The Contact Lens Industry: Structure,

Competition, and Public Policy

December 1984

NTIS order #PB85-204451
LIBRARY

OF TECHNOLOGY ASSESSMENT

HEALTH TECHNOLOGY CASE STUDY 31

The Contact Lens Industry

Structure, Competition, and

Public Policy

This case study was

Federal Policies

DECEMBER 1984

performed

and the

as part of OTA’s Assessment of

Medical Devices Industry

Prepared for OTA by:

Leonard G. Schifrin, Ph.D.

Department of Economics, College of William and Mary, Williamsburg, VA

and

Department of Preventive Medicine, Medical College of Virginia

Virginia Commonwealth University, Richmond, VA

with

William J. Rich, A.B.

Department of Economics, College of William and Mary, Williamsburg, VA

OTA Case Studies are documents containing information on a specific medical technology or area of application that supplements formal OTA assessments. The material

is not normally of as immediate policy interest as that in an OTA Report, nor does

it present options for Congress to consider.
Recommended Citation:

Schifrin, Leonard G., with Rich, William J., The Contact Lens Industry: Structure, Competition, and Public Policy (Health Technology Case Study 31), OTA-HCS-31, Washington,

DC: U.S. Congress, Office of Technology Assessment, November 1984. This case study

was performed as part of OTA’s assessment of Federal Policies and the Medical Devices

Industry.

Library of Congress Catalog Card Number 84-601157

For sale by the Superintendent of Documents

U.S. Government Printing Office, Washington, DC 20402
Preface

The Contact Lens Industry: Structure, Competition, and Public Policy is Case Study 31 in

OTA’s Health Technology Case Study Series. This

case study has been prepared in connection with

OTA’s project on Federal Policies and the Medical

Devices Industry, which was requested by the

Senate Committee on Labor and Human Resources

and endorsed by the Senate Committee on Veterans’ Affairs. A listing of other case studies in the

series is included at the end of this preface.

OTA case studies are designed to fulfill two

functions. The primary purpose is to provide

OTA with specific information that can be used

in forming general conclusions regarding broader

policy issues. The first 19 cases in the Health Technology Case Study Series, for example, were conducted in conjunction with OTA’s overall project

on The Implications of Cost-Effectiveness Analysis of Medical Technology. By examining the 19

cases as a group and looking for common probems or strengths in the techniques of cost-effectiveness or cost-benefit analysis, OTA was able

to better analyze the potential contribution that

hose techniques might make to the management

of medical technology and health care costs and

quality.

The second function of the case studies is to

provide useful information on the specific technologies covered. The design and the funding levels of most of the case studies are such that they

should be read primarily in the context of the associated overall OTA projects. Nevertheless, in

many instances, the case studies do represent expensive reviews of the literature on the efficacy,

safety, and costs of the specific technologies and

s such can stand on their own as a useful contribution to the field.

Case studies are prepared in some instances because they have been specifically requested by

Congressional committees and in others because

they have been selected through an extensive review process involving OTA staff and consultations with the congressional staffs, advisory panel

 the associated overall project, the Health Program Advisory Committee, and other experts in

various fields. Selection criteria were developed

to ensure that case studies provide the following:

● examples of types of technologies by func-

●

●

●

●

●

●

●

tion (preventive, diagnostic, therapeutic, and

rehabilitative);

examples of types of technologies by physical

nature (drugs, devices, and procedures);

examples of technologies in different stages

of development and diffusion (new, emerging, and established);

examples from different areas of medicine

(e.g., general medical practice, pediatrics,

radiology, and surgery);

examples addressing medical problems that

are important because of their high frequency or significant impacts (e.g., cost);

examples of technologies with associated high

costs either because of high volume (for lowcost technologies) or high individual costs;

examples that could provide information material relating to the broader policy and methodological issues being examined in the

particular overall project; and

examples with sufficient scientific literature.

Case studies are either prepared by OTA staff,

commissioned by OTA and performed under contract by experts (generally in academia), or written by OTA staff on the basis of contractors’

papers.

OTA subjects each case study to an extensive

review process. Initial drafts of cases are reviewed

by OTA staff and by members of the advisory

panel to the associated project. For commissioned

cases, comments are provided to authors, along

with OTA’s suggestions for revisions. Subsequent

drafts are sent by OTA to numerous experts for

review and comment. Each case is seen by at least

30 reviewers, and sometimes by 80 or more outside reviewers. These individuals may be from

relevant Government agencies, professional societies, consumer and public interest groups, medical practice, and academic medicine. Academicians such as economists, sociologists, decision

analysts, biologists, and so forth, as appropriate,

also review the cases.

Although cases are not statements of official

OTA position, the review process is designed to

satisfy OTA’s concern with each case study’s

scientific quality and objectivity. During the various stages of the review and revision process,

therefore, OTA encourages, and to the extent

possible requires, authors to present balanced information and recognize divergent points of view.

,.. 111
Health Technology Case Study Seriesa

Case Study Case study title; author(s); Case Study Case study title; author(s);

Series No. OTA publication numberb

Series No. OTA publication numberb

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

Formal Analysis, Policy Formulation, and End-Stage Renal

Disease;

Richard A. Rettig (OTA-BP-H-9(1))C

The Feasibility of Economic Evaluation of Diagnostic Procedures: The Case of CT Scanning;

Judith L, Wagner (OTA-BP-H-9(2))

Screening for Colon Cancer: A Technology Assessment;

David M. Eddy (OTA-BP-H-9(3))

Cost Effectiveness of Automated Multichannel Chemistry

Analyzers;

Milton C. Weinstein and Laurie A. Pearlman

(OTA-BP-H-9(4))

Periodontal Disease: Assessing the Effectiveness and Costs of

the Keyes Technique;

Richard M. Scheffler and Sheldon Rovin

(OTA-BP-H-9(5))

The Cost Effectiveness of Bone Marrow Transplant Therapy

and Its Policy Implications;

Stuart O. Schweitzer and C. C. Scalzi (OTA-BP-H-9(6))

Allocating Costs and Benefits in Disease Prevention Programs:

An Application to Cervical Cancer Screening;

Bryan R. Luce (Office of Technology Assessment)

(OTA-BP-H-9(7))

The Cost Effectiveness of Upper Gastrointestinal Endoscopy;

Jonathan A. Showstack and Steven A. Schroeder

(OTA-BP-H-9(8))

The Artificial Heart: Cost, Risks, and Benefits;

Deborah P. Lubeck and John P. Bunker

(OTA-BP-H-9(9))

The Costs and Effectiveness of Neonatal Intensive Care;

Peter Budetti, Peggy McManus, Nancy Barrand, and

Lu Ann Heinen (OTA-BP-H-9(10))

Benefit and Cost Analysis of Medical Interventions: The Case

of Cimetidine and Peptic Ulcer Disease;

Harvey V. Fineberg and Laurie A. Pearlman

(OTA-BP-H-9(11))

Assessing Selected Respiratory Therapy Modalities: Trends and

Relative Costs in the Washington, D.C. Area;

Richard M. Scheffler and Morgan Delaney

(OTA-BP-H-9(12))

Cardiac Radionuclide Imaging and Cost Effectiveness;

William B. Stason and Eric Fortess (OTA-BP-H-9(13))

Cost Benefit/Cost Effectiveness of Medical Technologies: A

Case Study of Orthopedic Joint Implants;

Judith D. Bentkover and Philip G. Drew (OTA-BP-H-9(14))

Elective Hysterectomy: Costs, Risks, and Benefits;

Carol Korenbrot, Ann B. Flood, Michael Higgins,

Noralou Roos, and John P. Bunker (OTA-BP-H-9(15))

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

31

The Costs and Effectiveness of Nurse Practitioners;

Lauren LeRoy and Sharon Solkowitz (OTA-BP-H-9(16))

Surgery for Breast Cancer;

Karen Schachter Weingrod and Duncan Neuhauser

(OTA-BP-H-9(17))

The Efficacy and Cost Effectiveness of Psychotherapy;

Leonard Saxe (Office of Technology Assessment)

(OTA-BP-H-9(18))d

Assessment of Four Common X-Ray Procedures;

Judith L. Wagner (OTA-BP-H-9(19))e

Mandatory Passive Restraint Systems in Automobiles: Issues

and Evidence;

Kenneth E. Warner (OTA-BP-H-15(20))f

Selected Telecommunications Devices for Hearing-Impaired

Persons;

Virginia W. Stern and Martha Ross Redden

(OTA-BP-H-16(21))g

The Effectiveness and Costs of Alcoholism Treatment;

Leonard Saxe, Denise Dougherty, Katharine Esty,

and Michelle Fine (OTA-HCS-22)

The Safety, Efficacy, and Cost Effectiveness of Therapeutic

Apheresis;

John C. Langenbrunner (Office of Technology Assessment

(OTA-HCS-23)

Variation in Length of Hospital Stay: Their Relationship to

Health Outcomes;

Mark R. Chassin (OTA-HCS-24)

Technology and Learning Disabilities;

Candis Cousins and Leonard Duhl (OTA-HCS-25)

Assistive Devices for Severe Speech Impairments;

Judith Randal (Office of Technology Assessment)

(OTA-HCS-26)

Nuclear Magnetic Resonance Imaging Technology: A Clinical

Industrial, and Policy Analysis;

Earl P. Steinberg and Alan Cohen (OTA-HCS-27)

Intensive Care Units (ICUs): Clinical Outcomes, Costs, an

Decisionmaking;

Robert A. Berenson (OTA-HCS-28)

The Boston Elbow;

Sandra J. Tanenbaum (OTA-HCS-29)

The Market for Wheelchairs: Innovations and Federal Policy

Donald S. Shepard and Sarita L. Karen (OTA-HCS-30

The Contact Lens Industry: Structure, Competition, and Public

Policy

Leonard G. Schifrin with William J. Rich (OTA-HCS-3)

aAvailable for sale by the Superintendent of Documents, U.S. Government d

Background paper #3 to The Implications of Cost-Effectiveness Analysis

Printing Office, Washington, DC, 20402, and by the National Technical Medical Technology.

Information Service, 5285 Port Royal Rd., Springfield, VA, 22161. Call eBackground Paper #5 to The Implications of Cost-Effectiveness Analysis

OTA’s Publishing Office (224-8996) for availability and ordering infor- Medical Technology.

f

mation. Background paper #1 to OTA’s May 1982 report Technology and Han

bOriginal publication numbers appear in parentheses. capped People.

c

The first 17 cases in the series were 17 separately issued cases in Background gBackground Paper #2 to Technology and Handicapped People.

Paper #2: Case Studies of Medical Technologies, prepared in conjunction

with OTA’s August 1980 report The Implications of Cost-Effectiveness Analysis of Medical Technology.
OTA Project Staff for Case Study #31

Roger Herdman, Assistant Director, OTA

Health and Life Sciences Division

Clyde J. Behney, Health Program Manager

Jane E. Sisk, Project Director

Lawrence H. Miike, Senior Associate

Katherine E. Locke, Research Assistant

H. Christy Bergemann, Editor

Virginia Cwalina, Administrative Assistant

Rebecca I. Erickson, Secretary/Word Processor Specialist

Brenda Miller, Word Processor/P. C. Specialist
Advisory Panel for Federal Policies and

the Medical Devices Industry

Richard R. Nelson, Chair

Institute for Social and Policy Studies, Yale University

New Haven, CT

William F. Ballhaus

International Numatics, Inc.

Beverly Hills, CA

Ruth Farrisey

Massachusetts General Hospital

Boston, MA

Peter Barton Hutt

Covington & Burling

Washington, DC

Alan R. Kahn

Consultant

Cincinnati, OH

Grace Kraft

Kidney Foundation of the Upper Midwest

Cannon Falls, MN

Joyce Lashof

School of Public Health

University of California

Berkeley, CA

Penn Lupovich

Group Health Association

Washington, DC

Victor McCoy

Paralyzed Veterans of America

Washington, DC

Robert M. Moliter

Medical Systems Division

General Electric Co.

Washington, DC

Louise B. Russell

The Brookings Institution

Washington, DC

Earl J. Saltzgiver

Foremost Contact Lens Service, Inc.

Salt Lake City, UT

Rosemary Stevens

Department of History and Sociology of Science

University of Pennsylvania

Philadelphia, PA

Allan R. Thieme

Amigo Sales, Inc.

Albuquerque, NM

Eric von Hippel

Sloan School

Massachusetts Institute of Technology

Cambridge, MA

Edwin C. Whitehead

Technicon Corp.

Tarrytown, NY
Contents

Page

CHAPTER 1: SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

CHAPTER 2: THE DEVELOPMENT OF CONTACT LENSES . . . . . . . . . . . . . . . . . . . . 9

CHAPTER 3: TYPES OF CONTACT LENSES AND THEIR CHARACTERISTICS . . 15

Hard PMMA Lenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Soft Lenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Gas-Permeable Lenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Present Usage and Future Trends... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

CHAPTER 4: WEARERS, PRICES, AND SOURCES OF PAYMENT . . . . . . . . . . . . . . 23

Wearers of Contact Lenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Prices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Sources of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

CHAPTER 5: PRODUCERS OF CONTACT LENSES.. . . . . . . . . . . . . . . . . . . . . . . . . . . 31

CHAPTER 6: CONTACT LENS PRESCRIBERS AND DISPENSERS. . . . . . . . . . . . . . . 39

Ophthalmologists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Optometrists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

Opticianry: Independent Optical Outlets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

Opticianry: Optical and Drug Chains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

The Marketing of Contact Lenses to Dispensers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

CHAPTER 7: THE ROLE OF FEDERAL POLICY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

General Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

Patents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

The Maintenance of Market Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

State Commercial Practice Restraints. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

FDA Regulatory Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

The Origins, Development, and Scope of FDA Authority Over Contact Lenses . . . 51

The Effects of the Present System of Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

APPENDIX A.– FDA APPROVED CONTACT LENSES AND CURRENT PRICES.. 57

APPENDIX B.– MAJOR CONTACT LENS MANUFACTURERS, METHODS OF

ENTRY, AND ACQUISITIONS AND LICENSE AGREEMENTS . . . . . . . . . . . . . . . . 59

APPENDIX C.– GLOSSARY OF TERMS AND ACRONYMS . . . . . . . . . . . . . . . . . . . . 62

APPENDIX D.– ACKNOWLEDGMENTS AND HEALTH PROGRAM

ADVISORY COMMITTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63

REFERENCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69

Tables

Table No. Page

l. Summary of the Historical Development of Contact Lenses . . . . . . . . . . . . . . . . . . . 9

2. Persons Wearing Corrective Lenses: 1966, 1971, and 1977. . . . . . . . . . . . . . . . . . . . . 17

3. Persons Wearing Corrective Lenses: 1970, 1975, 1978-82 . . . . . . . . . . . . . . . . . . . . . . 18

4. Share of U.S. Contact Lens Market by Lens Type, 1978-87. . . . . . . . . . . . . . . . . . . . 18

vii
Contents—continued

Table No. Page

5.

