Resale price maintenance (RPM), also known as retail price maintenance, is the practice whereby a manufacturer and its distributors agree that the distributors will sell the manufacturer’s product at certain prices (RPM), at or above a price floor (minimum RPM), or at or below a price ceiling (maximum RPM). If a reseller refuses to maintain prices, either openly or covertly (such as selling on the grey market), the manufacturer may stop doing business with it. This was per se illegal until 2007, when the U.S. Supreme Court deemed it legal in certain situations (e.g., pro-consumer situations) (Leegin Creative Leather Products Inc. v. PSKS Inc., 2007) .
The ongoing commoditization of contact lens sales has created an environment in which many eyc care professionals (ECPs), optometrists and ophthalmologists who are trained to fit contact lenses, consider contact lenses not appropriately profitable in comparison to other aspects of their practice. This has a potential impact on both patients and on ECPs. If appropriate profit motivation is taken out of the equation, there is significant potential for inhibition of innovation. Unless contact lenses can provide appropriate financial benefit to both the ECPs who fit them and, ultimately, to the manufacturers who conduct the research and development that create new contact lens materials and designs, there will be little motivation for innovation in the field.
Beyond the economic impact on contact lens innovation, there is evidence that the purchase of contact lenses outside of the fitting ECP’s practice can increase the risk of medical complications associated with contact lens wear. Fogel and Zidile (2008) published results of a survey of contact lens wearers indicating that consumers who purchased their contact lenses either online or at a vendor other than their ECP were significantly less likely to follow FDA-recommended contact lens care and wearing behaviors. Additionally, a study by Stapleton et al (2008) found that those individuals who purchased their contact lenses over the Internet were approximately 4.8 times at greater risk for developing microbial keratitis compared to patients who purchased their lenses at their ECP’s office. Potential reasons may be that patients who purchased lenses on the Internet may not have had appropriate and regular professional eye care, or they may perform contact lens care behaviors that put them at higher risk for infection.
As a practicing optometrist and contact lens fitter I, and my colleagues, have noted that online contact lens sellers, although they are legally bound to get a current contact prescription from the prescribing doctor, often go out of their way to pretend to get one, but never really make contact with the doctor's office in a way that the doctor can respond in a timely fashion. Either the online seller will have a long automated telephone call, which starts out give a lot of upfront useless information, such as the patient's address, reference number, before giving the patient's name, so you cannot even start retrieving information about the patient until the last part of the call, or they will send a fax when they know the office is closed, typically 6:00 p.m. on Friday, giving 8 hours to reply to message, knowing that the office will not be able to reply in time and filling the expired prescription anyway. People using online sellers can get contact lenses for years with an out dated prescription. It is obvious that online contact lens sellers do not care about the health of their customers eyes. They only care about selling the contact lenses before the doctor has a chance to stop the order.
Until recently, there was no RPM within the contact lens industry. With careful review of the law, it appears that a number of contact lens companies have boldly moved into this arena to protect their brands. In 2013, coinciding with the introduction of its Dailies Total1 daily disposable lens, Alcon put in place what the company defined as a UPP. This price policy initially was exclusively applicable only to Dailies Total1 contact lenses and not to any other of the company’s existing contact lens products. However, as stated previously, in 2014, Alcon extended its UPP to other new products. Under the UPP in the United States, Alcon will not sell (or permit its authorized distributors to sell) these specific contact lens products to customers who resell or advertise these products for sale to patients at less than the MRP set by Alcon. The company’s policy indicates that Alcon customers are free to sell the product at a price higher than the MRP; however, if they sell the product at a price lower than the MRP, Alcon will terminate the supply of the product to that customer for a period of one year.
Alcon says it has adopted this policy to encourage retailers to provide patients with a high level of personalized service from ECPs who have a deep understanding of the advanced new technology associated with these products. The idea is that premium products can prosper only if ECPs invest the time to learn about their benefits and to educate their patients about them. The UPP was designed to incentivize ECPs to this. Alcon states that the policy will benefit patients and help ensure that the company can continue to innovate and bring state-of-the-art products to market in the future (Alcon Unilateral Price Policy Customer FAQ Document, June 1, 2013). These statements are in line with the spirit of the U.S. Supreme Court’s ruling in the Leegin case mentioned previously.
