Online Eye Care Offerings Promise Consumer Choice, Face Regulatory Hurdles
WASHINGTON (Jan. 12, 2016) – The contact lens market represents a microcosm of the regulatory impediments that continue to face online medical retailers, with incumbent businesses seeking to use the political process to snuff out competition, according to a new R Street Institute policy study co-authored by Associate Fellow Ashley N. Baker and Senior Fellow Alan B. Smith.
“Over the past two decades, the struggle for market share within the contact-lens industry has spilled into the legal, legislative and regulatory arenas,” write Baker and Smith. “Starting in the early 1990s, eye-care providers’ initial response to the competitive threat posed by outside retailers was to enforce a ‘doctors-only’ distribution policy, in collusion with major lens-wear manufacturers.”
This approach to excluding online competition was addressed in an antitrust lawsuit filed by 32 state attorneys general. Despite a 2001 settlement in the suit, similar practices continued unabated, most frequently taking the form of falsely denying prescription requests. The study also looks at the recent history of misleading health claims put forward by prescribers to justify regulations that protect their established business models.
“There is evidence that some prescribers intentionally fail to provide the consumer’s complete prescription to third-party sellers,” the authors write. “In April 2016, the FTC issued 55 warning letters—45 sent to prescribers and 10 issued to retailers—regarding alleged violations of the Contact Lens Rule’s verification clause.”
Ultimately, as with other regulatory battles in which regulators have wrestled with the rise of digital competition to traditional brick-and-mortar establishments, the focus should be on allowing innovation. The authors conclude:
“As health solutions increasingly become available online, it is imperative that lawmakers and regulators do not stifle progress and innovation. In approaching this issue, policymakers should embrace online markets and be wary of misleading public safety arguments and efforts to impose protectionism through fear, uncertainty and doubt. Any risk posed by more vibrant online markets for contact lenses is far outweighed by their economic benefits and the access they now grant to rural, low-income and disabled communities.”
