearns. Just another minute. I think you have got a very
important point here. Mr. Coon has read your document and you are saying
that document does not apply.
Mr. Fryling. No. What I am referring to--
Mr. Stearns. Because you are telling your doctors you will have sole
right to sell this and it will not be sold to anybody else. But you
are just now telling Mr. Terry that you are going to sell them to all
the places they market, and I don�t understand.
Mr. Fryling. No, no. The document indicates to the practitioner he
can not resell that lens, other than directly to a patient. We have
the ability also to sell that lens to all of the other outlets as
well. So what we are basically saying to the doctor, and this is a
matter of product recall as well, is you can�t resell it to, let�s say,
another, to an Internet company or to so some other group that we have
basically indicated we do not want to provide that product to.
Mr. Stearns. Well, let me just read, staff has given me, right from
your document, from CooperVision, it says "products for sale over the
Internet except to your patients whom you fitted and prescribed the
lenses, and any reference to the products on any website you have
maintained, you have or maintain, must state clearly that such
products are available only to such patients. Except to your patients
whom you fitted and prescribed is to sell or resell."
Mr. Fryling. Yeah. We are just telling him he can�t be a wholesaler.
He can sell directly to his patients, but he can�t be a wholesaler.
Mr. Stearns. Okay. Mr. Coon, do you want to answer anything to that?
Mr. Coon. I am just dumbfounded that he is trying to make it sound
like it isn�t more clear. It says, you will dispense products only to
your patients under your direct control. It could not be any more
clear. That is how the doctors read it. Everybody knows the policy.
More importantly, they gave this list of all these places they sell to.
Every single one of them has a doctor on-site. That wasn�t the issue
when the 32 States sued. The issue is being able to buy from a non
doctor, being able to separate purchase from exam. Wal-Mart has
doctors on-site. Target has doctors on-site. The AGs didn�t have to
sue to get companies to sell to Wal-Mart. All the three major
manufacturers were already selling to Wal-Mart.
Mr. Stearns. You know, I am not making a judgment call here. I am
just trying to understand. And Mr. Fryling, I mean, what I hear
Mr. Coon say in his document, what the staff has given me, and what
you are saying, I am having a little trouble. I am not saying you
are right or wrong. I am just trying to understand. Could a doctor
sell to other patients?
Mr. Fryling. Yes, he can sell to other patients. What he cannot be
is a wholesaler. That is what that agreement refers to. And Mr. Coon
is correct in saying what that document basically says is he can�t be a
wholesaler that would then resell it to the Internet outlets.
Mr. Stearns. Okay. My time and Mr. Terry�s has expired. I appreciate
it. Mr. Gonzalez.
Mr. Gonzalez. Thank you very much, Mr. Chairman. I will start off
with some general observations. If I have any questions, obviously
they would be predicated on my understanding. A general observation
is I really believe there is room for all of y�all out there. We
really need to accommodate one another. If you ask Congress to fix
the problem, you are going to be surprised because your fate and your
destiny will be in other people�s hands. You really don�t want that.
And we really need some direction and some guidance. And I think I
understand the Chairman�s somewhat frustration of trying to get some
answers to some very simple questions.
In the life of the Internet, a million years ago, which is about
10�years ago, Steve Case made the observation that the future of the
Internet is not dependent on technology, but rather regulation. We
are talking about regulation here. Steve Case wasn�t talking about
the commercial setting that the Internet has created, but that is
where we find ourselves today. And we, as Congress, and you, as
physicians, doctors, manufacturers, distributors, can�t be behind
the curve where the population, our constituency, and the consumer
is going, and that is recognizing the role of the Internet, because
we have had some of this problem previously but not to the degree
that the different parties now feel that their vested interests may
be jeopardized, and it is because of the Internet.