6.

7.

8.

9.

10.

11.

12.

13.

14.

15.

16.

17.

Contact Lens Wearers, Percent of Population, by Sex and Age,

1965-66, 1971, and 1979-80. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Purchase or Repair of Contact Lenses per 1,000 Population at Different

Family Income Levels, 1977 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Average Soft Contact Lens List and Total Fitting Prices, per Pair, 1971-82,

Selected Years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Market Shares and Concentration Ratios, Soft Lenses, 1978-82 . . . . . . . . . . . . . . . . 31

Market Shares and Concentration Ratios, Gas-Permeable Lenses, 1979-82 . . . . . . . 31

Worldwide Sales, Profit, and R&D Data of the 17 Major Firms in the

Contact Lens Industry, 1982 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

U.S. Product Lines and List Prices Per Lens for the 15 Major Contact Lens

Manufacturers, May 1983 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

Contact Lens Fittingly Ophthalmologists, 1982 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Contact Lens Fitting by Optometrists, 1982 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

Contact Lens Fitting by Independent Dispensing Opticians, 1982 .........,., . . . 41

Contact Lens Fitting by Chain Outlets, 1982. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

Major Optical Chains and Number of Outlets, 1982 . . . . . . . . . . . . . . . . . . . . . . . . . . 42

Contact Lens Fitting by Opticians: Survey of State Limitations . . . . . . . . . . . . . . . . 49

. . . Viii
OTA Note

These case studies are authored works commissioned by OTA. Each author

is responsible for the conclusions of specific case studies. These cases are not statements of official OTA position. OTA does not make recommendations or endorse

particular technologies. During the various stages of review and revision, therefore,

OTA encouraged the authors to present balanced information and to recognize

divergent points of view.

25-339 0 - 84 - 2 : QL 3
1

Summary

This study presents an analysis of the contact

lens industry in the United States, emphasizing

the role of economics and public policy in shaping past and future development. The analysis follows the general format usually employed in such

industry studies: 1) the evolution and present configuration of the structural and institutional features, including public policy, that define the contact lens industry; 2) the corporate strategies and

policies conditioned by this operational context;

and 3) the end results of these strategies and policies in terms of the technical improvement of contact lenses, the ways of making them, and the

prices at which they are sold.

In following this general format, the study is

both descriptive and analytical. The descriptive

aspects include the historical evolution of contact

lenses (ch. 2); the range of available lens types

(ch. 3); the characteristics of wearers of contact

lenses, how much they spend, and the sources of

payment for these contact lenses expenditures (ch.

4); the firms that make contact lenses (ch. 5); the

eye-care professionals who represent the bridge

between makers and users by prescribing and fitting contact lenses, and toward whom lens manufacturers direct most of their marketing efforts

(ch. 6); and the regulatory context within which

the entire manufacturing and selection process

takes place (ch. 7).

The first part of the analysis relates structure

to behavior, or the influence that the number, size,

market power, and policies of the makers of contact lenses have on their incentives and behavior

regarding competition in product development

and price.

The second part of the analysis focuses on the

role played by public policy in influencing this

competition, either directly or indirectly. The

more important elements of public policy affect:

1) mergers, 2) market entry, 3) competition in the

professional prescribing and fitting of contact

lenses, and 4) the payment mechanism in the purchasing process.

Why is it important to know these features of

the contact lens industry and how public policy

affects the industry’s operation, when the industry is quite small, with annual domestic sales at

the manufacturers’ level currently running about

$350 million? First, the analysis of any industry,

however small, provides another economic case

study that adds to our knowledge of how industry structure and public policy affect the competitive behavior of firms in the marketplace. Second,

the contact lens industry gives every indication

of growing considerably in the relatively near

future; thus, its record in product improvement

and pricing will be increasingly important relative to the full range of goods and services produced in the economy. Third, the study of the effects of public policy regarding the contact lens

industry can provide guidelines for the formulation of sound policies in the future toward this

industry, and, in turn, by serving as a case study,

for the formulation of effective policies to influence the activities and performance results of other

industries, both inside and outside the medical

sector.

Contact lenses are of three types, although the

distinctions between the types could conceivably

disappear in the future. The first type of modern

contact lens was the hard “PMMA” (for “polymethylmethacrylate”) lens, made of plexiglasstype plastics. The advantages of this type are relative rigidity (where flexing may be a problem),

smallness, lightness, safety (minimal risk to the

eyes), ease of precision-machining, ease of maintenance, and durability. Their major disadvantage is that they are impermeable to oxygen and

interfere with the flow of oxygen to the cornea.

For a sizable proportion of potential wearers, this

problem may actually deter the wearing of PMMA

lenses; for others, wearing time becomes limited

to a usual daily maximum of 8 to 16 hours.

PMMA lens wearers may also incur “spectacle

blur” when switching from lenses to glasses.

The second type of contact lens is made from

water-absorbing plastics caIled “hydrogels” (mostly

3
4 ● Health case study 31: The Contact Lens Industry: Structure, competition, and Public Policy

“HEMA’’-for “hydroxyethylmethacrylate’’—hydrogels, but other hydrogel materials are also

popular) or soft silicone. Their water absorbency

and resulting softness make them considerably

more easy to adapt to and more comfortable for

longer periods, but the same characteristics make

them fragile, provide less acute vision correction,

and may increase the likelihood of eye infections

from handling and wearing.

The third type of lenses is gas permeable. These

lenses have much of the superior optical and easeof-care qualities of hard lenses because of their

rigidity, and the comfort of soft lenses because

they are oxygen permeable.

About 120 million people in the United States

wear corrective eyeglasses and another 16 million

to 18 million use contact lenses, either exclusively

or interchangeably with eyeglasses. Among all

U.S. contact lens wearers, the use of hard lenses

is declining and the use of soft and gas permeable

lenses is increasing. For new fittings, hard lenses

represent a minor share, soft lenses predominate,

and gas permeable are the fastest growing. For

both new fittings and replacements together, soft

lenses represent upwards of 75 percent of the total

market, probably their peak figure. Hard lenses

have 15 percent or less of the market, and gas

permeable at least 10 percent.

In the future, soft and gas-permeable lenses will

account for almost all lens sales, perhaps about

equally. There are some signs that a hybrid type

of lens, combining the best qualities of each type,

may be emerging. If so, then this fourth type will

be “the” contact lens of the future. Whether or

not this hybrid is developed, contact lenses may

become as common or even more common a

method of vision correction than eyeglasses, as

their comfort, wearability, applications, and effectiveness continue to increase.

At present, contact lenses are particularly useful

in the correction of single vision problems, essentially myopia (nearsightedness) and hypermetropia

(farsightedness). They are also useful in the correction of astigmatism (a vision defect usually

resulting from an irregular, nonsymmetrical conformation of the cornea, which results in a lack

of sharpness or evenness of focus) and presbyopia

(the loss of flexibility in refocusing from near to

far objects, and vice versa) for which bifocal or

multifocal corrective lenses or monovision correction is employed. These “disorders of refraction and accommodation” rank very high among

physical problems, as evidenced by patient visits

to all eye-care professional practitioners.

Certain interesting features exist in the pattern

of contact lens wearers. Unlike eyeglasses, contact lenses have been a “younger person’s” product. The traditional wearer has been the young

adult female. However, as the therapeutic applications of contact lenses expand and consumer tastes

are altered (partly by increased direct advertising by manufacturers), contact lens usage among

males and among older persons is increasing

rapidly and the traditional orientation toward the

young adult female is disappearing.

The absolute price of contact lenses of all types

has fallen significantly in the past decade, a time

of high general inflation. Soft lens wholesale prices

now are about half their mid-1970s level, and total

fitting prices are half or less of their early 1970s

level. Lens price reductions have resulted from

large-scale entry, excess capacity, and vigorous

price competition among manufacturers, particularly in the soft lens group. Total-fitting price reductions reflect these cuts in lens prices and the

expanded competition among lens fitters, particularly the large chain optical houses. Continued

price competition is likely, and further price declines, if less dramatic, may occur in the future.

Unlike many categories of health care expenditures, the largest proportion of payments for corrective lenses comes from patients, rather than

from private or public insurance. Although a

number of major collectively bargained employment contracts provide vision-care benefits, such

coverage applies only to a small proportion of all

workers, provides mainly for eyeglasses, and provides only partial payment for contact lenses

when they are covered. In the public sector, contact lenses are insured only for therapeutic, not

cosmetic, use. (In a strict sense, all contact lenses

that offer vision correction or eye protection are

“therapeutic” in use. However, contact lenses that

provide correction or protection not achievable

through the use of eyeglasses are commonly considered “therapeutic” in use while those afford-
Ch. I—Summary ● 5

ing benefits also attainable through the wearing

of eyeglasses are considered “cosmetic,” since, it

is believed, the choice of contact lenses in the latter

cases is made on the basis of appearance considerations. ) In practice, this means that contact

lenses are provided under Medicare, Medicaid,

and other public programs mainly in relation to

cataract or other eye surgery. As a result of this

minimal role of third-party payment in the total

source-of-payment pattern, insurance as a whole

and public programs in particular have little discernible effect on contact lens usage, development,

prices, or resource allocation patterns.

Although a large number of firms produce contact lenses, the manufacture of both soft and gas

permeable lenses is concentrated among a very

few large firms. However, because of many factors—e.g., the similarity of lenses within each

type, the considerable substitutability and resulting competition among types, and excess

capacity—competition is active in both product

development and price. Where market power is

most evenly distributed (hard lenses), price competition is greatest. Where large firms dominate

but are surrounded by a fringe of smaller firms

(soft lenses), price competition is high. Where only

a few firms are in the market and one predominates (gas permeable lenses), price competition,

among groups if not within this group, is at least

observable.

Yet public policy has not had benign effects on

market competition. As a result, the degree of

competition is probably less than it otherwise

would be, and the gap between the actual and potential levels may widen in the future. To the

present, the history of this industry shows the

important role of small firms as generators of innovational progress, service, and price rivalry.

Yet the sector most open to small firms—hard

roses -is becoming less important as time passes.

n the soft-lens area, energetic small firms have

Difficulty entering the market, and mergers and

acquisitions by large firms may eliminate many

of them. And small firms have the greatest difficulty in entering the fastest growing market

area —gas-permeable lenses. The greatest potential obstacle to the attainment of optimal product and price competition in the future is the U.S.

Food and Drug Administration’s premarketing

approval policies, which have been especially

burdensome to smaller firms. Restrictive market

approval policies may be wise for significantly

new lens types, but once their effectiveness and

safety become established, more flexible approaches

toward minor or closely similar new developments seem warranted.

The study also examines the role of contact lens

prescribers and dispensers (ophthalmologists, optometrists, and opticians) in the eye-care field.

Ophthalmologists are medical doctors specializing in eye care, and vision correction is a large

part of their activity. There are about 12,500

ophthalmologists in the United States, of whom

11,000 are involved in regular patient care. Optometrists, who are licensed to measure and fit

corrective lenses, outnumber ophthalmologists by

roughly two-to-one, and fit proportionally more

corrective lenses. Opticians are usually limited to

making contact lenses or to fitting them under the

supervision of an optometrist or ophthalmologist,

but in some States they may measure for and fit

corrective lenses. There are an estimated 26,000

dispensing opticians. Recent action by the U.S.

Federal Trade Commission (FTC), however, has

expanded the competitive roles of these dispensing opticians. The FTC requires all lens prescribers

to provide copies of the prescription to the patient, Thus, patients may take these prescriptions

elsewhere, including to opticianries, for filling and

fitting. State prohibitions against price competition by corrective lens dispensers are also no

longer enforceable, and opticians have begun to

compete on the basis of price to fill corrective lens

prescriptions written by others. Large chains, with

inhouse optometrists and opticians, have been the

most vigorously price competitive, both for full

prescribing and fitting, and for filling prescriptions

brought in by patients. Accordingly, public policy has been successful in providing strong competition in the fitting of contact lenses, which is

directly advantageous to patients in the forms of

expanded choices and lower prices, and indirectly

advantageous by exerting a strong counteracting

force on any market power among lens manufacturers.

Other Federal policies—tax, import, research

funding, procurement—seem to have little, if any,

effect on the contact lens industry. Patent policy
Case Study 31: The Contact Lens Industry: Structure, Competition, and Public Policy

is somewhat more important, but not critically approval requirements could suggest adjustments

so. More importantly, the procompetitive effects in policies that would make mergers somewhat

of enhancing competition among dispensers could more difficult to accomplish and market entry

be maximized subject, of course, to the mainte- considerably easier. Adoption of more flexible

nance of high-quality care. An assessment of the policies of premarket approval merits particular

effects of unhindered mergers and premarketing attention.
2.

The Development of Contact Lenses1

The oft-told history of the development of contact lenses is an interesting one, and its highlights

are presented in table 1. The history usually begins

with the theories of Leonardo da Vinci that a

water-filled glass “half circle” could neutralize the

refractive (light bending) power of the cornea and

substitute the refractive power of the curved glass

to improve the clarity of the image received by

the retina. Leonardo suggested at least two demonstrations of his theory: 1) a water-filled glass

bowl in which the person placed his or her face

(presumably for brief periods) and looked through

the bottom, and 2) a water-filled glass hemisphere

actually worn over the eye and remarkably like

a contact lens. His ideas far exceeded the ability

of his times to actually implement them. However, he had correctly identified several key principles of contact lenses; neutralizing the refraction of the natural cornea by means of an artificial

surface; substituting the refractive powers of a

1Except as noted, this discussion was drawn from: Graham, 1981

(15); Lowther, 1982 (21); and Ruben, 1976 (30).

curved, clear lens in its place; and positioning that

lens directly on the eye.

