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I.
Introduction
Mr. Chairman and members of the Committee, I am Howard Beales, Director of the
Bureau of Consumer Protection at the Federal Trade Commission (“Commission”
or “FTC”). The Commission is pleased to provide information concerning
the contact lens industry and offer comments on the Fairness to Contact Lens
Consumers Act (H.R. 2221) (“the bill”). I will discuss the
Commission’s mission and our long history of activity in the eye care
industry, and provide some specific comments on the bill.[1]
As the federal government’s principal consumer protection agency, the FTC’s
mission is to promote the efficient functioning of the marketplace by enforcing
laws against unfair or deceptive acts or practices in or affecting commerce.[2] Pursuant to its
statutory mandate, the Commission increases consumer choice by promoting
vigorous competition. The Commission has extensive experience assessing
the impact of regulation and business practices on competition and consumers in
many industries, including, as discussed below, substantial experience with
eyeglasses, contact lenses, and other eye care goods and services.
II. The
Contact Lens Marketplace
The contact lens market in the United States is a multi-billion dollar market.[3]
Recent data indicate that nearly 36 million Americans – almost 13% of all
Americans – wear contact lenses.[4]
There are numerous manufacturers of contact lenses (e.g., Johnson & Johnson,
Bausch & Lomb, and CIBA Vision) and many different channels of distribution,
including eye care practitioners (e.g., ophthalmologists and optometrists),
national and regional optical chains, mass merchants (e.g., Wal-Mart and
Costco), and mail order and Internet firms.
The contact lens market has undergone significant change in recent years.
In the past, for example, contact lenses were designed to last for long periods
of time, required daily removal, and involved extensive cleaning regimens.
Consumers generally purchased these lenses from their eye care practitioners
after an eye exam and lens fitting and then replaced them, for example, when the
prescription changed or a contact lens was lost or damaged. Manufacturers
had not developed production methods for lenses that provided standardized
reproduction.
Beginning in the late 1980s, lens manufacturers began to market and sell
“disposable” and “frequent replacement” soft contact lenses, which are
designed to be replaced daily, weekly, or monthly. Today, the replacement
soft contact lenses that a patient receives pursuant to a prescription
specifying brand and power will be the same, regardless of whether the patient
buys the lenses from an eye care practitioner or another seller.
The development of standardized lenses has facilitated the growth of sellers
other than eye care practitioners. These sellers tend to focus on the sale
of replacement lenses for which an eye care professional has already fitted the
customer. Unlike many eye care practitioners, these sellers do not sell
eyeglasses, and do not fabricate contact lenses or fit them to the eye.
Their business consists simply of shipping to customers lenses that come from
the manufacturer in sealed boxes labeled with the relevant specifications.
Many of these sellers are located in a single state but ship orders to customers
nationwide.
The advent of disposable soft contact lenses, followed by the growth of
“alternative” retail sources of contact lenses, including mail order,
pharmacy and mass merchants, has changed the market. Eye care
practitioners still write prescriptions, but now consumers purchase more contact
lenses with greater frequency. Moreover, they have greater choice of
sellers and means of delivery when they purchase lenses.
Consumer choice in the contact lens market is expanding, and that can have
important benefits to consumers. Competition among contact lens sellers
benefits consumers through lower prices, greater convenience, and improved
product quality.
III.
Overview of FTC’s Authority and History of Activity in the Eye Care Industry
The Commission has a long history of activity in the eye care industry –
through law enforcement, advocacy before other government agencies, and
rulemaking. The underlying objective of these various activities is to
promote vigorous competition and consumer choice, thereby increasing consumer
welfare.
A. Law Enforcement
Many of the FTC’s law enforcement efforts concerning eye care have focused on
ensuring that consumers have access to truthful, non-misleading information
about the eye care products they need. Until the 1980s many government
boards and trade associations imposed restrictions on the ability of eye care
practitioners to provide truthful and non-misleading advertising about their
goods and services. The Commission brought law enforcement actions
challenging some of these advertising restrictions as anticompetitive. For
example, in Massachusetts Board of Registration in Optometry,[5]
the Commission challenged a state optometry board’s regulations restricting
advertising of price discounts, the advertisement of affiliations between
optometrists and retail optical stores, and the use of testimonials and similar
forms of advertising. The FTC concluded that these restrictions did not
serve a legitimate purpose and were anticompetitive, and ordered the board to
cease and desist from imposing such restrictions on advertising by optometrists.
Removing such advertising restrictions has allowed sellers of eye care goods and
services to compete more aggressively with each other.