But we better catch up, because your patient and your consumer is
moving forward. And this is the way they conduct business. Congress
even is asking the physicians to plug into the Internet age. We are
talking about health information technology. We have bills that are
pending now. Commerce probably feels the greatest impact of the
Internet. And so the FTC recognizes that. FTC says we don�t have a
problem that has risen to the level that creates it. But I have my
State Attorney General, and I have the greatest respect for the State
attorneys general, first of all, because I think they are in the
forefront, and what they are saying is, do you have to be sick before
you feel better? Does it have to reach that level before we can
improve it?
That is really a good point. But Congress should not act unless it
really has to act. And we are being asked to act by the different
sides. And the question here is this real curious one. No one is
really questioning the adequacy of the prescribed product that
eventually ends up in the consumer hands, because I heard Dr. Schein
say, look, I am not trying to attribute blame for this malady, or
whatever it was, or disease, on one particular manufacturer, so it is
not the problem with the quality or adequacy of what is ending up in
the consumers hands. Now, that�s the first question I am going to
pose to each of you. Is there any question here, any fear that we
should have, that the end product, the end prescribed product that
ends up in the consumers hands is something that we should worry about
because of some of the practices that are at issue here. That is
going to be the first question. And I don�t think that it is.
My second observation, and it is a curious one, and I have to be
totally blunt and honest with you. And that is what other situations
do we have where the gatekeeper, being the optometrist or the
ophthalmologist, really determines whether the consumer is going to
receive a certain product through a specific channel? And that is
really an interesting one and presents some real problems.
And I think distributors should be free to promote whatever product
that they distribute in any relationship, making exclusive, giving
it the gold standard seal of approval or whatever, I like that. That
is being a great entrepreneur, and I don�t think we should interfere
with that. There is nothing wrong that. And if it doesn�t rise to
the level where there is some sort of competitiveness that is being
infringed and such and there is no safety or health safety concern,
then what are we doing here today? And it all comes down to
verification.
And can we come up with a system that will allow the marketplace to
proceed with something that is essential and that is verification,
Mr. Coon, because I think you understand your obligation to make sure
it is a legitimate prescription, it has an expiration date, and there
are dangers associated with prescribing something that if it wasn�t
being supervised by the physician, the optometrist, we would have some
serious problems. And yet verification really lies there at the very
feet of the prescriber. And I mean, we have got to figure out a way.
So we are talking about legislation. Let�s not just do it with
automated phone calls. Let�s do fax and e-mails. I don�t think that
there is going to be a problem with that, to be honest with you. So
that is my second question. The second question goes, is the best
practices relating to verification. How do we get there?
First question to everyone, do we have a problem with the end products
adequacy in meeting the patient�s needs as a result of Internet sales?
And the second question, of course, comes down to best practices when
it comes to verification, because we have had an example here where we
have differences of opinion between Mr. Coon and Dr. Curtis in a
real-life setting, so we can imagine how this thing gets replicated
every day.
So I have used up most of my time with my general observations, but you
know my questions and I am going to ask the Chairman to indulge me some
additional time on those two questions. And we will just go down the
list.
Ms. Ohlhausen. On your first question, we have not seen a problem with
the product. It seems that it is being delivered to people, that it is
widely available to them at competitive prices, and we haven�t seen
health consequences arising from that.
Secondly, the best practices for verification. When the law and the
rule were adopted, there was a shake-out period, definitely, and the
FTC did receive complaints from both sellers and prescribers about not
being able to communicate with each other well. We have found that
those complaints have receded. There still may be, from time to time,
complaints, but the volume of them has gone down. And we engaged in
quite a bit of consumer and business education to help smooth over this
transition period.
Mr. Klein. Mr. Chairman, Representative Gonzalez, number one, on your
first question, as part of the attorney general�s litigation and
settlement with the contact lens industry, one of the pledges we made
to them was that we will do our best as attorneys general to investigate
and prosecute people who are engaging in violations and failing to
verify. And we invited them to send us the complaints, and we pledged
that we will investigate and validate those complaints, and if they
have valid complaints we will take action. We are not getting those
complaints and have not had any actions that were justified.