Almost a century and a half later, the philosopher-mathematician René Descartes suggested

placing a lens at the end of a water-filled tube,

the other end of which was placed on the cornea

of the eye. His concept was not really practical

as such tubes would require external support, but

time has shown that his idea of placing the lens

only over the cornea instead of including the sclera

(white portion of the eye), as Leonardo had proposed, was most perceptive.

In 1801, Thomas Young, an English scientist,

actually made a rudimentary set of contact lenses

on the model of Descartes. Using wax, he affixed

water-filled lenses to his eyes, neutralizing his own

refractive power, then corrected for it with another

pair of lenses. His optic device affirmed the principles formulated by both Leonardo and Descartes.

Next in the progression of the science of contact lenses was Sir John Herschel, an English

Table 1 .—Summary of the Historical Development of Contact Lenses

Year Individual(s) Development

1508

1636

1801

1827

1887

1888

1888

1936

1938

1947

1947

1950

1960

1968

1971

Leonardo da Vinci . . . . . . .

René Descartes . . . . . . . . .

Thomas Young . . . . . . . . . .

John Herschel . . . . . . . . . .

F. A. Muller. . . . . . . . . . . . .

A. E. Fick . . . . . . . . . . . . . .

E. Kalt . . . . . . . . . . . . . . . . .

W. Feinbloom . . . . . . . . . . .

Mullen and Obrig . . . . . . . .

N. Bier . . . . . . . . . . . . . . . . .

K. Tuohy . . . . . . . . . . . . . . .

Butterfield . . . . . . . . . . . . . .

Wichterle and Lim . . . . . . .

Bausch & Lomb . . . . . . . . .

1970s J. DeCarle . . . . . . . . . . . . . .

1970s Rynco Scientific . . . . . . . .

1970s

1978 Danker Laboratories . . . . .

1979 Syntex Ophthalmic . . . . .

Described glass contact lens

Tube of water used to neutralize the cornea

Used Descartes’ principle to study the eye

Described how a contact lens could be ground; concept

of molding the eye

Fitted a glass blown lens for a patient to protect the eye

Described first glass lens to be worn to correct vision

Designed and fitted glass corneal lenses; Used

ophthalmometer to fit lenses

Made lens with glass central optic and plastic surround

(first plastic used in contact lens)

First all-plastic (PMMA) contact lens

Fenestrated minimum-clearance haptic lens

All-plastic corneal lens

Designed corneal lens to parallel the cornea; used

peripheral curves

Hydrogel polymers for contact lenses

U.S. FDA became involved in regulating contact lenses

First hydrogel lens approved in United States

Extended wear with high water content hydrogel lenses

Use of CAB polymer for contact lenses

First clinical marketing of soft silicone lenses

U.S. FDA approval of CAB lenses

U.S. FDA approval of a PMMA-silicone copolymer lens

SOURCE: G. E. Lowther, Contact Lenses: Procedures and Techniques (Boston, MA: Butterworths, 1982)

9
10 ● Health Case Study 31: The Contact Lens Industry: Structure, Competition, and Public Policy

astronomer, who in the 1820s suggested principles

for accurate lens grinding and fitting. His first contribution was to suggest grinding the inside curvature of a glass lens to conform as closely as possible to an irregularly surfaced cornea, and the

outside curvature of the same lens to duplicate

a normal cornea. He also proposed taking an actual mold of the eye to use in rendering an accurate interior curvature fit and using a gel-like

filling for the cavity between the cornea and interior curve.

The actual making of contact lenses became

possible as the necessary technological capabilities slowly emerged. The development of anesthesia in 1884 allowed for making a mold of the

shape of the eye, as proposed by Herschel. Advances in optics, particularly precision glass blowing and lens grinding, made possible the accurate

duplication in glass of the curvatures of the eye.

Usable lenses thus were developed, but their first

applications were for pathological conditions of

the eye (as opposed to correcting a refraction error), since only the correction of severe problems

justified the wearing of these large, heavy, and

uncomfortable devices, which were tolerable only

for brief periods. In Germany, F. A. Muller, a

maker of artificial glass eyes, made a transparent

lens in 1887 to protect a diseased eye that seems

to have worked for many years.

The following year, two important developments occurred. A. E. Fick, a Swiss physician,

employed a small glass bowl—more accurately,

a segment of a glass sphere “bounded by concentric and parallel sphere segments’’—to correct

refractive errors. These appear to be the first true

contact lenses, and Fick went on to design and

use both corneal and scleral lenses. Concomitant

advances in lens making, led by the Zeiss enterprise in Germany, made Fick’s work possible and

allowed for further experimentation with contact

lenses in Germany, Switzerland, and France. For

the most part, however, such lenses were not

comfortable enough for much use in other than

pathological conditions such as keratoconus,

where the pressure of the lens might help suppress

the conical distention of the cornea and protect

it; other severe distortions of the cornea in which

correction by the use of spectacles was not possible; and in cases where the cornea needed protection from infections and encrustations of the

eyelids.

By the end of the 19th century, then, a plateau

had been reached in the progress of contact lenses.

Fairly well-fitting and carefully made glass contact lenses were available but were used on a

limited scale only for occasional therapeutic purposes. Glass, even thin-blown or finely ground,

is relatively heavy. Thus, small lenses would not

adhere reliably to the surface of the eye, and large

lenses which extended under the eyelids impeded

the lubrication of the cornea and the flow of oxygen (and carbon dioxide) because they were

essentially impermeable. The results of wearing

these large, scleral lenses were: discomfort, irritation, swelling, and perhaps infection or other

damage; the need for continuous and usually not

successful artificial lubrication of the eye; and/or

a cycle of short-term wearing and longer rest periods. Additionally, wearing highly fragile lenses

in the eye was considerably dangerous, and the

glass material itself was affected by tears. The

regular use of contact lenses for simple vision correction, although nearer to reality than before,

was not yet feasible. The development of contact

lenses thus remained static at this point, waiting

for supporting technology to catch up.

This catchup took another half-century and appeared in the form of plastics, which overcame

some of the more serious limitations of glass

lenses. Feinbloom, in the United States, was the

first to use plastic in contact lenses. In 1936, he

produced a scleral lens by bonding the glass corneal portion to an opaque, molded resin scleral

band. Obrig and Mullen, also working in the

United States, made the first all-plastic scleral

lenses in 1938, using a new material, polymethylmethacrylate (PMMA), which was particularly

easy to shape to ultra-thin dimensions and greatly

superior to glass in safety, lightness, and workability. The step from plastic scleral to plastic corneal lenses was a short but difficult and important one and was accomplished by Tuohy in 1947,

and the modern era of contact lenses had begun.

Tuohy and others, including Butterfield, made

great progress in both the construction and design of corneal plastic contact lenses. The results
Ch. 2—The Development of Contact Lenses ● 11

were a small, light lens of high optical quality and

a design that conformed very closely to the shape

of the central cornea, but with a slight “stand off”

at the edges for better tear spreading for greater

lubrication and oxygen delivery to the cornea. As

a result, PMMA or “hard” corneal contact lenses

for correcting refractive errors became commercially practical in the early 1950s, and for the next

two decades, they were virtually the only type

of lenses used.

The search for new lens materials and designs

was partly spurred by the wide range of corrective and therapeutic requirements that one material and a few design configurations were unlikely

to serve, but more so by the limitations of PMMA

for routine refractive corrections. A serious limitation of PMMA is that because it is nonpermeable,

oxygen-bearing tears may not be able to diffuse

through the lens to reach the cornea in sufficient

quantity. Without oxygen, the cornea swells and

makes lens-wearing difficult. For many people,

natural blinking and movement of the lens allow

for an oxygen supply adequate for upwards of 16

hours of wear, so-called “daily” wear. But for

many others, shorter wearing times and higher

levels of discomfort can be expected, perhaps to

the point of their forgoing lenses totally, especially

since many wearers of contact lenses choose them

over glasses essentially for cosmetic reasons.

If PMMA lenses represent the first generation

of modern contact lenses, “soft” lenses, designed

largely to overcome the limitations of hard PMMA

lenses, represent the second generation. For the

most part, soft lenses are made of hydrophilic

(water-absorbing) plastic materials called “hydrogels.” The basic hydrogel plastic is hydroxyethylmethacrylate (HEMA), although new hydrogel

materials and other soft-lens plastics have recently

been developed. These plastics absorb water (as

much as 85 to 90 percent by weight) and become

soft and flexible in proportion to their absorbency.

In 1960, Wichterle and Lim, Czechoslovakian

chemists working with Dreifus, an ophthalmologist, researched hydrogels, and with Dreifus began

to formulate hydrophilic contact lenses.

Although hydrogels have become the main type

of contact lenses currently on the market, they

were not a practical alternative to hard lenses for

a decade or more after their invention. Being soft

and permeable, they were comfortable on the eye,

but their water content made them difficult to

handle, of poor optical quality, and raised questions about the absorption of infectious bacteria.

However, within several years, improved materials and lens designs were formulated. After a

few years of experimentation and improvement,

Wichterle granted to National Patent Development Corp. (NPD), a U.S. firm, exclusive Western Hemisphere rights to the new hydrogel materials and to a novel molding process, now called

“spin casting, “ for the fabrication of hydrogel contact lenses. NPD, in turn, licensed Bausch &

Lomb Inc. to use these product and process patents. In 1971, after considerable improvement

and careful testing, Bausch & Lomb obtained approval from the U.S. Food and Drug Administration to sell hydrogel lenses in the United States.

After several years, other firms began to obtain

similar approvals for their hydrogel lenses, and

many firms are now in the market.

Today, there are more than 30 manufacturers

of soft lenses (31,48). For any given use, different

brands of lenses may differ slightly in design and

hydrophilic capacity, some higher for greater

comfort and permeability, others lower for greater

durability and visual acuity. Soft lenses are now

available for a wide variety of vision problems

and for extended wear.

The decade of the 1970S thus marked the introduction, acceptance, and ultimate dominance

of soft lenses over the older PMMA hard lenses,

but as the decade ended a new type of lens, perhaps a third generation, was introduced. This lens

is a gas-permeable hard lens, made of either

cellulose acetate butyrate (CAB), PMMA-silicone

combinations, or pure silicone. These lenses allow

oxygen to reach the cornea through the lens as

soft lenses do, while also offering the optical

clarity and ease of handling of hard lenses. In

1979, the first gas-permeable hard lenses were approved for use in the United States, and recently,

others have followed. Currently, in addition to

the wide range of soft lenses available or being

tested, experimentation with newer gas-permeable

hard lenses, including extended wear lenses, is

active.
12 ● Health Case Study 31: The Contact Lens Industry: Structure, Competition, and Public Policy

The history of the development of contact

lenses is considerably more detailed and complex

than is suggested by a discussion of its significant

developments or a chronological listing of its

highlights. Today’s wide range of precision-made,

carefully fitted, and extensively used contact

lenses represents the contributions of a large number of scientific areas and industrial sectors which

played key roles. These include: physics, biology,

and chemistry and their continually expanding

theoretical and empirical foundations; precision

glassmaking, which made possible early lenses of

thin optical glass; the plastics industry, which has

developed an expanded inventory of sophisticated

polymer plastics that are the foundation of today’s

contact lenses; the precision machine tool industry, which has provided ultra-fine grinding,

lathing, and molding machines for lens finishing;

the optical instruments industry, for its provision

of precise ophthalmic measurement and examination technology and eye-care practitioners and

technical personnel, who have utilized the new

technologies and encouraged their continued

evolution.
3 ■

Types of Contact Lenses and

Their Characteristics1

The basic categories of contact lenses currently

in use are the original hard (polymethylmethacrylate [PMMA]) lenses, soft hydrogels (hydroxymethylmethacrylate [HEMA] and other materials), and gas-permeable hard lenses (cellulose

HARD PMMA LENSES

As discussed in the previous chapter, hard

PMMA lenses were the first lenses introduced

onto the market, and corneal PMMA lenses similar to those currently in use have been available

since the early 1950s. Compared to later types of

lenses, PMMA lenses can be difficult to adapt to,

and perhaps as many as half of the people fitted

do not become long-term wearers. Since PMMA

is not water- or gas-permeable, wearers must rely

on the “tear pump” action of the eye to provide

oxygen to the covered portion of the cornea. As

the wearer blinks, tear interchange occurs from

outside the lens to beneath it, providing the necessary oxygen. Although hard lenses are very

small and cover only a portion of the cornea,

many persons may not be able to provide enough

tears for comfortable wear. Others may “get by”

for 8 to 12 hours but beyond that time, they suffer from dryness, swelling, and discomfort of the

eye. Thus, hard lenses are, at best, “daily” wear

lenses, but for many people they are very comfortable for that duration.

The positive characteristics of PMMA lenses are

numerous. PMMA is made by annealing, a process of successive heating and cooling, which leaves

it free of toxic chemicals. It thus is an inert mate-

‘This discussion of lens types and characteristics is drawn from:

Aquavella and Gullapali, 1980 (3); Check, 1982 (8); Consumer

Reports, 1980 (9); Dixon, 1982 (13); Feldman, 1981 (14); Kersley,

1980 (19); and Morrison, 1976 (27).

acetate butyrate [CAB], PMMA-silicone, and

silicone). There are variations within each group,

but their respective properties are similar enough

to consider them as essentially the same type of

lenses.

rial and safe for use in the eye. It can be molded

or lathed into lenses with a high degree of precision. Once made, PMMA lenses can be reworked

and modified to customize them to an individual’s

requirements. The result is a safe lens of excellent

visual properties which very closely conforms to

patient requirements. PMMA lenses require minimal use of cleaning, soaking, and wetting solutions. They may be tinted to reduce excessive light

sensitivity, to make them easier to find when

dropped, or for appearance reasons. They are

durable, can be renewed by polishing away minor surface scratches, and often last 5 to 7 years

or more. Last, they tend to be cheaper than other

lens types, because they are an older product with

many small suppliers and little difference among

different brands.

