[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

                             ________


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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.ï¿½ Iï¿½m 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 Iï¿½m 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 todayï¿½s 
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 
consumersï¿½ 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 consumersï¿½ 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 sellersï¿½ 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 canï¿½t 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 todayï¿½s hearing to investigate these 
complaints to determine what needs to be done to ensure that we 
protect consumersï¿½ health and safety, and I thank the witnesses here 
for shedding light on this important issue.  Thanks. 
Mr. Stearns.  I thank the gentlelady. 
Mr.ï¿½Terry.  
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 wonï¿½t 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
 patientï¿½s 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 todayï¿½s 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 doctorï¿½s 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 providersï¿½ 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.ï¿½Ed Whitfieldï¿½s 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 todayï¿½s 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 itï¿½s 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.ï¿½ 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.ï¿½ 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.ï¿½ 
Doctors report numerous instances of third-party vendors using 
automated phone systems that often provide inadequate information for
 verifying patient prescriptions.ï¿½ 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.ï¿½ 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 patientsï¿½ prescriptions whatsoever.ï¿½ 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.ï¿½ 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.ï¿½ Completing contact lens sales regardless of
 a patientï¿½s medical history is an unacceptable business practice 
and clearly contrary to the best interest of consumersï¿½ health and 
well-being. 
Verifying patient prescriptions requires a good-faith effort on the 
part of both doctors and third-party vendors.ï¿½ 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.ï¿½ Vendors would then be required to attempt at 
least two of the three communication choices.ï¿½ 
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 donï¿½t 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.ï¿½Maureen 
Ohlhausen, Director of the Office of Policy Planning at the Federal 
Trade Commission, and we have Mr.ï¿½Wayne Klein, Assistant Attorney 
General, Office of the Attorney General, State of Utah.  And we have
 Mr.ï¿½Jonathan Coon, CEO of 1-800 Contacts.  We have Mr.ï¿½Gregory 
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 Commissionï¿½s Office of 
Policy Planning. 
I am pleased to present the Commissionï¿½s testimony on consumer 
protection and competition issues concerning the contact lens industry.
  The Commissionï¿½s 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 FTCï¿½s 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 
Actï¿½s 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 Samï¿½s, and many of 
these outletsï¿½ 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 Commissionï¿½s
 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 supplierï¿½s 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 Generalï¿½s 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 optometristsï¿½ business interests 
to override the optometristï¿½s 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 optometristsï¿½ 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 optometristï¿½s ability to prescribe the 
product that is best for the patient.  What it does do is limit the
 optometristï¿½s 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 patientï¿½s 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 statesï¿½ 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 optometristsï¿½ business 
interests to distort the optometristsï¿½ 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 optometristï¿½s 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
 customerï¿½s 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 optometristï¿½s ability to 
prescribe the product that is best for the patient.  What it does do is 
limit an optometristï¿½s 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 ï¿½ 
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 patientï¿½s 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 doctorï¿½s 
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 manufacturersï¿½ 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 doctorï¿½s 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 doctorï¿½s aid in enforcing any manufacturerï¿½s 
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 Americaï¿½s 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.ï¿½Coon, 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 wasnï¿½t 
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 consumerï¿½s 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, "Letï¿½s 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 doesnï¿½t happen with drugs.  No one goes to Walgreenï¿½s only to 
find out they canï¿½t 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 canï¿½t 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. Curtisï¿½ 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. Curtisï¿½ office 
show that in the last 12 months we have received 117 orders from Dr. 
Curtisï¿½ patients.  We have made 192 phone calls to Dr. Curtisï¿½ 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. Curtisï¿½ office 
answering the phone, so we know who we spoke with. 
After navigating Dr. Curtisï¿½ 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. Curtisï¿½ 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. Curtisï¿½ 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 donï¿½t get caught in the middle.  
That said, I believe there is actually more common ground here than 
it might appear from everyoneï¿½s 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 Americaï¿½s 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 prescriberï¿½s 
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, itï¿½s generally a 
simple process -- the consumer goes to his or her local pharmacy, the 
pharmacy calls into the prescribing physician and the physicianï¿½s 
office then promptly confirms, corrects or rejects the refill.  Thatï¿½s 
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 doctorï¿½s 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 doctorï¿½s 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 doctorï¿½s refusal to respond can stop a patientï¿½s order from a third 
party, a presumed verification system requires the doctor to actively 
do something to cancel the patientï¿½s 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 todayï¿½s 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 doctorï¿½s 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 lawï¿½s 
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 Committeeï¿½s report which states that, 
"The consumerï¿½s 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, "Letï¿½s 
see. Youï¿½ll make more money."  The ad goes on to explain to the doctor 
that "since ProClear Compatibles are only available through your 
practice, youï¿½ll get what youï¿½re 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 economistï¿½s view that a manufacturer offering 
a retailer increased profits or exclusivity to promote the 
manufacturerï¿½s 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 FTCï¿½s 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 AOAï¿½s 
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 AOAï¿½s settlement, which clearly states in 
Section 2(e):
"The AOA will resist any invitation by any contact lens manufacturer 
to enlist the AOAï¿½s aid in enforcing any manufacturerï¿½s distribution 
policy refusing to sell contact lenses to any channels of trade."