On your second point, you talked about gatekeeper. And I think the
gatekeeper role is something that is being lost in some of this
discussion. I am loathe to criticize another enforcement agency. But
I think the economists of the FTC doing the study missed a crucial
point, and that is that yes, in a competitive market, there are great
advantages to consumers to having the ability, having, letting a
manufacturer require a vendor to provide full services. This is not,
however, a competitive market. We, in fact, have a gatekeeper who
says you can only buy this particular product, and I will tell you the
brand name, and you can only buy it with written permission from me.
And when you have a gatekeeper, such as the optometrist, who tells you
what you need, when you need it, and told you the brand, then we do not
have a competitive market and we need, then, to create a better balance
to restore some power to the consumers. Thank you.
Ms. Ohlhausen. Could I respond?
Mr. Stearns. Yes.
Ms. Ohlhausen. I just wanted to mention that we did examine in our
report, because we are certainly aware of the possibility that a
gatekeeper could perform this kind of function, and we looked at it to
see if consumers were locked in to purchasing lenses at a higher price
or less availability. And the evidence that we examined, the pricing
evidence, the availability evidence, didn�t support the idea that
competition wasn�t a sufficient check on this ability of the gatekeeper.
So it is not that we didn�t know that this could be a problem. We
examined it, and we just found that the evidence didn�t suggest that
the gatekeeper was able to reduce competition in this way.
Mr. Coon. Thank you, sir. If I might go out of order. If I could,
would you mind if I responded to the FTC�s remarks since she jumped in?
I think no one argues with the FTC�s position that offering a retailer
a financial incentive or exclusivity to promote a product is fine.
Paul Mitchell doesn�t sell their shampoo to grocery stores, right?
The FTC, in its study, looked at markets like beer, fragrance, apparel,
electronics. There is no problem there because you don�t get a
prescription for shampoo. I mean, if you can�t find it at the hair
stylist and you are in the grocery store, you just buy a different
shampoo. There is a huge difference here that seems to be lost to
the FTC. When a manufacturer offers a financial incentive to a doctor
to prescribe a product, the FTC sees no difference between a market in
which somebody has no prescription and a market in which they do. And
it is best evidenced by the fact that Ms. Ohlhausen has represented
that even if 100�percent of the market were to go to doctors-only
lenses, the FTC would still see no reason for action.
The first issue I want to address to your two questions, health and the
best practice, on the health, both the FTC and the attorneys general
are actually in agreement on something. They both agreed that better
access to and lower prices for contacts will encourage people to
replace their lenses more frequently, which benefits their ocular
health. We actually have data on that. The average, according to the
major manufacturers, is 28 lenses per year. Customers who order from
us average 40 lenses per year. So when their lenses are easier to
obtain they do, in fact, throw them away more frequently.
On the second point, I think it is an easy answer. What is the best
system? I think we all agree here, it is positive verification. But
it is positive verification like the drug industry. Both of these
doctors, at the end of the table, if they prescribe you a drug, they
are not allowed to sell it to you. But if they prescribe you contact
lenses they can. And one of the doctors said earlier, that regulation
like has been proposed by Congressman Terry is unprecedented in health
care. What is unprecedented in health care is doctors selling what they
prescribe. And what is unprecedented is manufacturers explicitly in
their ads offering doctors money to write prescriptions for them. If we
want a positive verification system, it needs to work like drugs.
Doctors need to stop selling what they prescribe. And we would
strongly support that.
Mr. Fryling. Thank you very much. I would like to give you some
facts rather than some emotional comments based on what we have.
Proclear, which is one of the products that they refer to as a
financial incentive, which I am not sure what you are referring to at
that point.
Mr. Coon. You will make more money.
Mr. Fryling. Okay. Make more money. If that was the case, you would
think that the market share of Proclear, with the limited distribution,
would be greater in the U.S. than France. France is a market where the
ophthalmologist writes the scrip, and it is filled separately,
independently by a retailer. Proclear has a much greater market share
in France than it does in the U.S., it is around 7 to 8�percent. By
the way, in France, with that separation, the cost of the product to
the consumer is higher than it is here in the United States. So let�s
make sure we understand the consequences of some of these things that
emotionally we are throwing out.