Despite attempts to improve their permeability

by drilling small holes in the lenses (“fenestration”), adding hydrogel to the PMMA, or other

modifications, impermeability remains the major

shortcoming of rigid PMMA lenses. Because of

this impermeability, they cannot cover much of

the cornea and therefore must be small. They must

be light and thin to adhere to the eye, which precludes their use for correcting corneal astigmatism

beyond a moderately severe degree.

In summation, then, hard lenses are effective

for daily wear for those persons who have normal or better tearing action and who have mainly

single vision refractive problems, such as near15
16 ● Health Case Study 31: The Contact Lens Industry: Structure, Competition, and Public Policy

sightedness (myopia) and farsightedness (hypermetropia). They are not suitable for those with

poor tearing action, high corneal oxygen need,

SOFT LENSES

Soft lenses differ from PMMA lenses in many

ways. Their basic soft quality comes from their

water absorbency. They are usually gas-permeable, allowing oxygen transport to the cornea.

This softness and permeability make them considerably more comfortable than hard lenses, and

many wearers can adapt to them almost at once.

These qualities can be of great advantage to

wearers, but they come at the expense of some

visual clarity. Soft lenses, which may contain

anywhere from 30 to 90 percent water, can be

very flexible, but what is called their “bag of

water” nature has an effect on refraction, yielding

less clear images than provided by hard lenses.

Additionally, high water content lenses are usually fragile and easily torn. Reducing the water

content in order to increase acuity and durability,

however, sacrifices comfort. Reducing the plastic

content to increase acuity by making a thinner

lens usually increases fragility. These tradeoffs are

the major problem with soft lenses. Further, these

lenses cannot be easily modified. The extensive,

but limited, inventories of ready-made lenses and

the lack of post-prescription customizing cannot

possibly meet the exact needs of all wearers. Still,

lenses are readily available for the most common

refractory corrections and may be available for

less common corrections. For most wearers the

original fit is close enough, and the flexibility of

the lens provides an additional, built-in element

of modification.

The comfort and permeability of soft lenses

allow for uses beyond the correction of nearsightedness and farsightedness. Some brands have

been approved by FDA for 15-day and even 30-

day extended wear. Extended-wear lenses offer

particular benefits to those who find lens insertion and removal difficult, such as persons with

extremely poor eyesight or troubled by arthritis

or unsteadiness of the hand. Extended-wear soft

lenses, therefore, are often used by persons with

difficult multifocal correction requirements, or

who are unable to follow a daily regimen of care,

insertion, and removal.

aphakia (i.e., those who have undergone lens

removal, usually due to cataracts) who may not

see well enough without contact lenses to insert

them properly, and are of particular value to older

persons.

The larger size of soft lenses offers another

advantage. They can overlap comfortably onto

the scleral portion of the eye and under the lid,

which stabilizes the lenses. This allows a soft

bifocal or multifocal lens to be tried in those cases

of presbyopia (loss of flexibility in adjusting from

far to near vision, usually associated with age)

where hard PMMA bifocals have not proven successful. Multifocal soft lens are still problematical for most users, particularly as other alternatives exist, such as bifocal eyeglasses; single vision

lens-eyeglass combinations; and an unmatched

pair of monovision contact lenses, one correcting for nearsightedness, the other for farsightedness. The stability of soft lenses has also led to

the recent introduction of soft toric lenses, which

are used to correct for uneven focusing of the eye

(so-called “corneal astigmatism”).

Special problems associated with soft lenses

relate to their hydrogel construction, fluid content, and extended-wear functions. The potential

exists for the accumulation of both surface deposits and bacteria, and the latter, particularly, was

thought to be a serious problem. As a result,

special cleaning methods are used, and disinfection techniques are also necessary. First, “hot”

methods of disinfection (e.g., boiling), and then

“cold” methods (chemical solutions) were developed and appear to be equally effective in preventing serious problems that might otherwise develop in wearing waterlogged lenses for long

periods of time. However, these cleaning and

disinfection methods are costly, raising the expense of maintaining soft lenses to upwards of

$100 a year or more and stimulating the growth

of a sizable lens care products industry (31).
Ch. 3—Types of Contact Lenses and Their Characteristics ● 17

GAS= PERMEABLE LENSES

Gas-permeable lenses are the newest type to ap- care. Their rigidity helps to correct astigmatism,

pear and are made of either CAB, a PMMA- they are small but easy to handle, and they have

silicone combination, or pure silicone. They are recently become available in tints. Of the three

rigid lenses, with the optical properties of PMMA types of gas-permeable lenses, the PMMA-silicone

lenses, but approach soft lenses in comfort because combination is the most preferred at present, but

of their permeability. They take more getting used the pure silicone lens has proved popular since

to than soft lenses do but require considerably less its introduction.

PRESENT USAGE AND FUTURE TRENDS

Both governmental and trade sources provide

data on current levels and trends in contact lens

use, but they are in some disagreement. Comparisons of the data in table 2, which contains estimates from the National Health Survey on corrective lens usage in 1966, 1971, and 1977, and

that of table 3, which contains estimates from industry sources for the period 1970-82, show that,

where the two sets overlap, the governmental statistics are considerably more conservative. For example, the National Health Survey estimates of

total lens wearers in 1971 and 1977 are 2.4 million and 7.0 million persons, respectively; the

trade data for 1970 and 1975 suggest that there

were 8.0 million and 11.0 million lens wearers in

those years. The wide gap between these two sets

of estimates is explainable if the National Health

Survey data relate to those who wear contact

lenses, and the industry data, to those who have

purchased them. In any case, caution is called for

in making definitive statements about rates of

sales and levels of usage of contact lenses. The

subsequent analysis of trends and levels of contact lens wear derives mainly from the data in

table 3, which are more detailed and current, if

higher, than the data in table 2.

The numbers of eyeglass and contact lens

wearers appear to have grown at fairly steady

rates since 1979, with eyeglass wearers increasing by about 5 million per year and contact lens

wearers by about 1.5 million per year. Since the

number of new contact lens patients per year is

well above 1.5 million, it appears that substantial attrition or failure rates do occur. The stable

growth rate among lens wearers, however, may

Table 2.—Persons Wearing Corrective Lenses:

1966, 1971, and 1977

1966 1971 1977

In millions

Population 3 years and over . . . . . . . . 178.9 191.6 202.9

Wearing corrective lenses. . . . . . . . 86.0 94.3 103.3

Eyeglasses only . . . . . . . . . . . . . . 84.2 90.3 96.3

Contact lenses, with

or without eyeglasses . . . . . . . 1.8 2.4 7.0

Percentages

Percent of population wearing lenses 48.1 49.2 50.9

Eyeglasses only . . . . . . . . . . . . . . 47.1 47.1 47.5

Contact lenses, with

or without eyeglasses . . . . . . . 1.0 1.3 3.5

SOURCES: 1966: U.S. Department of Health, Education, and Welfare, Characteristics of Persons With Corrective Lenses, United States: July 1965-

June 1966, Vital and Health Statistics, series 10, No. 53, prepared by

M. M. Hannaford, DHEW publication No. (PHS) 1000 (Washington, DC:

U.S. Government Printing Office, June 1969). 1971 and 1977: U.S. Department of Commerce, Bureau of the Census, Statistical Abstract

of the United States, 1982-83 (103 cd.), Washington, DC, 1983.

be only a temporary phenomenon. Since new (as

opposed to replacement) contact lenses are expensive and usually represent an alternative to eyeglasses for cosmetic reasons, it is likely that the

recession of the early 1980s had a significant negative effect on lens purchases. Additionally, the

sales data probably do not yet reflect the ultimate

acceptance levels of recent contact lens innovations.

Perhaps the more meaningful implications of

the data relate to patterns among contact lens

types rather than to aggregated totals. Here, the

data tell a less ambiguous story. The older hard

lenses are declining in total usage, having dropped

from 10 million to 7.1 million wearers between

1975 and 1982. Each year they have accounted

for a declining share of both new and replacement
18 . Health Case Study 31: The Contact Lens Industry: Structure, Competition, and Public Policy

Table 3.—Persons Wearing Corrective Lenses: 1970, 1975, 1978”-2 (trade data sources) (millions)

1970 1975 1978 1979 1980 1981 1982 (est.)

Population requiring vision correction . . . . . . . . . . . . . . . . 100.0

Corrective lens wearers

Eyeglasses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92.0

Contact lenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.0

Hard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.0

soft . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . –

Gas-permeable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —

New contact lens patients . . . . . . . . . . . . . . . . . . . . . . . . . . —

Hard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —

soft . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . –

Gas-permeable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —

Replacement contact lenses (pairs)a 

. . . . . . . . . . . . . . . . . —

Hard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —

soft . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . –

Gas-permeable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —

Total contact lens sales (pairs)a 

. . . . . . . . . . . . . . . . . . . . . —

Hard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —

soft . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . –

Gas-permeable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —

107.0

96.0

11.0

10.0

1.0

—

0.9—

0.9—

0.3

—

0.3—

1.2

—

1.2

—

112.5

100.1

12.4

9.0

3.4

—

3.3

1.7

1.6—

1.6

0.9

0.7—

4.9

2.6

2.3—

118.0

105.2

12.8

8.0

4.8

—

4.5

1.8

2.4

0.3

2.1

1.0

1.1

—

6.5

2.7

3.5

0.3

125.0

110.5

14.5

8.0

6.2

0.3

3.0-4.4

1.2

1.4-2.8

0.4

2.2

0.8

1.3

0.1

6.6

2.0

4.2

0.4

131.5

115.0

15.0-16.5

7.8

6.6-8.1

0.6

3.2-4.6

1.0

1.8-3.2

0.4

2.5-4.1

0.7

1.7-3.3

0.1

7.0-7.2

1.6

4.9-5.1

0.5

138.0

120.0

16.3-18.0

7.1

8.3-10.0

0.9

2.8-4.3

0.5

1.9-3.4

0.4

2.7

0.4

2.7

0.1

7.0

0.9

5.6

0.5

a

lncludes single lenses as half pairs.

SOURCES: L. Schwarz and D. K. Temple, Contact Lens Industry-The Shakeout Continues (New York: Salomon Bros., Inc., 1983).

levels, and now represent only a small proportion, estimated at less than 15 percent, of each

category. Soft lens wearers have increased substantially, particularly as the result of their dominance in the new lens market. (While soft lenses

also account for most of the replacement market,

a high fraction of these sales probably replace previous soft lenses, which, as noted earlier, have

a short life span.) Gas-permeable lenses, the

newest type on the market, exhibit a steady

growth rate, accounting for 5 percent or more of

all contact lenses in use, 10 to 15 percent of the

lenses for new wearers, and about 10 percent of

all current lens sales. Market share data for the

three lens types are given in table 4.

Current trends are easily ascertained, but what

of the future? That question can be addressed by

dividing the actual and potential lens wearer

population into four groups according to their

visual correction requirements, and considering

each separately in relation to the present and

future characteristics of contact lenses.

Those with uncomplicated single vision problems (nearsightedness and farsightedness) comprise the first and largest of these groups. Because

they represent a large share of the total market

and are easy to fit with one or more types of lens,

this is where the greatest market penetration has

occurred, although, as was implied by the data

in tables 2 and 3, the overwhelming majority

within this group still rely wholly on eyeglasses.

Since, on average, the total costs of contact lenses

(lenses and fittings) are more than for eye glasses,

price remains unimportant variable in determining the rate of shift from ’’eyeglasses only’’ to contact lens use, with or without eyeglasses.

Table 4.–Share of U.S. Contact Lens Market by Lens Type, 1978.87 (est.)

1978 1979 1980 1981 1982 (est.) 1987 [est.)

Soft lenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. , . ,

49% 54% 64% 70% 75% 65-75%

Hard lenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 39 27 21 15 5

Gas-permeable lenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 6 8 9 10 20-30

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100% 100% 100% 100% 100% 100%

NOTE: Figures may not add due to rounding.

SOURCE: L, Schwarz and D. K. Temple, Contact Lens Industry-The Shakeout Continues (New York: Salomon Bros., Inc., 1983)
Ch. 3–Types of Contact Lenses and Their Characteristics “ 19

The second and third components of the total

market also are large, but the difficulties in developing wearable lenses have left most of this

market untapped. These two groups are, respectively, the moderate-to-severe astigmatic, and

those with presbyopia, for which bifocal or multifocal corrective lenses are usually employed.

By and large, the use of contact lenses in these

three groups can be considered “cosmetic,” since,

with some exceptions, eyeglasses readily afford

satisfactory levels of correction. For the fourth

market segment, however, contact lenses can be

considered therapeutic, since, using the same criterion, eyeglasses have limited capability for correction. In this group are those who suffer from

corneal abnormalities such as keratoconus and

other pathological conditions such as trachoma,

corneal ulcers, and scarred corneas (20).

Projections for contact lens use for the shortrun future can be made by extrapolating current

market trends; for the medium-run future by estimating the effects of changes currently underway

or impending but which have not yet materialized

as strong market factors; and for the long-run

future by predicting the effects of changes that

today may be only hypotheses, concepts, or ideas.

In the short run, current trends are likely to continue. Contact lens wearers will increase steadily,

if slowly, as a percentage of the total visioncorrected population. Soft and gas-permeable lens

wearers will grow and hard lens wearers will decline as percentages of the total contact lenswearing population. Sales of soft lenses will grow

as the currently strong competition in innovation

and improvement creates increasingly satisfactory

products for those who have not yet adopted

lenses or have failed with hard lenses. The unique

qualities of soft lenses will make them increasingly

attractive to those persons with visual problems

not resolvable with hard or the earlier soft lenses.

Accordingly, growth in the use of soft lenses is

likely, perhaps at a rate of 10 to 15 percent per

year as their uses for single vision problems,

astigmatism, presbyopia, and therapeutic applications expand. Further, as the majority of lens

wearers shifts to soft lenses, their fairly short average duration (9 to 18 months) will generate a very

sizable replacement lens market.

