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Press Release

    Seeing Straight on Contact Lens Regulations

    10/22/2003

    Recently, the House Energy and Commerce Committee passed the “Fairness to Contact Lens Consumers Act,” (H.R. 3140) which promises to modernize regulations governing the contact lens industry. Like many other industries, technological advances and Internet marketing have the potential to provide consumers greater choice and more convenience when filling their prescriptions for new contact lenses. Unfortunately, these consumer benefits are held at bay by regulations that have failed to keep pace with the marketplace. Passing H.R. 3140 would remove unnecessary impediments and allow the market to serve consumers better using all the latest technologies.

    The impediments limiting competition in the contact lens market are not unique. Regulations are inherently static in nature, attempting to control a market as it is defined when the rule is written. However, markets by nature are dynamic, constantly changing and evolving as producers find new ways to serve consumers better than their competitors. Product innovations, technological innovations, and marketing innovations are aggressively pursued to gain more customers. Consumers benefit from this competition in the marketplace through falling prices and greater choices. Unless, of course, regulation protects monopoly providers and limits competition.

    Americans currently face a regulatory burden that has been estimated to be $800 billion annually. While businesses often decry the general burden of regulation, they are not without blame. The business community is not a monolithic entity that speaks with one voice. In fact, businesses are competing aggressively in both the marketplace as well as politics. Businesses spend millions in Washington pursuing regulations to limit competition and shore up their position in the marketplace. Such regulations harm consumers while providing no economic benefits.

    Technological advances often provide new avenues of competition, allowing competitors to emerge even in industries that have been heavily regulated. The Internet, for example, has been a major impetus for change in a number of industries that allows consumers direct access to a wide range of producers. From online travel reservations, to mortgages and insurance, to online shopping, and to contact lenses, consumers are finding opportunities to save money by skipping the middleman and dealing directly with producers. The initial reaction in these industries often has been an attempt to block new competitors through regulation, something that the Federal Trade Commission (FTC) has been monitoring carefully.

    The contact lens industry provides a perfect example. In 1978, the FTC issued a rule requiring eyeglass prescriptions be made available to consumers. The rule was released after the FTC found that it was difficult for consumers to comparison shop for eyeglasses because often eye doctors refused to release their prescriptions. At the time, however, contact lenses were virtually custom fit to consumers, so it made little sense to include contacts in the prescription release rule. Since then, the production of contacts has changed tremendously, with disposable lenses coming to dominate the market. Disposable soft contact lenses can be produced consistently to the same prescription, unlike the hard contact lenses they have replaced in the market.

    With the rise of the Internet, new avenues have become available to consumers for purchasing contact lenses at more competitive prices. In light of this potential for new competition, some optometrists have sought to strengthen requirements for releasing and verifying prescriptions in ways that make it more difficult for consumers to take advantage of alternative low-cost providers. In fact, legislation has been introduced in a number of states to require stricter release and verification procedures that effectively reduce competition and protect incumbent sellers.

    The legislation recently approved by the House Energy and Commerce Committee provides guidelines to ensure a competitive market for contact lenses. Simply stated, the bill establishes guidelines for the release of prescriptions that would provide consumers the opportunity to comparison shop for replacement lenses. Consumers are to receive a copy of their prescription at no extra charge, and, when requested, eye care providers are to verify that the prescription is accurate and can be filled. To prevent gaming the verification process in ways that disadvantage competitors, H.R. 3140 incorporates a “passive” verification process. That is, a prescription would be assumed accurate if the eye care provider does not state otherwise within 8 hours of a request for verification (under the bill the FTC has the authority to establish a different timeframe if appropriate).

    Consumers are best served by open and competitive markets. H.R. 3140 is an attempt to ensure that regulatory barriers do not impede consumer choice for the benefit of incumbent producers. Markets and technology have evolved in ways that serve consumers better, but those benefits are threatened by politics and regulation. To avoid these problems, Congress should pass the “Fairness to Contact Lens Consumers Act,” which would expand consumer choice while allowing markets to continue to evolve in ways that help consumers.