Number two, Proclear is sold in 14,000 accounts we sell Proclear to.
The average sale is about $2,000 of wholesale. The average sale that
a practice sells is about $40,000. So that is 5�percent of their
practice. If this is motivated for profit or incentive, you would see
a greater percentage of Proclear in that market than anywhere else.
If you understand the market, I really encourage you, both of you that
have your own practice, you will find that the material profit in
contact lenses is a very small amount for the O.D. He wouldn�t risk
his reputation to create an artificially high price point that would
then not only risk his fitting fees, he also has the potential if
they buy glasses, they buy everything else. This just doesn�t happen.
That is why the FTC hasn�t found a difference in a price point between
these products. And as I have indicated to you before, we reached that
same conclusion when we bought these companies, and that is why we no
longer put those kinds of ads. The only thing we do, or we are trying
to do with Proclear is that is a unique product that was approved, has
a claim for dry eyes, which is one of the main reasons for patients
dropping out. And with dry eye, it is very complicated, and we wanted
those patients to be followed up with the practitioner. Sometimes if
that condition continues, they can use punctal plugs. There are other
things that can help with that condition. That is the main focus on
trying to keep those, that product, and only that product, with an eye
care practitioner. We want to maintain a reputation of our product.
All of the other products are sold. We are in discussion with 1-800
right now, and I agree with you 100�percent. I would much rather let
the private market decide how we can get distribution into the Internet.
Mr. Gonzalez. I appreciate that, Mr. Fryling. The problem is that the
Chairman has given me actually 10�minutes more than I deserved. And
I need to hear from the doctors because it still comes down to
verification. At the end of the day, we would like our consumers, of
course, to be well served. But they are patients and we want them to
get to the doctors on a regular basis. And I think that was
Dr. Schein�s concern. And I would like to hear his, one, about adequacy
of the product, but the other thing too is about verification, which
obviously dovetails into the regular visits and such.
Dr. Schein. To address your first question first, there is nothing fundamentally different about the product based on the origin of sale.
And, in fact, risk with contact lenses is associated with how the
device is used and cared for. So whether it is worn, for example,
overnight, versus daily only or whether it is the contact lens case
adequately cleaned and replaced, those kind of things determine risk,
not the inherent device itself.
I think that I am in agreement with Mr. Coon, that the aim should be a
positive verification system that works for sellers and practitioners.
That should be the goal. That should be the purpose of meetings to
draft new legislation. I cannot believe that that is an impossible
issue. I have not personally devoted my time to this, but with our
communications abilities today and the use of the Internet, I cannot
believe that that cannot be done.
Mr. Stearns. Dr. Curtis.
Dr. Curtis. To specifically respond to your question about the
Internet and verification, in my particular situation, I purchased a
phone answering system 5�years ago and it seemed to be a relatively
high tech endeavor at the time. And now, using automated phone systems
seem to be relatively low tech. And my office does many things
regularly on e-mail, including communicate with patients. And I would
love to see a verification system where I received an e-mail requesting
the contact lens prescription and be able to respond to that in a very
timely, it would be very easy for our office to respond to those types
of situations very easily and quickly.
Mr. Gonzalez. Thank you very much. And thank you, Mr. Chairman, for
your indulgence.
Mr. Stearns. I appreciate any time when you give, ask questions,
because I think, like myself, we are just trying to understand this
better, and I appreciate also your observation that sometimes be careful
what you ask for when you come to these committees. Having seen what
turns out to be a pretty good bill, and then it gets amended, and pretty
soon no one likes the bill and everybody�s trying to stop it after
spending so much time trying to pass it.
But I am going to conclude, and I am going to go, Ms. Ohlhausen, just
to revisit here. You had indicated that the FTC did not find doctor
only or limited distribution lenses are prevalent. But isn�t this
because of the three major manufacturers, Johnson & Johnson, CIBA
Vision, and Bausch & Lomb, are prevented by the consent decree which
expires in 6�weeks from entering into exclusive contracts, isn�t that
the reason why we don�t see that?