The use of gas-permeable lenses will also grow

rapidly as users of hard lenses switch over, nonusers adopt them, and those who might otherwise

select soft lenses are attracted by the lower longterm costs (from less frequent replacement and

simpler care procedures), and excellent vision correction of the gas-permeables. An additional attraction is that these lenses, unlike the soft ones,

can be readily custom-fitted. Thus, over the next

5 years gas-permeable contact lenses will contribute substantially to the decline of hard lenses and

may also take part of the market that would

otherwise be won by soft lenses. Their percentage growth rate will be especially impressive,

given the present small base against which that

rate will be calculated.

Beyond the extension of present trends into the

short-run, certain projections for the medium-run

future can be made if one looks at forces of change

currently in their incipiency. At present, soft

lenses are fragile and not reworkable. However,

promising advances in plastics and in lens manufacturing technology will result in more durable

and more precisely fit soft lenses. Combined with

their comfort and extended-wear capabilities,

these improvements will enable soft lenses to protect their market position relative to gas-permeable lenses. As long as they remain distinguishable lens types, both soft and gas-permeable lenses

will grow steadily in use. Together, they will render hard lenses obsolete, and each will find its

respective market position. Soft lenses will be the

product of choice for those with single vision

problems who place a high premium on comfort

and extended wear, and they will be especially

useful for presbyopia and for conditions not correctable with eyeglasses. On the other hand,

gas-permeable lenses will be attractive to the single

vision problem wearer who finds them sufficiently

comfortable and prefers their overall economy,

ease of application, and current availability in

tints.

The recent introduction of extended-wear gaspermeable lenses, however, provides a strong hint

that the eventual merging of the two main types

of lenses has begun and that the future will bring

a new, hybrid type of lens combining the best

features of both. But in the long run, many other
20 . Health Case Study 31: The Contact Lens Industry: Structure, Competition, and Public Policy

changes which today may only be in their basic

research stages will play prominent roles, and all

predictions are very uncertain. However, based

on what is on the horizon today, the long-run

futures of both soft and gas-permeable lenses look

promising, possibly more so for soft lenses, if the

distinction continues. New soft lens developments, such as optically superior, nontoxic materials requiring minimal care even in extended

use, and lens-making methods that allow more

exact fitting and duplication, can be expected.

And as new manufacturing methods—e.g., improvements of today’s low-cost spin-casting

method—reduce costs, the popularity of soft

lenses should increase. Accordingly, the lens of

the future may well be a low-cost, easy-to-wear,

visually near-perfect, extended-wear, disposable

lens.

A hybrid lens that provides the best qualities

of both soft and gas-permeable lenses is a distinct

possibility, as mentioned. If it develops, then the

terms soft and (hard) gas-permeable will be obsolete. An additional quality of the lens of the

future will be durability, which may make lenses

still more affordable by reducing replacement

costs, and may increase their attractiveness to

users by making them more interchangeable with

eyeglasses, since they will be able to be handled

more often without damage.

Finally, in the past, many of the important developments in contact lenses originated from a

wide range of scientific and industrial sources.

This lesson of the long-term past is particularly

applicable to the long-term future. The technologies of electronics, imaging, optics, and all of

the other sciences are expanding exponentially.

In the long run, then, contact lenses will make

substantial gains as a form of corrective eyewear.

Given their potential development, it is at least

conceivable to project their displacement of eyeglasses as the dominant method of vision correction in the not-too-distant future.
4.

Wearers, Prices, and Sources of Payment

WEARERS OF CONTACT LENSES

“Disorders of refraction and accommodation, ”

according to the U.S. Public Health Service,

ranked 14th among the 20 most common reasons

for visiting a physician but accounted for only 1.4

percent of all visits to non-Federal, office-based

physicians in 1981 (52). Unlike other diagnostic

categories, however, refractive examinations and

corrective-lens prescribing and fitting can be obtained from eye-care professionals other than physicians (i. e., optometrists and, in some States, opticians). In fact, optometrists represent about

two-thirds of those professionals legally permitted

to examine eyes and prescribe corrective lenses,

and they prescribe approximately three-fourths

of all corrective lenses and 60 percent of all contact lenses (5,12). If all such eye care were provided by ophthalmologists, refractive disorders

would rank among the top three reasons for

visiting a physician, either closely following

hypertension and normal pregnancy or leading

them, depending on the adjustment factor chosen. Accordingly, it is not surprising that over half

of the population 3 years old and above wear corrective lenses and that about 15 million persons

wear contact lenses.

In table 5, data from three National Health

Survey studies of corrective lens wearers are

presented. These data, for 1965-66, 1971, and

1979-80, show some interesting patterns and

trends among users. In each of the study periods,

contact lens wearing was at least twice as prevalent among females, overall, as among males. Further, lens wearing is most common among young

adults, tapering to low levels at middle age and

beyond. This pattern is almost totally the opposite

of the age-related frequency of use of eyeglasses.

(However, in 1979-80, lens wearing in the 65 and

over group, both males and females, rose sharply. )

Third, over the covered period, lens wearing increased at every age level for both males and

females. Thus, the general view of contact lenses

as primarily a “younger female” product has subTable 5.—Contact Lens Wearers, Percent

of Population, by Sex and Age,

1965-66, 1971, and 1979.80

Percent of population 3

years and over wearing

contact lenses

Sex and age group 1965-66 1971 1979-80

Both sexes:

All ages, 3 and over. . . . . . . . .

3-16 . . . . . . . . . . . . . . . . . . . . . . .

17-24 . . . . . . . . . . . . . . . . . . . . . .

25-44 . . . . . . . . . . . . . . . . . . . . . .

45-54 . . . . . . . . . . . . . . . . . . . . . .

55-64 . . . . . . . . . . . . . . . . . . . . . .

65 and over . . . . . . . . . . . . . . . .

Male:

All ages, 3 and over. , . . . . . . .

3-16 . . . . . . . . . . . . . . . . . . . . . . .

17-24 . . . . . . . . . . . . . . . . . . . . . .

25-44 . . . . . . . . . . . . . . . . . . . . . .

45-54 . . . . . . . . . . . . . . . . . . . . . .

55-64 . . . . . . . . . . . . . . . . . . . . . .

65 and over . . . . . . . . . . . . . . . .

Female:

All ages, 3 and over. . . . . . . . .

3-16 . . . . . . . . . . . . . . . . . . . . . . .

17-24 . . . . . . . . . . . . . . . . . . . . . .

25-44 . . . . . . . . . . . . . . . . . . . . . .

45-54 . . . . . . . . . . . . . . . . . . . . . .

55-64 . . . . . . . . . . . . . . . . . . . . . .

65 and over . . . . . . . . . . . . . . . .

1.0

0.3

3.7

1.3

0.4

0.3

—

0.6—

2.0

0.9

0.3

1.3

0.4

5.2

1.7

0.5—

—

2.1

0.6

6.6

3.0

0.7

0.7

0.7

1.2

0.3

3.4

1.8

0.5

0.7

0.7

2.9

0.9

9.5

4.2

0.9

0.6

0.7

4.5

1.0

9.4

7.7

2.1

1.6

4.3

2.8

0.6

5.3

4.4

1.4

1.4

4.6

6.2

1.5

13.3

10.7

2.7

1.9

4.0

SOURCES: 1965-66: U.S. Department of Health, Education, and Welfare,

Characteristics of Persons With Corrective Lenses, United States

July 1965-June 1966, Vital and Health Statistics, series 10, No. 53,

prepared by M. M. Hannaford, DHEW publication No. (PHS) 1000

(Washington, DC: US. Government Printing Office, June 1969) 1971:

U.S. Department of Health, Education, and Welfare, Characteristics

of Persons With Corrective Lenses, United States: 1971, Vital and

Health Statistics, series 10, No. 93, prepared by M. H. Wilder, DHEW

publication no. (HRA) 75-1520, Washington, DC, 1974. 1979-60: R. HolIander, U.S. Department of Health and Human Services, Public Health

Service, Rockville, MD, personal communication, June 30, 1983.

stantial validity, but the pattern presently is

changing in substantial ways and will be considerably different in the future. The current

changes, particularly the increasing use of contact lenses by older persons, are attributable to

younger lens wearers’ moving through the age

spectrum; the development of newer types of

bifocal and toric lenses, which relate especially

to the vision problems of older persons; and the

23

25-339 0 - 84 - 5 : QI, 3
24 ● Health Case Study 31: The Contact Lens Industry: Structure, Competition, and Public Policy

growth in soft and extended-wear lenses, which

particularly help older persons, whose eyes are

less accommodating to contact lenses than are

those of younger persons. Further, differences in

the rates of lens usage by women and men are narrowing, and in new fits the differences will soon

be eliminated. Accordingly, the lens market will

no longer be dominated by the young adult female

wearer; the traditional patient base will expand

widely; and all groups except perhaps children will

become important users.

Although as large a part of the population with

vision correction suffers from presbyopia as from

single-vision problems, lens wearing is much more

prevalent among the latter group. As lenses for

all users improve, the greatest relative growth will

be for presbyopes and astigmatic, but contact

lenses will continue to be prescribed most frequently for single-vision problems. Within the

single-vision category, about 60 percent have

myopia, 40 percent hyperopia. In addition, the

relative use of contact lenses for those with myopia

runs somewhat higher than among those with

hyperopia. Therefore, at least through the 1980s,

the largest absolute volume of sales will continue

to be for the correction of myopia, followed by

hyperopia, with presbyopic use gaining quickly

and perhaps passing hyperopia before the 1980s

have ended.

Additional data from the National Health Expenditures Survey (51) show contact lens use to

be relatively more common in suburban than rural or inner-city areas, among whites than nonwhites (particularly blacks and Hispanics), and

also to be positively associated with the educational level of the family head. All of these correlations are explainable in terms of the higher income levels among suburban residents, whites,

and the more educated. (Other features in the pattern of contact lens use show that lenses are more

often worn by white-collar and service workers

than by blue-collar or farm workers. These differences may also be explainable in part by income differentials, but probably more so by the

greater proportion of women employed in the

white-collar and service sectors, and perhaps also

by the actual physical conditions of each type of

work. ) In other words, contact lenses are a “normal” economic good, with purchases expanding

as income expands, or in economists’ parlance,

with a positive income elasticity of demand.

Data from the National Center for Health Services Research’s National Health Expenditures

Study (table 6) shed a bit more light on the income elasticity of demand for contact lenses. (The

income elasticity of demand measures the relationship between changes in income and the resulting

changes in the number of units purchased. ) If we

were to assume average incomes within the three

classes to be $6,000, $18,000, and $30,000 respectively, with all other characteristics showing similar patterns among income classes, then the income elasticity would be approximately 0.13 to

0.27, which is a plausible range of estimation. (An

income elasticity of demand of 0.13 means that

a l-percent increase [decrease] in income causes

a 0.13 of l-percent increase [decrease] in units

[pairs of contact lenses] purchased.)

Although no measurement or estimation is

made here of the price elasticity or cross elasticity

of demand (defined as the effects on lens purchases

of changes in the price of lenses and of changes

in the price of other goods, particularly eyeglasses,

respectively) for contact lenses, certain relationships may be suggested on the basis of recent experience. First, the demand for lenses seems to be

at least somewhat sensitive to changes in the relative price of lenses in that wearers of eyeglasses

frequently specify cost as one of their reasons for

not switching to lenses. (Theoretically, if the demand for a product is sensitive to changes in income levels, it also is sensitive to price changes

of that product. The connection between the

two is the so-called “income effect” of the price

change. )

Table 6.—Purchase or Repair of Contact Lenses

per 1,000 Population at Different Family

income Levels, 1977

Persons with purchase or repair

Family income of contact lenses

Less than $12,000 . . . . . . 0.9

$12,000 to $19,999 . . . . . 1.1

$20,000 or more. . . . . . . . 1.4

SOURCE: U.S. Department of Health and Human Services, Public Health Service,

National Center for Health Statistics, 1981 Summary: National Ambulatory Medical Care Survey, NCHS Advance data, prepared by L. Lawrence and T. McLemore, No. 66, Hyattsville, MD, Mar. 16 1963.
Ch. 4—Wearers, Prices, and Sources of Payment ● 25

Second, through time, new developments in

both contact lenses and eyeglasses may have narrowed the qualitative differences between the two

types of corrective lenses, leaving the remaining

differences, including price, as relatively more important bases of choice than previously was the

case. For example, lenses may be bought because

wearers “look better” than if they were wearing

eyeglasses. However, the emphasis on “fashion

eyewear” has made the wearing of eyeglasses, particularly among males, considerably more acceptable. Other qualitative advantages of contact

lenses may have been offset by improvements in

eyeglasses: the lightness of contact lenses have

been offset somewhat by the popularity of light,

plastic lenses for eyeglasses; tinted contact lenses

are matched by “prescription sunglasses” and

photo-chromic spectacle lenses; both contact and

eyeglass lenses are available in bifocal and multifocal modes; new sports goggles have eliminated

PRICES

In 1980, consumers spent an estimated $700 million on contact lenses, lens-care products, and

professional services (23). In view of the significant growth in contact lens usage, this dollar figure would have been much higher had it not been

for the notable price declines of the late 1970s,

which have continued into the 1980s.

These declines are exemplified by the data in

table 7, which show soft-lens list prices to the

practitioner and total fitting prices, including

lenses, for selected years from 1971 to 1982. Softlens prices fell by over 50 percent during this

the safety advantage of contact lenses in activities where spectacle frames and lenses have posed

a problem; new eyeglass lenses of plastic on the

inside, for safety, and glass on the outside, for

durability, have just been introduced.