Increased competition among sellers through advertising, however, does not
benefit consumers if the claims made in the ads are false or misleading.
To prevent such claims from being made in the marketplace, the FTC sued sellers
who have made deceptive advertising claims for eye care products. For
example, the Commission recently issued final consent orders against two of the
largest purveyors of LASIK eye surgery services, the most common elective
surgery in the United States.[6]
In these cases, the Commission challenged as unsubstantiated claims that LASIK
surgery would eliminate the need for glasses or contacts for life, and that
LASIK surgery poses significantly less risk to patients' ocular health than
wearing contact lenses or glasses. Our cases have enhanced the ability of
consumers to make better-informed choices concerning eye care products.
B. Advocacy
The Commission also has pursued numerous advocacy opportunities involving the
eye care industry. In 2002, the Commission staff filed a comment before
the Connecticut Board of Examiners for Opticians addressing whether state law
requires that out-of-state sellers obtain a license to sell contact lenses to
the state’s residents. FTC staff argued that out-of-state sellers should
not be subject to state licensing requirements because the possible benefit to
consumers from increased state protection did not outweigh the likely negative
effect from decreased competition.[7]
Ultimately, the Board held that state law did not require out-of-state sellers
to obtain a license to sell contact lenses to consumers.[8]
Similarly, in April 2003, the Commission submitted comments to the Tennessee
state legislature on proposed legislation that would have restricted the types
of agreements that optometrists can make with commercial firms from which they
lease space.[9]
The FTC opposed these restrictions, explaining that they decrease competition
among sellers of eye care products, especially competition from chain optical
stores, without any offsetting benefits to consumers.
In October 2002, the Commission held a public workshop to evaluate possible
anticompetitive barriers to e-commerce in contact lenses and nine other
industries.[10]
Commission staff heard testimony from all sides of the contact lens issue,
including eye care practitioners, a major contact lens manufacturer, an online
seller, a traditional contact lens seller, and an economics professor. In
addition, Commission staff gathered evidence from a wide variety of sources,
such as empirical studies, court proceedings, state attorneys general, and the
Food and Drug Administration. Commission staff will report on the
information obtained in connection with the workshop and the extent to which
anticompetitive barriers to e-commerce exist in the contact lens industry.
C. Rulemaking
In 1978, to increase competition in the sale of eyeglasses, the Commission
promulgated the Ophthalmic Practice Rule (“Prescription Release Rule”).
The Rule requires optometrists and ophthalmologists to provide patients, at no
extra cost, with a copy of their eyeglass prescription after completion of an
eye exam.[11]
The Rule was based on the Commission’s findings that many consumers were
deterred from comparison shopping for eyeglasses because they did not receive a
copy of their prescription. Some eye care practitioners refused to release
prescriptions, even when requested to do so, while others charged an additional
fee for release of a prescription. The Commission also found a lack of
consumer awareness that purchasing eyeglasses can be separated from the process
of obtaining an eye exam. As part of its program of systematic analysis of
its rules and guides, the Commission currently is conducting a review of the
overall costs and benefits of the Prescription Release Rule.
One noteworthy issue is whether the Rule should be extended to require eye care
practitioners to release contact lens prescriptions to patients.[12]
The Rule currently does not require an optometrist or ophthalmologist to release
a contact lens prescription to a patient after an eye exam. The Commission
previously has considered this issue but declined to extend the Rule to contact
lenses. In 1989, the Commission found there was not sufficient reliable
evidence from which to conclude that the practice of not releasing contact lens
prescriptions upon request was prevalent.[13]
In 1995, in response to a petition for rulemaking, the Commission reached a
similar conclusion after conducting a survey on the extent to which patients
could obtain their contact lens prescriptions.[14]
Commission staff is monitoring the significant ongoing changes in the contact
lens marketplace relevant to issues raised in the rule review, including the
growth of alternate sellers of replacement contact lenses, state legislation
requiring contact lens prescription release and verification, and proposed
federal legislation addressing prescription release and verification issues.
IV. H.R. 2221:
The “Fairness to Contact Lens Consumers Act”
Drawing on its experience with the eye care industry, the Commission welcomes
the opportunity to provide its views on The Fairness to Contact Lens Consumers
Act. The bill would require that ophthalmologists and optometrists release
contact lens prescriptions to their patients and verify contact lens
prescriptions for Internet sellers and other third parties. The bill would
provide for FTC enforcement of these requirements. The Commission supports
the proposed legislation’s goal of promoting greater competition among contact
lens sellers and thereby enhancing consumer choice. We have comments on
three components of the bill.
A.