Ms. Ohlhausen. That certainly may be a reason why. We made no
conclusions.
Mr. Stearns. So you are saying if we didn�t have the consent decree,
we didn�t need this consent decree, is that what you are telling me?
Ms. Ohlhausen. No. What I am saying is we didn�t make any conclusions
in the report as to why the incidence of exclusive distribution lenses
was at a certain level. We just examined the market as it existed when
we did the study.
Mr. Stearns. But, if the consent decree is not extended, what, do you
think that these folks behavior will change at all?
Ms. Ohlhausen. Um --
Mr. Stearns. I mean you must have some opinion. You had a study on it
and you are involved with the consent decree. I mean it seems likes at
some point--
Ms. Ohlhausen. Excuse me. The FTC is not involved with the consent
decree.
Mr. Stearns. I understand that. But you were involved with the study
of it.
Ms. Ohlhausen. We were involved with the study that Congress directed
us to do.
Mr. Stearns. And what is your observation? Do you think the consent
decree should extend or not?
Ms. Ohlhausen. The FTC doesn�t have an opinion about extending it
except that
Mr. Stearns. Okay. I appreciate that. That is probably true.
Mr. Klein, what do you think?
Mr. Klein. We are very much worried about it. We are hoping, as a
result of the consent decree, that consumers would see greater price
savings; in addition, that the manufacturers would realize how much
better off they were by selling these lenses, because if what Mr. Coon
said is true, that consumers are replacing their lenses more frequently
through cheaper sources, that will result in the manufacturers selling
more lenses. The more lenses they sell, the more profit they make.
But, the concern remains paramount about the gatekeeper function. And
a rough analogy is, if a city requires a building inspector, health
inspector to come to your home, the health inspector comes to your home
and says your refrigerator needs to be changed because it doesn�t have
the latest filter or the antibacterial lining, and so you have to
change your refrigerator. And I am writing you a prescription that you
have to buy this particular refrigerator and this brand--
Mr. Stearns. I understand. But I am just trying to get this and I am
going to go right through the panel. The evidence that you have, your
experience of your boss and yourself, who couldn�t make it here, that
once this consent decree expires 6 weeks from now, do you think these
three manufacturers will cut distribution ties with aftercare retailers
such as 1-800 Contact? I mean, just give me your straight up or down
here.
Mr. Klein. Yes, because it grows its share of the other companies they
have an incentive to do that.
Mr. Stearns. Okay. Mr. Coon, obviously your feeling is yes.
Mr. Coon. I don�t think they want to start doing it again. I think
they have moved on, but I don�t think they will have a choice.
Mr. Stearns. Do you think there is an economic incentive to do this
for them?
Mr. Coon. It is an incredible shortcut. I mean, if you have got a
doctor who sells what they prescribe, you can just offer the doctor
money to write a prescription for your product, which is exactly what
these ads offer to do.
Mr. Stearns. But, you know, you are being a little idealistic if you
think when you said the statement, doctors should stop being able to
sell what they prescribe. I mean, the doctors today, they don�t
prescribe and sell the medicines, but they sure have a lot of
incentive to sell some medicines over others. And you and I both know
that. And those incentives come in through lots of different ways that
doctors are influenced.
And Mr. Klein, you know that too. So in a free market, lots of things
happen. Just like here in Congress, how legislation, I mean, this is
a free and open society where ideas come up, but lots of things happen
between the cup and the lip. So, you know, your feeling is you need
this consent decree extended, right?
Mr. Coon. To be clear, I think if doctors didn�t sell what they
prescribed, which is why I mentioned that, this market wouldn�t need
any regulation.
Mr. Stearns. Well, we are not going get to legislation passed between
now and the first of November. That is the bottom line. Unless
leadership somehow, after this hearing, decides there is a real need.
But I have seen the plate here. It is full. And there are a lot more
higher priority issues than this issue. So I guess the question is,
knowing that this legislation might not pass--this is just a hearing.