Thus, although the price level of corrective

eyewear as a whole determines the affordability

of obtaining vision correction, the price structure

of corrective eyewear (the magnitude of the differential between the price of contact lenses and

that of eyeglasses) appears to be influential in the

choice between the two alternatives. Here again,

recent events seem favorable for long-term growth

in contact lens usage, because prices for lens fitting have dropped significantly and are likely to

continue to compare favorably with eyeglass

prices. (Causes of these price declines will be identified in the next section of this chapter. )

period. Total fitting prices have also fallen, reflecting in part the effects of the fall in the price

of the lens component of the total price. Despite

the high rates of general and medical price inflation during this period, which would have more

than offset lens price declines, there were also

strong competitive forces at work within and between the various categories of fitters which kept

total prices stable or declining. Thus, contact lens

and total fitting prices have experienced large reductions despite high inflation. Although price

trends for gas-permeable lenses are still too early

to trace, two forces running counter to each other

Table 7.—Average Soft Contact Lens List and Totai Fitting Prices, per Pair,

1971-82, Seiected Years

1971-74 1975 1980 1981 1982

List pricea . . . . . . . . . . . . . . . . . . . . $65.00 $68.70 $50.00 $40.00 $30.00

Total fitting price:a

Ophthalmologist . . . . . . . . . . . . . $500-600 $250-325 $250-300 $250-300 $250-300

Optometrist . . . . . . . . . . . . . . . . . 300-350 400 250 225 225

Optical outlet . . . . . . . . . . . . . . . — — 170 150-170 125

Large chain . . . . . . . . . . . . . . . 120 100

Independent. . . . . . . . . . . . . . . 178 160

aPrices are higher for extended-wear soft Contact lenses.

SOURCES: L. Schwarz and D. K. Temple, Contact Lens Industry-The Shakeout Continues (New York: Salomon Bros., Inc.,

1983); and M. Carr, Health Products Research, Inc., Somerville, NJ, personal communication, July 7, 1983,
26 ● Health Case Study 31: The Contact Lens Industry: Structurer Competition, and Public Policy

will determine that trend. First, the early dominance of Syntex in the PMMA-silicone lens field

has given it an established position much like that

of Bausch & Lomb in the first years of soft lenses.

Without serious competition in PMMA-silicone

lenses, Syntex has avoided direct price competitive moves by close rivals. (However, although

Bausch & Lomb was the only seller of soft lenses

for 3 or 4 years, Syntex must take heed, at least

to some extent, of the prior presence of three

cellulose acetate butyrate (CAB) lenses in the gaspermeable market. ) On the other hand, gas-permeable lenses represent replacements for hard

PMMA lenses and alternatives to soft lenses. Both

of these other types of lenses have experienced

sharp price reductions as the number of sellers has

grown, excess production capacity has emerged,

and cost-reducing production methods have been

developed. In fact, wholesale hard lens prices ran

less than $10 a pair in 1982 (10), and total fitting

costs were, on average, 30 percent lower than for

other lens types.

The prospects are strong that future price declines will be a common event in the markets, if

SOURCES OF PAYMENT

Consideration of how the yearly $700 million

expenditure for contact lenses, lens-care products,

and fitting services is paid for raises two questions:

first, what are the sources of payment funds, and

second, does the payment pattern, specifically the

share from Federal program sources, exert a feedback influence on the quantity of demand for the

covered goods and services.

The three main sources of funds for health care

expenditures are family out-of-pocket payment,

private insurance, and government. These three

sources can also be separated by the distinction

between “private” and “public” sources, with

family out-of-pocket and private insurance grouped

together as private and government classified as

public; and also by the distinction between outof-pocket and “third-party,” which includes both

private insurance and government.

For all personal health care expenditures as a

whole, 33 percent is paid out-of-pocket, almost

economic forces are free to manifest themselves.

While empirical verification is lacking, it may well

be the case that there are no substantial economies

of scale in research or manufacturing, since smaller

firms show impressive records in product and

process discoveries, improvements, and implementation. The economic barriers to entry are

low, with capital requirements relatively modest,

the necessary inputs widely available, and with

few important patent barriers. And an informed

group of buyers (practitioners) serve to mitigate,

at least somewhat, the effects of excessive or flamboyant promotional rivalry. Accordingly, many

rivals, of small but efficient size, with abundant

research and production capacity, seem ready to

promote technological progress, efficient production, and competitive pricing. However, there are

several threats to this competitive state of affairs,

particularly the regulatory barrier to entry, in the

form of a costly and sometimes long approval

process before widespread marketing of a lens is

permitted by the Food and Drug Administration

(FDA). (The matter of FDA approval is examined

in ch. 7.)

27 percent by private insurers, and 40 percent by

government. Thus, the payment mix is 60 percent

private/40 percent public and 33 percent out-ofpocket/67 percent third-party in origin (57).

Among the different components of personal

health care the proportions vary considerably. For

example, in 1981 the range, using the private/public distinction, went from 44 percent private/56

percent public for nursing home care to 96 percent private/4 percent public for dentists’ services. For the out-of-pocket v. third-party distinction, the range went from 11 percent out-ofpocket/89 percent third-party for hospital care to

82 percent out-of-pocket/18 percent third-party

for eyeglasses and other medical appliances. Thus,

contact lenses are in a group of products with the

lowest proportion of payment by third-party

sources. In terms of private v. public sources, they

are close to dentists’ services for the lowest proportion of payments by government, with 10 percent (57) 0
Ch. 4—Wearers, Prices, and Sources of Payment “ 27

If third parties as a whole and government in

particular play relatively small roles in financing

“eyeglass and appliance” purchases, those roles

are even smaller in the case of contact lenses. In

terms of private insurance, for example, one large

survey of employer-provided health-care plans

covering 21.8 million workers showed that only

3.6 million were covered for vision-care, including

examinations, refractions, and eyeglass lenses and

frames. When there is vision-care insurance, the

study found, contact lenses may be included.

Thus, private insurance for vision-care expenses

applied to only 16.5 percent of the workers in this

study, and coverage for contact lenses was narrower and shallower, geared mainly to the cost

of eyeglasses (57).

Government programs that pay for personal

health care are numerous, and include Medicare

and Medicaid; the Civilian Hospital and Ambulatory Medical Program of the Uniformed Services (CHAMPUS); the Civilian Hospital and

Ambulatory Medical Program of the Veterans

Administration (CHAMPVA); the Veterans Administration; the military; the Indian Health Service; and other Federal, State, county, and city

payers (51). All these sources together represent,

as indicated, 10 percent of the payment for eyeglasses and appliances, and about 8 percent of the

annual expenditures for purchases and repairs of

“vision aids” (51). Little, if any, authorization exists for the provision of funds for contact lenses.

Medicare, the main Federal health financing program for elderly or disabled people, pays only for

lenses for therapeutic use, and most of these lenses

are connected with cataract removal (4), for which

intraocular lenses are increasingly being used.

Considerably less is known about the 55 separate Medicaid programs, which are jointly funded

by the Federal Government and the States or territories. A review of the overall Medicaid enabling legislation makes no mention of contact lenses.

Therefore, public sector outlays, while covering

many millions of eligible recipients, are apparently

not available for a very large majority of all contact lens purchases (4,49,54).

The result of the limited applicability of both

private and public third-party arrangements is

that an estimated 84 percent of all vision-aid costs

are funded out-of-pocket. Of the 16 percent that

is covered, more of it appears to be provided by

private sources than government. Therefore, if

third-party payments increase health care utilization over that occurring in a market where all

payment is out-of-pocket, such effects are likely

to be relatively small for contact lenses. The role

of government in inducing greater demand is

smaller still, since government plays a lesser role

than private insurers, and that role, such as it is,

is limited to a small part of the current patient

population.

Further, if resources are not drawn into the development and manufacture of contact lens due

to expanded utilization levels, then resource

allocation to this industry has suffered relative to

other medical technologies, which are more broadly

covered by insurance. It is, of course, possible that

developments in contact lenses would have been

even more pronounced with insurance coverage

comparable to that which has been available to

pay for other medical technologies. Yet the performance level of the contact lens industry seems

not to have been affected adversely; its record of

innovation, quality improvement, and price reduction is impressive when compared to most

other medical goods and services. Perhaps the explanation for this apparent paradox is to be found

in the fact that, unlike other medical technologies,

contact lenses are a consumer-oriented product,

sold in a market setting where the buyer-seller

relationships emphasize rivalry in three important

dimensions: innovation, quality, and price.
5.

Producers of Contact Lenses

A large number of firms make contact lenses,

but the overall industry is rather highly concentrated and the largest half-dozen manufacturers

hold most of the market. For example, soft lenses

currently make up 75 percent of total lens production, and the four largest soft lens producers

account for over two-thirds of that sector, equivalent to about 55 percent of the total contact lens

market (table 8). Gas-permeable lenses represent

about 15 percent of the total market, but one type,

PMMA-silicone lenses (which outsell the other

type, CAB lenses, by four pairs to one), are almost

entirely provided by one firm (table 9). Only for

hard lenses, which have a small and declining

share of the market, are there many sellers, no

one or few of which are dominant.

Sales concentration in the predominant soft-lens

sector would rank high by most economic standards. The largest firm, Bausch & Lomb, accounts

for at least 40 percent of the market. The four

largest (adding American Hydron, Barnes Hind/

Hydrocurve, and CooperVision1

) account for

about 70 percent; and the seven largest (including

UCO Optics, Wesley-Jessen, and American Optical) account for over 80 percent of the market

(31). (UCO has since been acquired by CooperVision, doubling the latter’s market share to approximately 15 percent and increasing the fourand eight-firm concentration levels somewhat

(41). ) The data on firm shares in this market segment for 1978 to 1982 are presented in table 8,

which shows four- and eight-firm concentration

levels to be high in each of the 5 years. However,

both, especially four-firm concentration levels,

‘CooperVision was recently sold to Nestle.

Table 8.—Market Shares and Concentration Ratios, Soft Lenses,

1978-82 (est.) (percentages)

Firm 1978 1979 1980 1981 1982 est.

Bausch & Lomb. . . .61 48 53 48 40+

American Optical . . . . 16 19 13 11 4

Barnes-Hind/Hydrocurve . . . . 12 14 11 10 13

Wesley-Jessen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 4 3 2 5

UCO Optics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 8 7 8 7

Channel/Lombart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 3 4 3 2

American Hydron . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 3 5 7 8

CooperVision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 2 3 8

Vistakon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1 1 2 2

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 1 7 9

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 100 100 100 100

Four largest firms total . . 95 89 84 77 69

Eight largest firms total . . . . . . . . . . . . . . . . . . . . . . . 100 100 98 91 89

SOURCE: L. Schwarz and D. K. Temple, Contact Lens Industry-The Shakeout Continues (New York: Salomon Bros., Inc., 1963).

Table 9.—Market Shares and Concentration Ratios, Gas-Permeabie Lenses,

1979-82 (est.) (percentages)

Firm Trade name Lens type 1979 1980 1981 1982 (est.)

Syntex . . . . . . . . . . . . . . . . . . Polycon PM MA-silicone 30 67 64 80

Barnes-Hind/Hydrocurve . . . CAB Curve CAB – – 15 6

Danker Laboratories. . . . . . . Meso CAB 40 20 11 6

Rynco Scientific . . . . . . . . . . RX56 CAB 30 13 9 5

Dow Corning . . . . . . . . . . . . . Silcon silicone — — 1 3

Four largest firms total. . . . . . . . . . . . . . . . . . . . . . . . . . . . I00a100 a 99 97

a

Three firms accounted for the total market.

SOURCE: L. Schwarz and D. K. Temple, Contact Lens Industry-The Shakeout Continues (New York: Salomon Bros., Inc., 1983).

31
32 ● Health Case Study 31: The Contact Lenss Industry: Structure, Competition, and Public Policy

have declined steadily. Although the shares of the

leading firms are far from being equalized, competitors capable of eroding the share of the onetime monopolist in soft-lens manufacture, Bausch

& Lomb, are well established in the market.

For gas-permeable lenses, there are fewer firms,

and the dominance of the leader is greater than

in the case of soft lenses. Here, as indicated earlier,

the preferred PMMA-silicone lenses have 80 percent of gas-permeable lens sales. One firm, Syntex,

accounts for about the entire output of PMMAsilicone lenses. (Several others were marketing this

type of lens to a limited extent in 1983, but their

products had not yet been approved by the Food

and Drug Administration (FDA). They have been

marketing their lenses under “Investigational Device Exemptions” issued by FDA and therefore

must operate within certain restrictions. ) Four

firms produce the CAB-type, and one (Dow Corning) markets an all-silicone gas-permeable lens.

Thus, the gas-permeable lens’ general market is

also highly concentrated, with one dominant firm,

five others with small shares, and a fringe of several brands under clinical investigation or approved for a specific use only. Market share data

for this sector are presented in table 9.

However, the dominance of Syntex and the

almost 100 percent four-firm concentration level,

while implying a potentially noncompetitive situation, must be viewed in historical perspective.

The soft lens market was dominated for the first

several years by the initial entrant, Bausch &

Lomb, but subsequent entry, after 4 to 5 years,

led to the erosion of Bausch & Lomb’s share and

a decreasing four-firm concentration ratio. The

vigorous competition in this market has been demonstrated by the sizable price declines described

in the previous chapter. Therefore, the situation

in gas-permeable lenses represents, at least thus

far, a replication of the development of soft lenses.

If substantial entry occurs, Syntex’s large share

will be reduced and strong price competition will

occur. But even if entry occurs only gradually,

firms that may dominate in this sector of the industry must still take into account the substitutability among lens types and thus adopt prices

that practitioners and patients will accept relative

to those of hard and soft lenses.

For the older, hard PMMA lenses, the case is

quite different. This market sector has been characterized as a “cottage industry,” where small laboratories prevail. They generally operate within

a small geographic area, manufacturing lenses

from plastic “buttons” purchased from bulk

plastics manufacturers, and providing custom

services to prescribing dispensers. There are many

such small manufacturers and so-called “optical

laboratories” that can compete effectively with

larger manufacturers. While the case is not conclusive, there is at present no evidence of economies of large-scale production in lens manufacturing of any type. However, many small

manufacturers have gone out of business or suffered sales declines during the past decade because

of the shrinkage of the market for hard lenses,

and the small firms’ inability to meet the requirements for FDA approval of the newer lens types

(22). Nonetheless, this segment of the market remains especially price competitive.

