Lawmakers Eye Bill To Ban Contact Lens Price Floors
Many contact lens manufacturers are imposing what’s called a Unilateral Pricing Policy on contact retailers. It lets manufacturers set a minimum price for their product. If retailers drop below that price, they risk losing the ability to continue selling that company’s contacts. Sen. Tom Lee (R-Brandon) says there are other products that fall under similar pricing agreements, but none quite like contacts.
“There is no other product that we have been able to identify where the consumer is forced to buy that product and then is prohibited by law from shopping for the lowest price,” Lee says.
Lee says that’s partly because contact prescriptions are brand specific. To purchase a pair of contacts a person must visit an eye doctor and get a prescription that specifies a brand – generally a brand that eye doctor sells. And Sen. Arthenia Joyner (D-Tampa) says consumers should have the right to shop around.
“Last night I went to BestBuy because I got a Hero 4, the new little GoPro camera – the Hero 4 and it didn’t have a screen on the back. So, I went there to purchase a screen and to get a battery and they had a price for both and I added it up and it came to $150 and I said I know I can get this less somewhere,” Joyner says.
Joyner checked her smartphone, found a lower price and was able to negotiate a $40 discount. She says consumers should be able to do that same thing when it comes to purchasing more necessary items like contact lenses. Eric Helms is the pricing manager of contact manufacturer Johnson and Johnson. He says 60 percent of Florida consumers saw a reduction in price after the company imposed a unilateral pricing policy.
“Why are consumers paying lower prices today for our UPP products? We really did three things. We lowered our whole sale prices--very traditional approach to hoping that retailers lower their retail prices. We removed mail in rebates. Rebates are a very good advertising tool, but they’re not a very good pricing tool. All of our analysis over 10 or 12 years of having rebates indicates that less than 10-percent of consumers actually buy a quantity that qualifies for rebates and follow through on mailing in a rebate,” Helms says.
And Helms says the company set lower price floors on its products through its pricing policy. He says an easy way to understand how U-P-Ps can lower prices is to think about iPads.
“So, today an Apple iPad, which has a UPP, if you go out and buy the newest nicest version of an iPad you’re going to pay $792 dollars. You’re going to pay that no matter where you buy it. You’re going to pay that online, or BestBuy or any other electronic store that sells the iPad air,” Helms says.
Helms says if Apple lowered its pricing policy to set a minimum price of $600 most people would agree retailers would quickly drop their prices to match that. He says that’s the same thing that’s happening with contact lenses. But Garth Vincent with 1-800 Contacts says that’s not what he’s been seeing
“ They say consumers love this an it has lowered prices, but UPP only works in one direction – up, just like its acronym. It forces everyone to come up to the floor it doesn’t require or suggest anyone to come down," Vincent says.
And Lens.com officials say they’ve been forced to increase some prices by up to 57-percent. The measure passed the Senate Health Policy Committee Monday, but its future isn’t looking clear. While it’s sponsored by the Senate’s appropriations chairman – a powerful position as the holder of the purse strings--several Republican heavy weights voted against the measure including former Senate President Don Gaetz and current majority leader Senator Bill Galvano. Galvano raised concerns about the measure creating inconsistencies among states and leading to legal challenges.
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