We haven�t even marked up out of my subcommittee. It has got to go to
the full committee. It has got to go to the House, it has got to go
to the Senate. There has got to be a conference. Would you want a
consent decree extended?
Mr. Coon. There is no question. And to be clear, if the doctors are
unwilling to not also sell what they prescribe--
Mr. Stearns. So you are not willing to call for an extension of the
consent decree.
Mr. Coon. We think it absolutely ought to be extended, and we think
the current system can work the way it is. The doctor just needs to
compete for the sale, which is what this law would do.
Mr. Stearns. Okay. Mr. Fryling, what is your feeling about the
consent degree?
Mr. Fryling. Well, I do think you should ask the other manufacturers
or follow up.
Mr. Stearns. Well, I am just asking for your point.
Mr. Fryling. We have had discussions, and we have agreed that we
would provide lenses to 1 800 regardless. We are not under the
consent decree at this point.
Mr. Stearns. That is right.
Mr. Fryling. What the FTC did was not under that.
Mr. Stearns. So we don�t have Johnson & Johnson, CIBA Vision, or
Bausch & Lomb so we can ask them. But Dr. Schein, what do you think.
Dr. Schein. I have no opinion.
Mr. Stearns. Okay. That is fine. Dr. Curtis.
Dr. Curtis. I would be shocked if any contact lens company changed
the way they were doing business.
Mr. Stearns. So with or without the consent decree, that business
will continue as it is, and once it expires, Bausch & Lomb and CIBA
Vision and Johnson & Johnson won�t change their behavior. They will
not go about trying to cut distribution ties with after care retailers
such as 1-800 contact. You think that is true.
Dr. Curtis. I am way out of bounds speaking for them, but I can�t,
as a client of theirs or a customer of theirs, I cannot imagine that
they would change the way they are doing business today.
Mr. Fryling. Mr. Chairman, could I just give you a reason why I think
that all the manufacturers will continue? There is a real concern in
the gray market associated with counterfeit lenses. We want these
Internet suppliers to get product that we know is our product and not
potential counterfeit lenses, so there is a real desire for us to go
forward. And so I would be very surprised, I am not speaking for all
the manufacturers, that they would not continue with providing product
to the Internet source.
Mr. Stearns. Well, thank you all of for your testimony. I am glad we
had the hearing. I will just conclude in touching upon what
Mr. Gonzalez has said. Sometimes having these hearings is enough to
tell all participants, hey, you had better just be careful what you
ask for, as he pointed out, because the Federal legislation, you have
435 members with ideas of their own, and a piece of legislation gets
an amendment on the subcommittee and the full committee and the House
and sometimes you don�t even know what you are going to get.
So it would be well for all of you to somehow work together, as
Mr. Gonzalez pointed out, and not have the Federal government step up
and do anything here. And perhaps Mr. Coon, this hearing alone will
say to these other distributors that, hey, the consent decree is over
the first of November, but we better watch how everybody plays this
game, because you might not like what happens. So with that, the
subcommittee is adjourned.
[Whereupon, at 11:07 a.m., the subcommittee was adjourned.]
Statement Submitted for the Record by CIBA Vision
CIBA Vision, the eye care unit of Novartis and a global leader in the
research, development, and manufacturing of contact lenses and lens
care products, welcomes the opportunity to submit this statement for
the record in the Subcommittee�s hearing on the topic "Contact Lens
Sales: Is Market Regulation the Prescription?" CIBA Vision is deeply
committed to the eye health and safety of contact lens wearers. For
this reason, the company supported enactment of the Fairness to
Contact Lens Consumers Act ("FCLCA") (Public Law No. 108-164) and was
a strong advocate for the "Boozman-Barton-Waxman" plano lens
legislation, now Public Law No. 109-96, which mandates that the Food
and Drug Administration regulate all contact lenses as medical devices
and requires that such lenses be sold only pursuant to an eye care
professional�s examination and prescription. It is CIBA Vision�s
abiding concern for eye health and safety that compels the submission
of this statement.