In summation then, the three sectors of the contact lens industry display different degrees of competition, yet the differences are explainable in

terms of the different stage in the “life cycle” of

each. The mature hard lens sector has few, if any,

dominant firms, and has been highly price competitive for many years. The soft-lens sector is

moving out of its youth phase and now displays

increasing entry, an equalizing of market power

among a group of large firms, and strong competition in price and innovation. The newest product sector, gas-permeable lenses, thus far has

retraced the steps of the soft-lens sector, and the

economic forces at work promise to maintain that

similarity, conditional on the magnitude of the

barriers to entry such as those posed by premarket

regulatory requirements.

With regards to the individual firms who comprise the industry, table 10 provides data on 17

major competitors, ranging from Bausch & Lomb,

with 1982 worldwide lens sales of $150 million

and profits of $52 million (including lens solutions), to Rynco and Alcon Optic, each with only

$2 million in sales. Of these 17 firms, only Bausch

& Lomb can be called a broad line optical goods

producer; the others are primarily contact lens

producers, although many have broad contact
Ch. 5—The Producers of Contact Lenses ● 33

Table 10.—Worldwide Sales, Profit, and R&D Data of the 17 Major Firms

in the Contact Lens Industry, 1982 (millions of dollars)

Contact lens Lens solutions Operating

Firm (and parent company) sales sales profit

Bausch & Lomb . . . . . . . . . . . . . . . . . . . . . . . . . 150.0 57.0 52

Barnes-Hind/Hydrocurve (Revlon). . . . . . . . . . . 38.0 48.0 8.5

CooperVision (Cooper Laboratories) . . . . . . . . 36.0 15.0 17.2

Syntex Ophthalmic (Syntex Corp.) . . . . . . . . . 26.7 — 0.7

American Hydron (National marginally

Patent Development Corp.) . . . . . . . . . . . . . . 30.0 — profitable

UCO Optics (CooperVision) . . . . . . . . . . . . . . . 19.0 — 2.8

Wesley-Jessen (Schering-Plough, Inc.) . . . . . . 15.0 — marginally

profitable

American Optical . . . . . . . . . . . . . . . . . . . . . . . . 13.0 — loss

American Medical Optics (American

Hospital Supply) . . . . . . . . . . . . . . . . . . . . . . . 2.5 — —

Ciba Vision Care (Ciba-Geigy) . . . . . . . . . . . . . 9.0 — loss

Vistakon (Johnson & Johnson). . . . . . . . . . . . . 8.0 — loss

Danker Laboratories . . . . . . . . . . . . . . . . . . . . . . 5.0 — loss

Dow Corning Ophthalmic (Dow Corning Corp.) 5.0 — loss

Channel-Lombart (Channel Industries) . . . . . . 8.0 — loss

Rynco Scientific . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 — loss

Alcon Optic (Nestle). . . . . . . . . . . . . . . . . . . . . . 2.0 26.0 NA

Allergan (Smith Kline-Beckman) . . . . . . . . . . . . — 69.0 NA

NA indicates data not available.

SOURCES: L. Schwarz and D K Temple, Contact Lens Industry-The Shakeout Continues (New York Salomon Bros., Inc.,

1983), and Moody’s Industrial Manual, 1982, vols. 1 and 2 (New York: Moody’s Investor Service, 1982).

lens product lines or are owned by parent companies that range across the health care and personal products fields or even into heavy industry and broadly based conglomerate activities. In

fact, 13 of the 17 largest firms are parts of larger

corporate organizations as a result of mergers and

acquisitions, and the acquisition of one or more

contact lens firms is usually only part of a larger

acquisition pattern by the parent company (see

app. A).

Small firms historically have been among the

industry’s most successful innovators, and entry

via small-firm acquisition often provides the larger

acquirer with a position in the industry more advanced than it could obtain with a “de novo” entry. (For example, Syntex, which had a bifocal

soft lens only “in development, ” recently acquired

Salvatori Laboratories, a long-established, smaller

firm which had moved very to close to obtaining

FDA approval for a bifocal soft lens. ) This advanced position, combined with the parent company’s financial resources, marketing strength,

and in one case a captive chain of dispensing optician outlets, provides a strong potential for eventual large-scale commercial success. Thus, on the

one hand, the “deep pocket” of the acquirer, together with the innovational momentum of the

acquired firm, provides an effective challenger to

the market position of dominant firms, which

enhances competition. On the other hand, continuous acquisitions of smaller by larger firms narrow the base of product innovation. A larger

number of small, dynamic firms becomes reduced

to a smaller number of larger firms, and there is

as yet little, if any, evidence to indicate that their

combined research productivity will exceed that

of the smaller firms.

As a result of both mergers and internal expansion, almost all of the major firms produce several lines of contact lenses (see table 11). The two

firms included in table 10 but not in table 11 are

Alcon Optic and Allergan, each of whose primary

activity is the sales of lens solutions. Most have

diversified their product lines to cover all or most

of the soft lenses’ individual submarkets as well

as gas-permeable lenses.

Thus, while the number of major competitors

is growing, their full-line strategies are making it

more difficult for the small, specialized firm to

occupy more than a toehold position. For example, a list of FDA-approved spherical (single-
34 . Health Case Study 31: The Contact Lens industry: Structure, Competition, and Public Policy

c I I

I I I —c —c I

‘om

—c I I

I
Table 11.—U.S. Product Lines and List Prices Per Lens for the 15 Major Contact Lens Manufacturers, May 1983 (except as noted)

Gas-permeable

Daily-wear soft lenses Extended-wear soft lenses Toric lenses Bifocal lenses lenses

Ciba Vision Care (Ciba-Geigy Corp.)

Cibasoft/$16.00 In FDA process with

Cibathin/$23.00 Cibathin

Softint/$20.00

Vistakon (Johnson & Johnson)

Hydro-Marc/$20.00 In FDA process

Hydro-Marc Ultra with Vistamarc

Thin/$20.00

VistaMarc (58%)/$35.00

Original Durasoft/$20.00

Danker Laboratories

— Sila Rx (aphakic)/$35.00

(pediatric aphakic)/$80.00

Dow Corning Ophthalmic (Dow Corning Corp.)

Gelflex/$15.00 Silsoft (aphakic, cosmetic)/$50.00

Gelflex M-T/$15.00 Silsoft Super Plus

(aphakic)/$70.00

Silsoft/39.50 b Silsight (therapeutic)/$39.50

Channel/Lombard (Channel Industries)

Amsof/$15.90 —

Amsof Thin/$15.90

Rynco Scientific

CeluSoft/$20.50 —

Tori soft/$43 .00 Bi-soft/$45.00

Hydro-Marc Toric/$45.00 —

— Front surface

bifocal/$45.00

(Gas-permeable

lens)

Silcon Custom/$31.00 VFL-11

(Silicone)/$53.00

— —

— —

—

—

Dura-Sil

Standard/19.00

Dura-Sil Super

Thin/$20.00

Meso/$22.50

Silcon

Stock/$20.00

Silcon

Custom/$27.50

—

RX-56/$27.50

Celuflex/$30.00

aPrice given by manufacturer Aug. 10, 1983.

bPrice per case.

NOTE: Since volume discounts vary by manufacturers, actual prices may differ significantly from list prices Figures given in parentheses are the water contents on hydrogel lenses.

SOURCES: L. Schwarz and D. K. Temple, Contact Lens Industry-The Shakeout Continues (New York: Salomon Bros., Inc., 1983); and P. Sposato, “New Ideas in Marketing,” Contact Lens Forum 8(5):29-45,

May 1983; and U.S Department of Health and Human Services, Food and Drug Administratlon, National Center for Devices and Radiological Health, Division of Ophthalmic, Ear, Nose, Throat and

Dental Devices, “Contact Lens Premarket Approval Application Approvals as of July 25, 1983,” Silver Spring, MD, 1983
36 . Health Case Study 31: The Contact Lens Industry: Structure, Competition, and Public Policy

vision correction) soft lenses (see app. A) includes

those of 17 firms not included in table 11, but their

combined market share is not more than 1 or 2

percent. None of the firms outside of the 15 in

table 11 had an FDA approval at the end of 1983

for the sale of extended-wear, cosmetic-use soft

lenses, and only two firms not on the list had an

approved bifocal soft lens (31,48).

Last in this survey of the activities and relative

sizes of the various lens manufacturing firms is

a brief profile of each, emphasizing its method of

entry into the industry and the acquisitions and

licensing arrangements that have contributed to

its growth. This material is presented in appendix B. These descriptions show that acquisitions,

joint ventures, and licensing agreements have

played important roles in firm growth and relative market shares in the contact lens industry.

The public policy aspects of these growth mechanisms are discussed in chapter 7.
6

Contact Lens Prescribers and

Dispensers
6 ■

Contact Lens Prescribers and Dispensers

Contact lenses are prescribed and fitted by three

types of eye-care practitioners: ophthalmologists,

optometrists, and, to a limited extent, opticians.

Ophthalmologists are doctors of medicine, specializing in problems of the eye. As such, they

may perform a wide variety of examination procedures and medical and surgical treatments, test

for refraction errors, and prescribe and fit all types

of corrective lenses. Optometrists are also specialists in eye care, but their functions, although

expanding, are narrower than those of ophthalmologists. Optometrists generally measure refraction, prescribe and fit corrective lenses, and detect

and diagnose vision problems and the condition

of the eye for referral to ophthalmologists and

other appropriate practitioners. In some States,

OPHTHALMOLOGISTS

There are about 12,500 ophthalmologists in the

United States today, of whom perhaps 11,000 are

involved in regular patient care as hospital- or

office-based physicians. (The remainder are ophthalmology residents or engaged in teaching and

research. ) Half or more of these 11,000 offer

dispensing services in addition to prescribing corrective eyewear, sometimes in conjunction with

opticians. They account for 30 percent of the total

retail corrective lens market and about 20 percent

of the contact lens market, operating from 6,000

locations with $1.35 billion in revenues (5).

optometrists may use drugs for diagnostic purposes, and in a few, use for therapeutic purposes

also. Fewer generalizations can be made about the

role of opticians, since the State laws defining their

permissible scope of activities vary, but opticians

are usually limited to the roles of “dispensing opticians, ” who make and fit corrective lenses

prescribed by ophthalmologists and optometrists,

either under their supervision or independently,

or “optical technicians, ” who grind the lenses for

others to fit to patients. In some States, however,

opticians may also examine, prescribe, and fit patients with contact lenses, if an ophthalmologist

or optometrist has already determined that the patient needs some form of corrective lenses (5,55).

Of all dispensing ophthalmologists, at present

more fit soft lenses (73 percent) than hard (71 percent) or gas-permeables (51 percent). This situation is reflected in the relative amounts of the three

types of lenses ophthalmologists prescribe in the

aggregate, as shown by the data on prescribing

practices by ophthalmologists in table 12.

Other significant data on ophthalmologists’

contact lens practices relate to prices and were

shown in table 7. Those data indicate that the cost

of being fitted with contact lenses by an ophthalTable 12.—Contact Lens Fitting by Ophthalmologists, 1982

Lens type

soft Hard Gas-permeable All

Percent of ophthalmologists fitting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 71 51

Percent of all contact lenses fitted by ophthalmologists . . . . . . . . . . . . . . . . . . . . . . 68 23

—

9

Contact lenses fitted by ophthalmologists as a percent

—

of total fittings by all practitioners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20a26a NA 15-20

NA indicates data not available,

a

1979.

SOURCES: M. Carr, Health Products Research, Inc., Somerville, NJ, personal communication, July 7, 1983; S. Davidson,

Ophthalmic, Norfolk, VA, 1983; D. P. Hayes,

“Market Data Book,” unpublished, Dow Corning

“Results From the Vision Care Survey Relative to the Profile of Contact Lens Fitters, ” Contact and Intraocular

Lens Medical Journal 7(1):9-10, January-March 1981; and L. Schwarz and D. K. Temple, Contact Lens Industry-The Shakeout Continues (New York: Salomon

Bros., Inc., 1983).

39

25-339 0 - 84 - 4 : QL 3
40 ● Health Case Study 31: The Contact Lens Industry: Structure, Competition, and Public Policy

mologist has decreased significantly in recent 1982, to $262 (7,16). However, the prices paid to

years. For example, in late 1978, the average cost ophthalmologists are, on average, higher than

of soft contact lenses from this source was $308; those paid to optometrists or opticians.

in 1979, it had fallen to $292, and by the end of

OPTOMETRISTS

At present, there are approximately 22,000

practicing optometrists in the United States (out

of a total of 25,000). Of these 22,000, 80 percent

(about 17,500) work independently. The other 20

percent include 2,400 optometrists working for

chain optical houses and about 2,000 who work

for government, health maintenance organizations

(HMOs), or ophthalmologists (5). Data for optometrists’ prescribing practices (comparable to

that for ophthalmologists in table 12) are presented in table 13.

Doctors of optometry average 12 new contact

lens fittings per month (compared to 10 for ophthalmologists), and their fees generally lie between

those of ophthalmologists and opticians (5,7). The

cost of being fitted for contact lenses by optometrists is falling, following the general industry

trend. In late 1978, for example, new soft lenses

cost $285, but by 1979, the cost was down to

$258, and to $218 in 1982 (7,16).

Table 13.–Contact Lens Fitting by Optometrists, 1982

Lens type

soft Hard Gas-permeable All

Percent of optometrists fitting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 91 73

Percent of all contact lenses fitted by optometrists . . . . . . . . . . . . . . . . . . . . . . . . 69 17

—

14

Contact lenses fitted by optometrists as a percent

—

of total fittings by all practitioners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5@ 62a NA 60a

NA indicates data not available.

a

1979 estimate.

SOURCES: 1. Bennett, State of the Optical Industry (White Plains, NY: Advisory Enterprises, 1983); S. Davidson, “Market Data Book,” unpublished, Dow Corning Ophthalmic, Norfolk, VA, 1983; D. P. Hayes, “Results From the Vision Care Survey Relative to the Profile of Contact Lens Fitters, ” Contact and Intraocular Lens

Medical Journal 7(1):9-10, January-March 1981; and L. Schwarz and D. K. Temple, Contact Lens Industry-The Shakeout Continues (New York: Salomon Bros.,

Inc., 1983).