In 2014, B+L became the next contact lens manufacturer to introduce a UPP when the company brought its new Ultra monthly disposable contact lens to the marketplace. B+L’s Ultra contact lens UPP states: “Bausch + Lomb is not making and will not make an agreement with any of its customers regarding the price at which such customer sells or advertises Bausch + Lomb Ultra® contact lenses. Rather, each customer is free to advertise or charge whatever price it wants, but should understand that Bausch + Lomb will cease to supply, and will prohibit its authorized distributors from supplying, Bausch + Lomb Ultra® contact lenses to any customer that resells or advertises Bausch + Lomb Ultra® contact lenses to the end consumer (e.g., patient) for sale at less than the MRP.” As to why the company adopted its pricing policy, B+L further states: “Bausch + Lomb Ultra® contact lenses are a significant advancement in contact lens technology. The full benefits of this advancement can only be realized through a deep understanding of the technology by eye care professionals (“ECP’s”) [sic], the provision of a high level of service by ECP’s based on that knowledge, education of consumers regarding the product and a continuing high level of customer service by Bausch + Lomb. The UPP is intended to (a) encourage ECP’s to invest the time to learn about the product and educate consumers, (b) support Bausch + Lomb Ultra® contact lenses as a premium offering and to enable Bausch + Lomb to continue to provide excellent customer service.”
Most recently, JJVCI applied a UPP to its existing Acuvue Oasys, 1-Day Acuvue Moist, and 1-Day Acuvue TruEye contact lens designs. JJVCI is the first company to apply a UPP to products that had previously been on the market and sold without a UPP. The company included the UPP as part of its “Enterprise Strategy,” which also included a new lens pricing program to the company’s resellers, new lens packaging, and the discontinuation of lens rebate programs. In a letter to eyecare professionals on June 24, 2014, Laura Angelini, president of Johnson & Johnson Vision Care – North America stated: “We believe the multifaceted nature of this new pricing strategy and the variety of elements that comprise the program will allow you to refocus the critical doctor/patient conversation on eye health and product performance, rather than cost. Also, by removing the complexity of rebates and building these savings into our new pricing, we believe we will be able to reach more patients with instant savings, while providing a simpler approach for everyone.”
The UPP prices in general are similar to the prices we were charging before UPP pricing. I have started keeping an inventory of 6 packs of certain popular UPP contact lenses. There is less incentive for patients to get contact lenses online and more incentive for patient's to get contact lenses from their doctors, who are in a position to see and know whether the contact lenses that were prescribed in a prior year are still the appropriate ones for the patient. If they are the appropriate contact lenses, the patient will get them for a fair price, and undoubtedly faster than he could from the online seller.
1800Contacts has submitted legislation in California Assembly Bill 789 which tries to reverse UPP in the state as it did in Utah.
I have written the following to my California representatives in Sacramento, before the vote on May 5, 2015:
I strongly OPPOSE Assembly Bill 789 which was proposed by the online contact lens seller 1800Contacts.
Resale price maintenance (RPM), is the practice whereby a manufacturer and its distributors agree that the distributors will sell the manufacturer’s product at certain prices (RPM). This was per se illegal until 2007, when the U.S. Supreme Court deemed it legal in certain situations (e.g., pro-consumer situations) (Leegin Creative Leather Products Inc. v. PSKS Inc., 2007) .
Last year, after realizing that it is better if Eye Care Professionals (ECPs), the eye doctor's who have been trained to fit contact lenses, should decide if contact lenses are appropriate for patient's eyes rather than 1800Contacts, contact lens manufactures Johnson and Johnson (maker of Acuvue contact lenses), Bausch & Lomb, and Alcon announced UPP (Unilateral Pricing Policy) on their new products.
On line sellers would often fill expired prescriptions and substitute lenses. There was growing evidence that the purchase of contact lenses outside of the fitting ECP’s practice can increase the risk of medical complications associated with contact lens wear. Fogel and Zidile (2008) published results of a survey of contact lens wearers indicating that consumers who purchased their contact lenses either online or at a vendor other than their ECP were significantly less likely to follow FDA-recommended contact lens care and wearing behaviors. Additionally, a study by Stapleton et al (2008) found that those individuals who purchased their contact lenses over the Internet were approximately 4.8 times at greater risk for developing microbial keratitis compared to patients who purchased their lenses at their ECP’s office.
Public safety should not be compromised to just improve the profits of 1800contacts. UPP is legal and good. Please vote against Assembly Bill 789.