CIBA Vision understands that one of the purposes of today�s hearing is
to examine the need for, and the impact on consumers and the
marketplace of H.R. 5762, the proposed Contact Lens Consumer Protection
Act. This legislation would require contact lens manufacturers to "make
any contact lens the manufacturer produces, markets, distributes, or
sells available in a commercially reasonable and nondiscriminatory manner
to (1) prescribers; (2) entities associated with prescribers; and (3)
alternative channels of distribution." For the purposes of the proposal,
"alternative channels of distribution" mean "any mail order company,
Internet retailer, pharmacy, buying club, department store, or mass
merchandise outlet, without regard to whether the entity is associated
with a prescriber, unless the entity is a competitor."
As an initial matter, CIBA Vision queries whether there is a need for
legislation such as H.R. 5762. The FCLCA (Section 10) directed the
Federal Trade Commission ("FTC") to "undertake a study to examine the
strength of competition in the sale of prescription contact lenses."
The statute specifies that the study must evaluate several issues,
including, inter alia: the "incidence of exclusive relationships between
prescribers or sellers and contact lens manufacturers and the impact of
such relationships on competition"; the "difference between online and
offline sellers of contact lenses, including price, access, and
availability"; and the "incidence, if any, of contact lens prescriptions
that specify brand name or custom labeled contact lenses, the reasons
for the incidence, and the effect on consumers and competition." The
FTC issued its report, The Strength of Competition in the Sale of Rx
Contact Lenses: An FTC Study, in February 2005. After a careful
analysis, the FTC concluded:
Our examination of these issues -- exclusive relationships, private
label lenses, and limited distribution lenses�suggests that such
relationships are not prevalent in the market for contact lenses and
are unlikely to limit competition and harm consumers. Exclusive
relationships are rare; private label lenses, while more common, still
represent a small portion of all sales of soft contact lenses; and
limited distribution policies are not widely used. Moreover, our
inquiry showed that a common, limited distribution lens, or its private
label equivalent, was available from the overwhelming majority of
outlets sampled. Given that the FCLCA permits sellers to fill
prescriptions with equivalent national brand or private label lenses,
consumers have a number of channels through which to obtain such
lenses.
* * *
In sum, the theory and the evidence examined do not support the
conclusion that these distribution practices harm competition and
consumers by allowing prescribers to lock in their patients to
supracompetitive priced lenses. The Strength of Competition in the
Sale of Rx Contact Lenses: An FTC Study (February 2005) at 33.
This study, which Congress specifically requested, demonstrates beyond
cavil that legislation such as H.R. 5762, which would replace vibrant
market competition with government regulation, is wholly unnecessary.
However, in CIBA Vision�s view, there is a serious defect in current
law which Congress should remedy expeditiously--the "passive" or
"default" prescription verification provisions of the FCLCA. CIBA
Vision concurs with the conclusions of the American Optometric
Association and the American Academy of Ophthalmology that passive
verification of contact lens prescriptions is not working in all
cases, with all sellers, and as a result, the eye health and safety of
patients are at serious risk.
Section 4 of the FCLCA provides that a "seller may sell contact
lenses only in accordance with a contact lens prescription for the
patient that is-- (1) presented to the seller by the patient or
prescriber directly or by facsimile; or (2) verified by direct
communication." Pursuant to the statute, a "prescription is verified--
only if one of the following occurs: (1) The prescriber confirms the
prescription is accurate by direct communication with the seller. (2)
The prescriber informs the seller that the prescription is inaccurate
and provides the accurate prescription. (3) The prescriber fails to
communicate with the seller within 8 business hours, or a similar time
as defined by the Federal Trade Commission, after receiving from the
seller the information described in subsection (c)." Subsection (c)
provides that when seeking verification of a contact lens prescription,
a seller must provide the prescriber with specific information including
the patient�s name and address; contact lens power, manufacturer, base
curve or appropriate designation, and diameter when appropriate;
quantity of lenses ordered; the date of the patient request; the date and
time of the verification request; and the name of the contact person at
the seller�s company including telephone and facsimile numbers. "Direct
communication" includes "communication by telephone, facsimile, or
electronic mail."
