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Finding Freedom for Contact Lens Retailers

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More than 30 million Americans wear contact lenses. In recent years, contact lens technology has improved, leading to increased sales and changes in the policies that lead to contact lens pricing. The Competitive Enterprise Institute argues in its new paper, Resale Pricing in the Contact Lens Industry: A Case Study of Regulation Undermining Pro-Consumer Resale Pricing Strategies, that the rise of discount and Internet-based contact lens retailers has put pressure on the traditional model of selling contact lenses, and that manufacturers’ attempts to set pricing is a response that offers consumers the best product and buying experience.

Several leading contact lens manufacturers have announced that they will not distribute to retailers that sell their contacts below a specified price. Manufacturers impose pricing uniformity across retailers for a given type of contact lens as a way to improve consumer experiences without raising prices overall. This pricing policy ensures that eye care professionals continue to have adequate incentives to invest in the facilities and expertise necessary to give the best contact lens prescription to each individual patient with respect to fit, comfort, and visual acuity. In fact, the empirical evidence suggests that manufacturer pricing policies have resulted in an overall decrease in the price of affected contact lens brands. When manufacturers are free to influence how retailers sell their products, they can focus on competing against one another to offer consumers the best product and buying experience, while eye care professionals can focus on care of their patients.

 “Consumers benefit from voluntary arrangements that limit retail price competition,” write the paper’s co-authors W. Thomas Haynes and Ryan Radia. “Manufacturer policies that promote consistent pricing of particular contact lens brands appear to improve consumer access to affordable, high-quality eye care.”

The paper takes a close look at the contact lens industry, which has experienced significant innovation in recent years, addresses criticisms of unilateral pricing – which has most recently come through the courts by way of antitrust litigation that challenges this vertical pricing restraint - and highlights the role of retailers in the contact lens marketplace, focusing on eye care professionals who not only sell contacts but also examine consumers’ eyes and write contact lens prescriptions.

View the paper here.