Prescription Verification
First, a central requirement of the bill is that eye care practitioners verify a
patient’s contact lens prescription “as directed by any person designated to
act on behalf of the patient.”[15]
This provision appears aimed at helping patients who seek to purchase contact
lenses from a seller other than their own eye care practitioner. Eye care
practitioners would be prohibited from refusing to verify prescription
information to a third-party seller, such as a mail order or Internet seller,
thus facilitating competition between eye care practitioners and third-party
sellers.
The bill does not impose a particular approach to verification. There are
two primary approaches to verification: “passive” and “active”
verification.[16]
Under a passive verification system, a third-party seller must notify the eye
care practitioner of its customer’s request to purchase contact lenses and
inform the practitioner what prescription information the customer has provided.
Unless the eye care practitioner affirmatively notifies the seller within a
specified time period that the prescription is incorrect, expired, or otherwise
problematic, the seller may presume that the prescription is correct and valid
and complete the sale to the patient. By contrast, under an active
verification system, the third-party seller must wait for affirmative
confirmation from the prescriber that the prescription is correct and valid
before it can complete the sale.
At its E-Commerce Workshop, the Commission explored the costs and benefits of
these two approaches to prescription verification.[17]
Proponents of passive verification (including many alternative sellers of
contact lenses like mail order and Internet sellers) favor this approach because
it allows the seller to presume verification if the eye care practitioner does
not take affirmative action to correct any errors in the prescription.
These proponents point to difficulties with an active verification regime, such
as low response rates or delayed responses by eye care practitioners who have an
incentive to impede verification so that their patients will continue to buy
contact lenses from them. By contrast, proponents of active verification
(including some groups representing eye care practitioners) express concern that
passive verification allows sellers to ship contact lenses even if the customer
has an invalid or incorrect prescription. According to proponents of
active verification, customers may face serious health risks if they obtain and
wear contact lenses based on an invalid or incorrect prescription.
The Commission believes that the bill should identify with specificity the type
of verification system that would be required. Absent such specificity,
the Commission would be in the difficult position of interpreting the law to
determine what types of verification systems would be acceptable. If the
bill directly and specifically addressed the issue of an acceptable verification
system, consumers also would receive the bill’s benefits more quickly than if
the Commission first had to compile information about various systems, analyze
the costs and benefits of these systems, and decide which systems are
acceptable.
B. FTC Study
The bill also requires that the FTC undertake a study and prepare a report,
within nine months, examining the strength of competition in the market for
prescription contact lenses. The study would address several specific
issues such as: the merits of active versus passive verification; compliance
with and enforcement of state verification laws; and the effects of these state
laws on competition and ocular health. In addition, the study would
address the costs and benefits of the practice of writing prescriptions for
“private label lenses,” that is, prescriptions written for contact lenses
that only the prescribing eye care practitioner sells.
The FTC study requirement implicates issues well outside the Commission’s
expertise, such as the effect of state verification laws on ocular health.
It also would be very difficult to complete within nine months the broad study
that the bill would require. Given the scope and burden of the study requirement
in the bill, the Commission respectfully requests that it be eliminated.
C.
Prescription Release Requirement
Third, the bill would require that ophthalmologists and optometrists release
contact lens prescriptions to their patients, and any person designated to act
on their behalf, upon completion of a contact lens fitting.[18]
The Commission believes that the availability of contact lens prescriptions
benefits consumers because it gives patients the option of purchasing contact
lenses from sellers other than the eye care practitioner who wrote their
prescription.[19]
More than two-thirds of the states already require that prescribers release
contact lens prescriptions to patients.[20]
Some states require the release of prescriptions upon request by the patient,
while other states require release automatically, regardless of whether the
patient requests it. Moreover, a survey conducted by the Commission in
1995 indicated that most consumers who requested their prescription were able to
obtain it.[21]
Nevertheless, there is anecdotal evidence that some patients have been unable to
obtain a copy of their contact lens prescription.[22]
Although it is unclear to what extent consumers currently do not obtain their
contact lens prescriptions, the Commission’s experience with the prescription
release requirements for eyeglasses suggests that the costs associated with a
contact lens prescription release requirement are likely to be quite low.
Accordingly, the FTC does not oppose such a requirement.[23]
V. Conclusion
The Commission appreciates this opportunity to present its views on the Fairness
to Contact Lens Consumers Act, H.R. 2221. I look forward to answering any
questions you may have.
[1]The
views expressed in this statement represent the views of the Commission.
My oral statements and responses to any questions you may have represent my own
views, and not necessarily the views of the Commission or any Commissioner.
