Contacts Bill a Utah Favor?

Archives Admin · #1 (**permalink**) 04-04-2006, 11:28 AM

The legislation had a title few wanted to challenge: The contact lens Consumer Protection Act.

With built-in cachet like that, Utah lawmakers quickly signed off - as did the governor. When it becomes law July 1, the act will require contact lens manufacturers to certify with Utah's attorney general that they sell lenses through "alternative channels of distribution," including price clubs and Internet retailers - those that don't face criminal penalties.

Legislators, state attorneys and representatives of 1-800 contacts insist the bill is good for the estimated one in 10 Utahns who wear contact lenses.

But at least one contact lens manufacturer says the legislation was written to benefit Utah-based 1-800 Contacts, forcing all manufacturers to sell to the wholesaler.

"Based on my experience, if this had not been a Utah company, it's hard to believe in a free-market state like Utah that this would have ever gotten out of the box," said Edward Correia, an attorney for CooperVision, a New York lens manufacturer.

1-800 Contacts company officials insist they simply were supportive bystanders while lawmakers debated the merits of the legislation. But the company's hefty lobbying budget and attempts to get similar language inserted into legislation before Congress and in other states raises questions about the origins of the Utah bill. And with some manufacturers balking, Utah's new contact lens act could be challenged in court if Attorney General Mark Shurtleff attempts to enforce it.

Provo Republican Sen. Curtis Bramble sponsored SB176 in an effort to continue the distribution practices established in a 2001 settlement between contact lens manufacturers and 32 state attorneys general that will expire later this year. The act lawmakers passed requires manufacturers to make their lenses available in a "commercially reasonable and nondiscriminatory manner."

"It is the policy of the state that citizens who wear contact lenses pursuant to valid prescriptions should not be unreasonably denied the opportunity to purchase their contact lenses from their retailer of choice," the act states.

Bramble insists his bill was all about saving Utah consumers money. He compares contact lenses to any other medical device or drug prescription. But in the case of contacts lenses, he says, optometrists and manufacturers make more money by prescribing name-brand lenses.

And lens wearers are restricted from buying a generic alternative or going to a cheaper outlet, such as 1-800 Contacts. The act, Bramble says, was meant to protect contact lens wearers by blocking manipulation between doctors and manufacturers, and requiring that all contacts are available at a wide variety of retailers.

"When there is the potential for optometrists and manufacturers to collude to restrict the market, that leads to higher prices," he said.

When Bramble unveiled his bill, the Contact Lens Institute issued a letter opposing it, arguing the draft law would interfere in the competitive contact lens market and in doctor-patient relationships.

The institute argued that such a law ultimately would break down health safeguards, making it easier for counterfeit lenses to reach consumers. In the end, the institute said, some manufacturers may avoid Utah altogether.

"This is a significant interference with interstate commerce that will impose substantial costs and disabilities on the manufacturers of contact lenses," the statement said. "This may have the unfortunate effect of causing manufacturers to limit their activities in Utah, rather than changing their nationwide business and distribution practices."

As the bill passed the Utah Senate, even some lawmakers questioned its stated goal. Sen. Greg Bell concluded that the legislation was a handout to 1-800 Contacts.

"We ought to outlaw collusion and kickbacks," the Fruit Heights Republican said. "But we're going a whole step further because we have a large vendor, and we're trying to make sure they can get their hands on every major brand."

Still, the largest contact lens manufacturer, Johnson & Johnson, ultimately withdrew its opposition to the legislation. And Contact Lens Institute Director Ed Schilling said the industry group is backing out of the debate because different manufacturers have different opinions of the Utah law. "It puts the association in a bad position," he said.

Utah is the first state to enact such legislation. But Alabama, Florida, Indiana, Georgia, Louisiana and West Virginia all have considered versions of the legislation.

And last year, U.S. Sen. Bob Bennett inserted similar language into the Federal Drug Administration's budget. Bennett's amendment would have blocked the FDA from approving contacts for any company that didn't comply with the open-distribution requirement. House members ultimately stripped the language, but Bennett said he will try to move the language through the Senate's Commerce Committee again this year.

Draper-based 1-800 Contacts spent $880,000 last year to lobby in Washington, D.C. In Utah, State Republican Party Chairman Joe Cannon is the company's lobbyist. And company executives gave Bennett $30,000 for the 2003-04 election cycle. Bramble's 2004 campaign received $500 from the company.

Bennett acknowledges looking out for 1-800 Contacts. "We do our best to provide constituent service to any Utah constituent, whether it's an individual or corporation, that has a legitimate problem," Bennett said.

Kevin McCallum, 1-800's corporate spokesman, says the company has hired a lobbying firm to represent the company in the Southern states. With its toll-free number and Internet sales, 1-800 Contacts has sold lenses to 4 million customers since it started, about 7 percent of the U.S. market. McCallum accuses CooperVision of creating a "closed-loop" system that forces lens wearers to buy the company's contacts through doctors.

"It's a consumer issue," McCallum said.

CooperVision attorney Correia counters that CooperVision sells its lenses to a wide variety of retailers, including Lenscrafters, eye glass World, Pearl Vision Centers and Shopko.

For now, CooperVision, which was not part of that 2001 settlement, apparently is alone in its complaints about Utah's law.

Attorney Correia wrote a letter to Shurtleff last month asking for clarification of the law's "complex and exceedingly vague" requirements. Specifically, Correia asked attorneys to define what "commercially reasonable" and "nondiscriminatory" mean and what a "buying club" is.

"It is simply impossible for a reasonable person, including businesses with legal counsel, to determine what is and what is not permitted by the act," Correia wrote.

In his response, Assistant Attorney General Wayne Klein repeated the stated goals of the legislation, while urging CooperVision to "continue to make its products available for the use of customers in Utah."

Correia said CooperVision executives have not decided what to do.

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Contacts Bill a Utah Favor?

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