By Dan Horowitz –
Recently, there has been a lot of talk in libertarian and conservative circles about eminent domain abuse, civil asset forfeiture, and the freedom of association. However, one private property rights violation that affects over 41 million Americansper year has gone completely under the radar.
For years, optometrists and ophthalmologists have been holding back prescriptions – legally, the property of the patient – as a way to artificially boost their market share.
This is because eye doctors don’t only fit consumers for contact lenses, but they also sell the product in their offices. They often hold back consumers’ prescriptions so they can nab the sale for themselves, helping their favored brands – Johnson & Johnson, CooperVision, Alcon, and Bausch & Lomb, which control about 97 percent of the contact lens market – in the process.
Solving Problems That Don’t Exist
In truth, the government shouldn’t even be mandating the use of doctor prescriptions. After all, most of Europe and Japan doesn’t require the use of a prescription. Even the American Optometry Association (AOA), the same trade association that lobbies for more government mandates and was once found guilty by 32 state attorneys generalsof colluding with lens manufacturers to capture the contact lens market, admits that it is not necessary for patients to go to the eye doctor’s office every time a lens refill is needed.
Many doctors, angered by their loss of market share, have been neglected the law and held back prescriptions in an attempt to increase their market share.
Of course, gutting the prescription mandate is not an easy task. In 2004, Congress tried to fix this messy situation an easier way by passing the Contact Lens Rule. This rule clarified that the prescription is indeed the property of the patient and not the doctor. Because of this law, doctors are now mandated to give patients copies of their prescriptions. At the same time, they are also still allowed to strike down a given lens sale within one business day should they find a reasonable health or safety concern with the vendor.
The Contact Lens Rule made great strides in rectifying the problem at hand. It caused the price of contact lenses to fall to record lows. A study published by Contact Lens Spectrum showed that the number of contact lens wearers over the age of 18 grew by a whopping $5 billion from 2005 to 2015, all while the market valuation of the U.S contact lens industry grew by nearly $1 billion.
While this new law certainly helped the industry, the regulatory capture problem is still far from being fully solved. Many doctors, angered by the fact that the market share of mass merchandisers and retail chains grew by a combined 20 percent after the 2004 law’s passage, have been neglecting the law and holding back prescriptions in a desperate attempt to increase their market share to pre-2004 highs.
That’s why in April of 2016, the Federal Trade Commission (FTC) issued 55 warning letters to prescribers and retailers who have been ignoring the Contact Lens Rule. Unfortunately, these warnings did little to smack eye doctors back into reality. To close the loophole once and for all, the Commission recently proposed a new rule to ensure that free market competition is fully restored to the contact lens industry.
To make sure that patients aren’t misled ever again, the new FTC rule will mandate that prescribers present the patient with an acknowledgement form to certify that each customer understands that they are “free to purchase contact lenses from [their] seller of choice.” The rule will also permit the seller to substitute contact lenses manufactured by the same company but sold under another label.
Rampant Cronyism
Although this FTC rule is clearly helpful in undoing a law that should never have existed, the American Optometric Association (AOA) claims that it will greatly increase the risk of eye infections.
Of course, the AOA’s “concerns” are hogwash. As Connecticut Attorney General Richard Blumenthal once said, “The industry has hidden behind claims of health concerns requiring that individuals get their contact lenses from certain professionals … But there is no scientific basis to that claim.”
It appears that the AOA’s lobbyists are forgetting that under current law, eye doctors can still strike down third party sales if there is actually a valid health concern. There really is nothing to worry about.The AOA is now lobbying Congress to pass legislation that will scrap the free market reforms from 2004.
It is also worth noting that their concerns come in stark contrast to the empirical data in the medical industry, which shows that the purchasing location of contact lenses has very limited association with eye health risks.
The FTC found that the studies the AOA point to are misleading. “The Stapleton study identified internet/mail order purchases as a potential risk factor for microbial keratitis in a large sample from Australia,” said the Commission. “However, when the authors of the Stapleton study limit their sample to cases of moderate to severe keratitis, internet/mail order purchases are not found to be a risk factor.”
Instead of accepting these academic and medical studies, the AOA is now lobbyingCongress to re-introduce and pass the Contact Lens Consumer Health Protection Act (CLCHPA), which will completely scrap the 2004 free market reform legislation and ensure that new FTC rules are not established.
This session, Congress needs to be smart and not allow crony capitalist eye doctors to blur the lines of consumer protection laws in ways that benefit established interests. Instead, it should work to open up the industry by closing the remaining loopholes that allow some doctors to profit from protectionist policies.