CooperVisionï¿½s president, Greg Fryling, is quoted in his companyï¿½s 
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, itï¿½s as much their battle as it is our 
battle."

It is odd for a manufacturer to publicly invite doctors to defend the
 manufacturerï¿½s 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 
patientï¿½s eyes and vision" and asking CooperVision to "review your 
companyï¿½s marketing and advertising policies."  Even the AOA 
recognizes that it cannot openly support CooperVisionï¿½s 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 physicianï¿½s 
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 patientï¿½s right to do so.  The bill does 
not limit what a doctor can prescribe for any patient.  The bill does 
not limit the doctorï¿½s 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 Congressï¿½ 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 patientsï¿½ 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 1-800ï¿½s urging, only Utah, 1-800ï¿½s 
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.ï¿½ We started as a small company competing 
against the large companies.ï¿½ CooperVision has been successful because
 of our high-quality products and our policy of choosing distributors
 carefully.ï¿½ 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.ï¿½ 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.ï¿½ 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 Congressï¿½s goals in passing the 
Fairness to Contact Lens Consumers Act.  That claim is far off the 
mark.  The FCLCA and the FTCï¿½s 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.

CooperVisionï¿½s Distribution Practices
	A number of claims have been made about CooperVisionï¿½s 
distribution practices, particularly the claim that one popular family 
of CooperVisionï¿½s 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 
manufacturerï¿½s 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 conditionï¿½that
 requiresï¿½identification byï¿½qualifiedï¿½eye 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 patientsï¿½ 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 andï¿½are considering providingï¿½these lenses toï¿½approved 
Internet suppliers, provided that certainï¿½conditions can be met,
 includingï¿½assurances of quality and service. ï¿½For example, we haveï¿½made 
an offer toï¿½1-800 Contacts to begin selling Proclear lenses to themï¿½in 
the near futureï¿½and 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 
manufacturersï¿½ 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 1-800ï¿½s urging, only Utah 1-800ï¿½s 
home state-passed the bill.  The FTC has already rejected 1-800ï¿½s 
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 1-800ï¿½s 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.ï¿½Schein, 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 
consumersï¿½ 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 Americaï¿½s 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 patientï¿½s contact lens wear.  
Accordingly, ongoing periodic evaluations after the initial 
prescription are very important to the patientï¿½s 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 FDAï¿½s medically-based decision to 
regulate contact lenses as medical devices.  The Academy of 
Ophthalmology remains hopeful that Congress will put the ocular 
health of Americaï¿½s 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 Americaï¿½s 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 
patientï¿½s contact lens wear.  Accordingly, ongoing periodic evaluations 
after the initial prescription are very important to the patientï¿½s 
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 patientï¿½s 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 FDAï¿½s 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 Americaï¿½s 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, Americaï¿½s frontline
providers of eye and vision care, I want to thank you for this 
opportunity to appear at todayï¿½s 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 patientï¿½s 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 doctorï¿½s 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 Presidentï¿½s
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 AOAï¿½s 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 patientï¿½s 
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 Whitfieldï¿½s 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, Americaï¿½s frontline 
providers of eye and vision care, I want to thank you for the 
opportunity to appear at todayï¿½s 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).ï¿½ The AOA 
supported the legislation because we felt it tried to balance the 
patientï¿½s ability to get his or her prescription with the need to 
assure that only properly verified prescriptions are filled.ï¿½  
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 consumerï¿½s 
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).  Thatï¿½s 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.ï¿½ 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.ï¿½ 
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.ï¿½ 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 doctorï¿½s 
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, itï¿½s 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 nationï¿½s largest Internet 
seller.  The FTCï¿½s 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 sellersï¿½ 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.  Hereï¿½s 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 patientï¿½s 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 canï¿½t imagine that anyone on this committee 
envisioned automated telephone calls would be the primary mechanism 
used by a seller to verify a prescription.  I canï¿½t imagine that 
anyone on this committee envisioned that a seller would undermine the 
lawï¿½s intention of encouraging patient-focused prescriber-dispenser
 communications.   Unfortunately, thatï¿½s whatï¿½s happening.
Thatï¿½s 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.ï¿½Schakowsky, 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.ï¿½Gonzalez 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.ï¿½Coon 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.ï¿½Coonï¿½s 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.ï¿½Coon, 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 wouldnï¿½t have put it in his written 
testimony.  However, the facts donï¿½t 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 canï¿½t talk--
Mr. Coon.  Sir, if I could, we use a live agent to make the phone call. 
 We donï¿½t 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 canï¿½t spend all this amount 
of time with one doctor.  Donï¿½t you think he has a legitimate complaint 
here, that he canï¿½t 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 donï¿½t 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 donï¿½t know the name.  I didnï¿½t 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 
canï¿½t 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 donï¿½t want to say anything, but I am just telling
