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Contact lens makers sue Utah over anti-price fixing law

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SALT LAKE CITY (AP) — The nation’s largest contact lens manufacturers have sued Utah over a new law that critics say was written at the behest of Utah-based discount retailer 1-800-Contacts.

The law comes amid an increasingly bitter fight between manufacturers like Johnson & Johnson and Bausch & Lomb and discount retailers over the prices of contact lenses.

The three major lens manufacturers instituted a pricing program that sets minimum prices for contact lenses, making it more difficult for 1-800-Contacts to offer the steep discounts that helped make them a prominent company in the contacts business. If the manufacturers find out that their contact lenses are being sold for less than the minimum price, they stop offering their products to those retailers.

Utah lawmakers and Republican Gov. Gary Herbert approved a law this year that makes it illegal for contact makers to control the prices of lenses or discriminate against any retailers for selling or advertising lenses at a particular price. Lawmakers in Idaho, Arizona and Mississippi considered similar laws this year, but efforts failed. Similar measures are still pending in several other states. The pricing policies have also been scrutinized by Congress, consumer advocates and others.

The contact lens makers argued in three separate federal lawsuits filed this week that Utah’s law is unconstitutional.

In the lawsuits, the contact lens makers noted that 1-800-Contacts executives spoke in favor of the bill earlier this year at the state Legislature, and several lawmakers noted in debates that the law would help the Draper-based company.

Lawyers for Alcon Laboratories, Johnson & Johnson and Bausch & Lomb said the minimum prices they’ve started implementing on some lenses in the past few years allow eye doctors to recommend lenses without worrying about costs.

With price minimums, eye doctors can learn about the features of specific products and share that with their patients instead of focusing on costs, the manufacturers argued. They said that by touting the benefits instead of cost, it creates more demand for those products and increases competition among manufacturers to make better lenses.

The law “allows in-state retailers, such as 1-800-CONTACTS, to free ride off of the services provided by eye care professionals,” attorneys for Bausch & Lomb said in court documents.

Sen. Deidre Henderson, a Spanish Fork Republican, sponsored Utah’s law, which she said prevents artificially high costs set by a minimum price.

If eye doctors issue a contact lens prescription that is specific to a brand and then sell to customers, the customers need to be able to shop around elsewhere for a better price, Henderson said.

“It protects the free-market by prohibiting this predatory, anti-competitive pricing scheme that contact lens manufacturers have started to implement,” she said.

Henderson said it’s not about 1-800 Contacts but it’s a free-market issue. She said she’s heard from similar retailers, including a Costco executive, who said the price minimums have caused them to raise prices.

The Utah attorney general’s office, which was named as the plaintiff in the lawsuits, was still reviewing them Wednesday and had no comment, spokeswoman Missy Larsen said.

Messages seeking comment from 1-800-Contacts were not returned Wednesday.

On its company website, 1-800-Contacts said the minimum price policies keeps them from offering discounts or rebates they once offered by buying in bulk directly from manufacturers.

The law is set to take effect May 12.