[2]
Federal Trade Commission Act, 15 U.S.C. §§ 45, 52.
[3]Annual
sales estimates range from $1.95 billion to $3.5 billion.
[4]See Health
Products Research (VIS) - Annual 2000 Year-End Consumer Contact Lens Survey
(cited in “Trends in Contact Lenses & Lens Care,” The Bausch & Lomb
Annual Report to Vision Care Professionals (Dec. 2001)).
[5]110
F.T.C. 549, 606-08 (1988).
[6]LCA-Vision,
Inc. d/b/a LasikPlus, Dkt. No. C-4083 (July 11, 2003) (consent) and The Laser
Vision Institute, LLC , Dkt. No. C-4084 (July 11, 2003) (consent). LASIK
is designed to reduce dependence on eyeglasses and contact lenses for distance
and near vision by changing the shape of the cornea.
[7]
FTC Staff Comment Before the Connecticut Board of Examiners for Opticians (Mar.
27, 2002), available at <
[8]
Connecticut Board of Examiners for Opticians, In re: Petition for Declaratory
Ruling Concerning Sales of Contact Lenses, Declaratory Ruling Memorandum of
Decision (June 24, 2003).
[9]Letter
from Timothy J. Muris, Chairman, Federal Trade Commission, to Hon. Ward
Crutchfield, Senate Majority Leader, (Apr. 29, 2003), available at <
[10]
67 Fed. Reg. 48,472 (2002).
[11]
16 C.F.R. Part 456. The original rule also prohibited bans on nondeceptive
advertising by vision care providers. That portion of the rule was
remanded to the Commission for further consideration in light of the Supreme
Court decision in Bates v. State Bar of Arizona, 433 U.S. 350 (1977).
American Optometric Ass’n v. FTC, 626 F.2d 896 (D.C. Cir. 1980). The
Commission has since taken action against such restrictions through
administrative litigation, on a case-by-case basis.
[12]
See Request for Public Comments, 62 Fed. Reg. 15,865 (Apr. 3, 1997).
[13]Ophthalmic
Practice Rules, Final Trade Regulation Rule, 54 Fed. Reg. 10,285, 10,299, 10,303
(Mar. 13, 1989).
[14]Letter
from Federal Trade Commission to H. Jeff McLeod, Re: Petition to Initiate
Rulemaking to Require the Release of the Contact Lens Prescription (June 29,
1995) (on FTC Public Record, Document No. B174817).
[15]H.R.
2221, Sec. 2(a)(2).
[16]States
have taken different approaches to verification of prescriptions.
California, for example, has adopted a passive verification regime, Cal. Bus.
& Prof. Code § 2546.6(a), while Texas has adopted an active
verification system. Texas statute Sec. 351.607.; Tex Adm. Code. § 279.2(e).
[17]The
choice of a time period in verification systems is a contentious issue, with
Internet and mail order sellers generally seeking shorter time periods and eye
care practitioners typically seeking longer time periods.
[18]H.R.
2221, Sec. 2(a).
[19]Release
of prescriptions by eye care practitioners to agents of consumers, such as mail
order and Internet sellers, also may promote competition.
[20]We
understand these states to be: Alabama, Arizona, Arkansas, California, Colorado,
Connecticut, Delaware, Florida, Georgia, Indiana, Iowa, Kansas, Kentucky,
Louisiana, Maine, Maryland, Massachusetts, Minnesota, Nebraska, New Hampshire,
New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon, South
Dakota, Texas, Utah, Vermont, Virginia, Washington, Wisconsin, and Wyoming.
Some states require prescription release by statute, while others do so through
rules.
[21]Bruskin/Goldring
Research, Contact Lenses, prepared for Federal Trade Commission (Feb.
1995) (available on the FTC public record, Document No. B174829). However,
the Commission has not studied the extent to which agents of consumers have been
unable to obtain release of prescriptions.
[22]In
addition, we note that the Attorneys General of 31 states filed suit in 1996
alleging, in part, a conspiracy among practitioners and their trade associations
to prevent the release of contact lens prescriptions to consumers. See In
re Disposable Contact Lens Antitrust Litigation, No. 94-MDL 1030-J-20A (M.D.
Fla.). The case ultimately settled.
[23]The
Commission also recommends that the bill clarify which state law would apply for
purposes of determining the expiration date for contact lens prescriptions.
See H.R. 2221, Sec. 3(a). As written, the state law “involved” could
be interpreted many ways, including to mean the state where the prescription was
written, the state where the prescription was filled, or the state where the
patient lives.
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