March 25--Nobody likes it when their contact lenses fall out. That point of view gets murkier when the prices of those lenses hit their floor.
At issue is a conflict among manufacturers pushing for minimum prices, resellers advertising low prices that may come with a catch and ultimately, consumers wanting the best deal they can get.
Contact lens manufacturers began instituting price minimums more than a year ago, arguing that they would lower prices for consumers and encourage them to work with their eye doctors to find the right fit. But opponents say the price floors bar retailers from offering discounts on the products.
A hearing is scheduled Tuesday in Springfield on legislation introduced last month that would bar manufacturers from setting price minimums for contact lenses as well as prohibiting them from refusing to sell to Illinois retailers who do not comply.
Each side has a prescription for its vision for the future.
Manufacturers want their contacts sold at regular prices. Four companies -- Alcon, Bausch Lomb, CooperVision and Johnson Johnson -- capture about 97 percent of sales.
Proponents of such price floors, known as unilateral pricing policies, say most customers will end up saving money because discounts marketed as mail-in rebates for an annual supply will be incorporated in the new prices of the lenses. About 8 percent of buyers follow through on mail-in rebates, according to Dr. Millicent Knight, a former Evanston ophthalmologist and head of professional affairs for Johnson Johnson Vision Care.
"The average patient is not in a position to purchase an annual supply -- and if you don't, you can't get the rebate. ... You don't know that upfront," Knight said.
Low-cost outlets such as Costco, Wal-Mart and 1-800-Contacts say nonnegotiable, minimum prices prevent retailers from selling lenses as cheaply as they'd like and, in some cases, drive up prices.
For example, a 30-day supply of Johnson Johnson's daily Acuvue Moist lenses that in 2014 cost $21.88 at Sam's Club now sells for $33. At 1-800-Contacts, the same box cost $29.99 last year. This year it's $33.00, according to data provided by 1-800-Contacts.
"We're not able to discount like we could before," said Tim Rousch, chief marketing officer at 1-800 Contacts. He said the company has raised prices and doesn't offer incentives because of manufacturers' pricing requirements.
Consumer groups are concerned the precedent of manufacturers setting minimum prices and refusing to sell to retailers who don't comply is a bad one. About 40 million Americans wear contacts and, according to consumer groups, about 40 percent of contact lenses have price minimums. The concern is that figure could rise to 80 percent.
"It could easily spread into other products and services," said George Slover, senior policy counsel at the Consumers Union. "It's causing clear harm to contact lens wearers -- the one for whom price is an important factor."
Eric Anderson of Northwestern University's Kellogg School of Management, said many industries have pricing policies in place. Manufacturers of durable goods -- refrigerators and coffee makers, for example -- often set minimum prices so higher-end stores can compete with Amazon and Wal-Mart.
"If they don't have a pricing policy for electronics, retailers will just stop selling the product," Anderson said. "As a consumer, if you want to go see a television before you buy it -- good luck. You won't be able to go to Best Buy and see a television."
He said the same concept can be applied to contact lenses. If eye doctors see that they can't compete with 1-800-Contacts, they'll stop offering contact lenses at their stores.
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