The FTC implemented the FCLCA through the Contact Lens Rule
which was promulgated in July 2004. (16 C.F.R. Part 315). In addition,
the FTC has issued two relevant guidances-- FTC Facts for Business--The
Contact Lens Rule: A guide for Prescribers and Sellers (October 2004)
and Q&A: The Contact Lens Rule and the Eyeglass Rule (October 2004). The
FCLCA and the FTC�s regulation and guidances all make it clear that a
seller may conclude that a prescription is valid if eight hours have
elapsed since a verification request was lodged with the prescriber
and no response from the prescriber was forthcoming. As a result, a
seller may dispense a prescription contact lens without ever having
had any confirmation that the request was received or that the
prescription is valid, accurate, and not expired. CIBA Vision
respectfully submits that such passive or default verification is
simply not acceptable.
The law is clear that all contact lenses are regulated as
medical devices by the FDA and that they may only be sold pursuant to
an eye care professional�s examination and a valid prescription. Such
regulation is manifestly justified by the fact that contact lenses
may cause serious injury if not properly manufactured, distributed,
fitted, worn, and cared for. The existence of a valid prescription is
an indispensable component of the regulatory schemata to protect the
eye health and safety of contact lens wearers. The gravamen of the
defect in the FCLCA�s passive verification provision is that it
grievously denigrates the integrity of the prescription requirement
and creates a gaping portal for abusive conduct.
CIBA Vision is aware of numerous instances of conduct designed
to subvert or circumvent the verification provisions of the FCLCA.
Consider the following:
Some sellers are ignoring the verification requirement altogether and
selling contact lenses without any effort to secure verification from
the prescriber.
Certain sellers make it extremely difficult, if not impossible, to be
contacted by the prescriber within the 8-hour window and then, having
heard nothing from the prescriber, proceed to sell the lenses.
Contact lenses are being dispensed by some vendors even though the
prescription has expired and is no longer valid.
Some sellers use automated calling systems to verify prescriptions making
it extremely difficult for a prescriber to convey critical information
about the patient or the prescription.
Prescriptions are being overfilled, sometimes with an unlimited supply
of product, especially immediately preceding the prescription expiration
date.
Unlike pharmaceuticals, because a contact lens prescription is not
surrendered when it is filled, patients are able to order from multiple
sellers and limitless supplies of contact lenses.
Lenses are being ordered using false eye care professionals� names and
contact information.
Patients are listing eye care professionals they have never seen as the
source of the prescription and without an active verification
requirement, some sellers fill the order.
Certain sellers have developed recurring "computer problems" which
prevent communications from prescribers. Claiming that they received
no communication from the prescriber within the 8 hours, the seller
fills the order.
TV commercials, websites, and magazine and newspaper advertisements
imply that prescriptions are not necessary and that orders can be
filled on some other basis, e.g. taking information from an empty
contact lens box.
We believe these abuses, and others, have emerged as a direct
result of the passive verification provisions in the FCLCA. There is
no limit to the ingenuity of unscrupulous sellers who are intent on
ignoring or circumventing the weak default prescription verification
process called for by current law. The potential ramifications to
consumer eye health and safety must be considered if passive
verification remains the statutory standard.
A safer and more effective prescription verification system
should contain at least the following elements: (1) providers who
write contact lens prescriptions should be permitted to require that
verification requests from sellers must be submitted by e-mail or
facsimile rather than through automated telephone systems; (2) a
requirement that the seller satisfactorily resolve all patient eye
health care considerations raised by the prescriber before filling
the prescription and selling the contact lens; and (3) increased
penalties and fines for violations of the active prescription
verification requirements.
As Congress considers legislation affecting the contact lens market,
it should eschew efforts to reconfigure the competitive structure of
the industry. Instead, it should accede to the compelling demands of
consumer eye health and safety by eliminating the passive verification
system and mandating a system which requires active verification of
contact lens prescriptions.