 you that you lose your credibility.  In my case, if I donï¿½t 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 wouldnï¿½t 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 
werenï¿½t actually doctors-only lenses, that wasnï¿½t 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.ï¿½Terry, go ahead.  
Mr. Terry.  I appreciate that, Mr.ï¿½Gonzalez, 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 didnï¿½t 
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 5ï¿½years, 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, "letï¿½s see, you will make more money."  That ad hasnï¿½t run 
for over 3ï¿½years.  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 wasnï¿½t 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 3ï¿½percent 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 donï¿½t 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 arenï¿½t being sold at Wal-Marts 
or Costcos, and that is only Septemberï¿½5, 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 CooperVisionï¿½s current distribution policy 
from December ofï¿½2005.  I am going to read from it because he says 
they donï¿½t 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 patientï¿½s 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 canï¿½t 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 physicianï¿½s 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 doesnï¿½t 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 donï¿½t 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 canï¿½t resell it to, letï¿½s 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 canï¿½t be a wholesaler.  
He can sell directly to his patients, but he canï¿½t 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 isnï¿½t 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 wasnï¿½t 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 didnï¿½t 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 canï¿½t be a
 wholesaler that would then resell it to the Internet outlets.
Mr. Stearns.  Okay.  My time and Mr. Terryï¿½s 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 yï¿½all 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 peopleï¿½s hands.  You really donï¿½t want that.  
And we really need some direction and some guidance.  And I think I 
understand the Chairmanï¿½s 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 
10ï¿½years 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 wasnï¿½t 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, canï¿½t 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 donï¿½t 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, thatï¿½s 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 donï¿½t 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 donï¿½t think we should interfere 
with that.  There is nothing wrong that.  And if it doesnï¿½t 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 wasnï¿½t 
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.  Letï¿½s not just do it with 
automated phone calls.  Letï¿½s do fax and e-mails.  I donï¿½t 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 patientï¿½s 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 havenï¿½t 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 generalï¿½s 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, didnï¿½t support the idea that 
competition wasnï¿½t a sufficient check on this ability of the gatekeeper.  
So it is not that we didnï¿½t know that this could be a problem.  We 
examined it, and we just found that the evidence didnï¿½t 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 FTCï¿½s remarks since she jumped in?  
I think no one argues with the FTCï¿½s position that offering a retailer 
a financial incentive or exclusivity to promote a product is fine.  
Paul Mitchell doesnï¿½t 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 donï¿½t get a 
prescription for shampoo.  I mean, if you canï¿½t 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 100ï¿½percent 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 8ï¿½percent.  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 letï¿½s
 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 5ï¿½percent 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 wouldnï¿½t 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 doesnï¿½t happen. 
That is why the FTC hasnï¿½t 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 100ï¿½percent.  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 10ï¿½minutes 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. Scheinï¿½s 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 5ï¿½years 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 everybodyï¿½s 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 isnï¿½t this 
because of the three major manufacturers, Johnson & Johnson, CIBA 
Vision, and Bausch & Lomb, are prevented by the consent decree which 
expires in 6ï¿½weeks from entering into exclusive contracts, isnï¿½t that 
the reason why we donï¿½t see that?  
Ms. Ohlhausen.  That certainly may be a reason why.  We made no 
conclusions.  
Mr. Stearns.  So you are saying if we didnï¿½t have the consent decree,
 we didnï¿½t need this consent decree, is that what you are telling me?  
Ms. Ohlhausen.  No.  What I am saying is we didnï¿½t 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 doesnï¿½t 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 doesnï¿½t 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 couldnï¿½t 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 donï¿½t think they want to start doing it again.  I think 
they have moved on, but I donï¿½t 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 donï¿½t 
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 didnï¿½t sell what they 
prescribed, which is why I mentioned that, this market wouldnï¿½t 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 havenï¿½t 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 donï¿½t 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 wonï¿½t 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 canï¿½t, 
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 donï¿½t 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 Subcommitteeï¿½s 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
 professionalï¿½s examination and prescription.  It is CIBA Visionï¿½s 
abiding concern for eye health and safety that compels the submission 
of this statement.
CIBA Vision understands that one of the purposes of todayï¿½s 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 lensesï¿½suggests 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 Visionï¿½s 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 patientï¿½s 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 sellerï¿½s 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 FTCï¿½s 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 professionalï¿½s  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 FCLCAï¿½s 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 professionalsï¿½ 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. 
