FTC Issues Study on Competition in Contact Lens Market

The Federal Trade Commission has released a study on the strength of competition in the sale of prescription contact lenses. Congress required the study under the Fairness to Contact Lens Consumers Act (FCLCA), which was enacted to promote competition in the contact lens market by enhancing consumers’ ability to buy contact lenses from sellers other than their eye care practitioners (ECPs).

The FTC’s study examines a variety of issues, including: (1) various types of manufacturer-seller relationships and their impact on competition; (2) the prices charged by contact lens sellers in different retail channels; (3) the effect of state regulations on competition in the sale of contact lenses; and (4) the impact of the FTC’s Eyeglass Rule on competition.

The FTC’s study finds that consumers have the ability to choose between several retail options, other than their prescribing ECP, when purchasing contact lenses, due in part to the standardization of disposable soft contact lenses, along with the FCLCA-required prescription portability. The study concludes that independent ECPs account for the majority of sales, followed by national optical chains and mass merchandisers.

Regarding relationships between contact lens manufacturers and sellers, the FTC found that exclusive relationships – such as a manufacturer agreeing to supply only one seller, or a seller agreeing to sell only one manufacturer’s contact lenses – appear to be rare. Private label and limited distribution strategies, although also rare, appear to be more common than exclusive relationships. The study concludes that the available data do not indicate that either of these strategies poses a threat to competition or consumer welfare.

The FTC conducted a survey of the availability and price of a six-month supply of 10 popular contact lenses at 20 online and 14 offline retail outlets and found that, in general, independent ECPs and optical chains charged the highest prices, while wholesale clubs offered the lowest prices. Regarding specialty lenses (such as toric or multifocal), the FTC found that the differences in price between independent ECPs, optical chains, hybrids (offline retailers’ Web sites), and mass merchandisers were not statistically significant. For spherical lenses, however, the FTC found that the differences in price between mass merchandisers and hybrids offer were statistically significant.

The FTC’s study also examines several other issues that may affect competition in the contact lens market. According to the study, state licensing requirements that restrict consumers’ ability to buy contact lenses from out-of-state sellers or non-ECP sellers may limit competition and harm public health. The FTC’s study also notes that state restrictions on truthful advertising are likely to inhibit competition and limit consumers’ ability to make informed choices about their contact lens purchases.

The FTC’s study additionally concludes that, by making it easier for consumers to comparison shop, the FTC’s Eyeglass Rule has had a positive impact on competition in the eyeglass market, which has lowered prices and increased consumer choice.

Copies of the FTC’s study are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580.

(FTC File No. V040010)