OPTICIANRY: INDEPENDENT OPTICAL OUTLETS

Reliable data on opticians and their practice

locations are not readily available, since only 22

States currently license opticians. The Opticians

Association of America estimates that there are

about 26,000 dispensing opticians in the United

States (5). There has been a higher growth rate

among opticians than among ophthalmologists or

optometrists, reflecting their increasing roles as

primary fitters and as adjuncts to the other two

classes of practitioners (47).

Approximately 35 percent of dispensing opticians (as distinguished from optical laboratory

technicians) are employed in so-called “independent” single shops or small (ten unit or less) chains,

Another 40 percent work for optical or drug

chains, and the remaining 25 percent for ophthalmologists, optometrists, or other professionals

Independent dispensing opticians account for 21.3

percent of the total retail corrective lens market

(5). Table 14 presents data on contact lens pre-
Ch. 6—Contact Lens Prescribers and Dispensers “ 41

Table 14.-Contact Lens Fitting by Independent Dispensing Opticians, 1982

Lens type

soft Hard Gas-permeable All

Percent of independent dispensing opticians fitting . . . . . . . . . . . . . . . . . . . 55 52 36

Percent of all contact lenses fitted by independent dispensing opticians . 60

—

13 7

Contact lenses fitted by independent dispensing opticians

—

as a percent of total fittings by all practitioners . . . . . . . . . . . . . . . . . . . . . 20a

20a NA 10-15

NA indicates data not available,

aEstimated.

SOURCES: I Bennett, State of the Optical Industry (white Plains, NY: Advisory Enterprises, 1983); S. Davidson, “Market Data Book, ” unpublished, Dow Corning Ophthalmic, Norfolk, VA, 1983; D. P. Hayes, “Results From the Vision Care Survey Relative to the Profile of Contact Lens Fitters, ” Contact and Intraocular Lens

Medical Journal 7(1):9-10, January-March 1981; and L, Schwarz and D. K. Temple, Contact Lens Industry-The Shakeout Continues (New York: Salomon Bros.,

Inc., 1983).

scribing patterns by these independent dispens- independents and small

ing opticians. year for which separate

chains. In 1981, the first

data are available, indePrices paid for lenses acquired from optician pendent and small-chain opticianries charged, on

outlets tend to be the lowest in the industry, with average, $178 for soft lenses; in 1982, their averthe large chains charging somewhat less than the age price was $160 (7).

OPTICIANRY: OPTICAL AND DRUG CHAINS

Data on optical and drug chains and the number of their contact lens fittings are particularly

difficult to come by, and when available, are

obscure or comingled with data for independent

and small-chain outlets. However, the data that

are known are presented in table 15, and one item

is noteworthy: large chains now provide as much

as 40 percent of all contact lens fittings (5). This

large share is both a cause and result of the downward price trends observed for all fitters. Chain

outlets offer lenses at lower prices than other

sources ($100 per pair of soft lenses in 1982 [7])

and thus exert downward pressure on the entire

price structure.

overruled laws in 43 States that placed restraints

on price advertisements by eye-care dispensers.

This action paved the way for the great growth

of chain outlets, price rivalry, and price reductions. Since low price is a key strategy of chain

outlets, the FTC ruling strongly enhanced their

market position. Indeed, large chains are growing larger through expansion and merger, and one

lens manufacturer (Frigitronics) has built up a 400-

outlet chain (Benson Optical/House of Vision).

Further, in what may prove to be an especially

significant innovation, several major chains, including some of the largest, are offering franchises

to optometrists and opticians.

These effects are particularly present since 1978, Any forthcoming FTC action in this area, parwhen the U.S. Federal Trade Commission (FTC) ticularly in regard to franchising and to the State

Table 15.—Contact Lens Fitting by Chain Outlets, 1982

Lens type

soft Hard Gas-permeable All

Percent of optical chains fitting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 71 44

Percent of all contact lenses fitted by optical chains . . . . . . . . . . . . . . . . . . . . . . . . . 66 11

—

3

Contact lenses fitted by optical chains as a percent

—

of total fittings by all Practitioners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . NA NA NA 30-40

NA indicates data not available

SOURCES: I. Bennett, State of the Optical Industry (White Plains, NY: Advisory Enterprises, 1983); M. Carr, Health Products Research, Inc., Somerville, NJ, personal

communication, July 7, 19S3; S. Davidson, “Market Data Book, ” unpublished, Dow Corning Ophthalmic, Norfolk, VA, 1983; and L. Schwarz and D. K. Temple,

Contact Lens Industry-The Shakeout Continues (New York: Salomon Bros., Inc., 1983).
42 ● Health Case Study 31: The Contact Lens ]ndustry: Structure, Competition, and Public Policy

laws that define the permissible limits of opticians

in the fitting of contact lenses, will exert great influences on the extent and forms of competition

among all classes of practitioners, with strong implications for future price structures and trends.

Whatever happens, the large optical chain has become an important part of the contact lens distribution mechanism and promises to play a larger

role in future years. In table 16, eight of the largest

chains are identified, along with their present

number of outlets.

In conclusion, the three classes of practitioners

have become more competitive with each other,

particularly since 1978, when some of the limitations on price competition and on the role of opticians as independent dispensers were reduced.

As a result of these changes, the total supply of

practitioner/dispensers has expanded, and the

highlighting of price as a basis of choice has served

as one common denominator among all types of

dispensers. Increasingly, price differentials among

dispensers have come to reflect their qualitative

differences as perceived by consumers, regardless

of whether these perceptions are borne out in fact

by either actual market experience or “objective”

measures of dispenser “quality. ” These perceived

qualitative differentials seem to have narrowed

over time, perhaps because soft lenses, which predominate in the market, usually have well-known

company labels, and because customizing of soft

lenses is not widely done. With the tangible part

of the combined lens/fitting rendered more homogeneous among different types of practitioners,

the remaining differences, including price, have

become more important in the choice among practitioners. And with the growing influence of price,

the lower prices of high-volume chain opticianries

have attracted more and more consumers and

pulled down the entire contact lens price structure, as described in chapter 4.

Those closest in character to the larger chains—

namely, the smaller chains and independent opticianries—have been affected the most, with optometrists the next most affected, and ophthalmologists the least but still feeling the impact. If

both large and small opticianries are considered

together, then their emphasis on price competition most seriously affects optometrists. This expectation is supported by the decline optometrists

have experienced in their soft lens market share

from 60 percent in 1979 to 40 percent in 1980 (5).

Over the next several years and into the middlerun future, price competition can be expected to

continue. The entire price structure for conventional contact lenses will continue to ease downward, at least relative to the structure of all prices.

Within the contact lens retail price structure, positions are not likely to change, with the chain

dispensers at the bottom of the structure initiating price reductions and compelling the other

dispensers, mainly small opticianries and individual optometrists but even ophthalmologists, to

follow. Furthermore, these competitive pressures

in the retail market can be expected to spill over

into the manufacturers’ sector as all dispensers,

led by the large chains and their expanding outlets

and franchises, exert buyer pressure for lower

prices in the wholesale market. Accordingly, the

entire industry, wholesale and retail, promises to

be characterized by a high degree of price competition along with strong rivalry in lens innovation in the years ahead.

Table 16.—Major Optical Chains and Number of Outlets, 1982

Chain name(s), if different

Chain owner from owner Number of outlets

Searle . . . . . . . . . . . . . . . . . . . . . . Pearle Vision Centers and Texas

State Optical

Cole National. . . . . . . . . . . . . . . . Sears; Montgomery Ward 465

Frigitronics. . . . . . . . . . . . . . . . . . Benson’s; House of Vision 400

Sterling . . . . . . . . . . . . . . . . . . . . . 110

Lee Optical. . . . . . . . . . . . . . . . . . 100

D.O.C. . . . . . . . . . . . . . . . . . . . . . . 85

Western State Optical . . . . . . . . 64

American Vision Centers. . . . . . 40

SOURCE: 1. Bennett, State of fhe Optical Industry (White Plains, NY: Advisory Enterprises, 1983).
Ch. 6—Contact Lens Prescribers and Dispensers ● 43

THE MARKETING OF CONTACT LENSES TO DISPENSERS

Manufacturers distribute their contact lenses to

the three groups of dispensers, who in turn make

them available to patients. Thus, manufacturers’

promotional efforts are mainly directed to these

professionals, although some consumer-oriented,

brand-name advertising takes place.

Manufacturers offer a wide and sometimes confusing array of marketing plans, and any given

firm may have several programs in effect. Further, the programs are usually in a state of change,

reflecting new attempts to induce dispensers to

rely more heavily on one brand or to fend off the

aggressive programs of rivals. (Because of the

range and diversity of marketing techniques, this

discussion will focus on those of the larger firms2

engaged in nationwide distribution, since the

smaller labs depend more on reputation and wordof-mouth promotion in their local areas to promote sales. )

The larger firms often distribute lenses on a consignment basis. Some require the dispenser to pay

a one-time fee per lens, others require no fee, and

still others charge prescribers an annual per-lens

fee on the original lens consignment. Dispensers

are generally required to keep their inventories

at the original consignment levels and to pay for

lenses as they are ordered to restock to the specified level.

A common promotional practice is volume discounting, Manufacturers offer dispensers price

cuts if they order a certain volume of lenses, and

the discounts are often graduated and cumulative,

linking dispensers increasingly closer to producers

as their usage volume expands. At least one major manufacturer has offered prizes such as Mercedes

automobiles and gold bullion to practitioners for

ordering its lenses in large quantities.

Most manufacturers offer limited warranties

and exchanges on their lenses. The warranties usu-

‘This discussion is drawn from Contact Lenses, 1982 (10); and

various articles from the Contact Lens Forum, 1979-1983, provided

by Patty Sposato, Associate Editor (2,18,26,32,33,35,36,37,38,39).

‘The firms discussed include: American Hydron, American Medical Optics, American Optical, Barnes-Hind/Hydrocurve, Bausch

& Lomb, Channel/Lombart, Ciba Vision Care, Dow Coming, Paris,

Syntex Ophthalmic, Vistakon, Wesley-Jessen, Salvatori Ophthalmics.

ally apply only to material and workmanship

defects and exclude tearing and other damage

from use and handling. The dispensers usually

have 30 to 60 days to return defective lenses. They

also can return those lenses not suitable for a patient; some firms give full credit, others partial

credit, for such returns. Many firms now also offer lenses with no warranty, which lowers prices

and reduces paperwork for dispensers. There is

also a general movement in the industry to simplify and expedite warranty procedures.

Price competition and simplified billing routines

are heavily used to promote sales. Prices have

been dropping steadily in the industry over the

past 5 years, as described in previous chapters,

and between May 1982 and May 1983 only one

daily wear lens was increased in price. Many manufacturers now give practitioners a choice of pricing methods: per lens or per fitting (“per case”),

which allows for lens return. Both types of prices

have been part of the downward price trend.

Along with rivalry in price formats and price

levels, contact lens producers are also moving into

“full line” marketing strategies. The goal of these

strategies is to entrench a brand name across the

different specialty markets, offering the dispenser

“one-stop” shopping, so to speak. The competitive implications for smaller firms have not yet

become clear. Full-line strategies are pursued in

contact lens accessories as well as in the lenses

themselves as the markets for lens solutions and

practitioner aids have grown large.

To introduce prescribers and dispensers to a

brand of lens, its producer may offer diagnostic

lens sets free of charge or at a great discount. This

technique is reported to have met considerable

success with new practitioners.

Once a prescriber-dispenser begins to use a particular type of lens, firms usually emphasize service to continue the affiliation. The larger firms

maintain full-time customer service and sales staffs

to deal with problems. They also try to anticipate

practitioners’ needs and frequently use computergenerated inventory plans for individual offices.

Some firms further strengthen their relationships

with dispensers by training the dispensers’ staffs.
44 ● Health Case Study 31: The Contact Lens Industry: Structure, Competition, and Public Policy

Beyond the

scribed above

manufacturer

general marketing techniques de- On a more conventional scale, some small

are more unusual programs. One PMMA hard lens makers are becoming distribu-

(Channel/Lombart) has offered a tors for the soft lenses made by larger firms,

one-time lens exchange program in which a practitioner could exchange 100 used soft or hard

lenses for 100 new soft lenses at about $6 off the

regular per lens price. Other firms seek goodwill

through funding educational grants for student

or graduate practitioners, one of a variety of ways

to establish the names of firms and their products in the minds of those making selection decisions among competing products.

allowing the small firms to have at least some degree of participation in this much greater market

and allowing the larger manufacturer to expand

its distributional and promotional mechanism.

Wholesale-only houses are also appearing in some

regions, and at least one consortium (Product Development Consortium) of small firms has been

organized to manufacture and market soft lenses.
7

The Role of Federal Policy
The Role of Federal Policy

GENERAL OVERVIEW

Federal policies affect the development, manufacture, distribution, and use of contact lenses

through various paths and in varying degrees,

ranging from minor to large.

Direct Federal in-house activities and external

funding for vision-care research play only a slight

role in the operation of the contact lens industry,

one of whose main benefits to consumers lies in

the cosmetic qualities of contact lenses. Similarly,

tax policy may have an important effect on the

industry but not in any way that is distinct from

other industries. Features of the tax laws, particularly provisions for accelerated depreciation, investment credits, favorable treatment for retained

corporate earnings, and restrictions on corporate

divestitures favor larger corporations relative to

smaller ones, but the inherent features of the contact lens industry are compatible with small firms,

and their position is not seriously threatened by

any advantages provided their larger rivals through

these tax provisions.

Foreign trade policy does not appear to adversely affect the contact lens industry. The tariff on imported contact lenses is low, 8.5 percent

of value (5.6 percent for those coming from countries with preferential treatment), much less than

PATENTS

For the most part, patents neither pose probems nor exert special influence on the contact lens

industry. They seem to offer an acceptable balance between the sometimes conflicting goals of

stimulating innovation and keeping market competition viable. On the one hand, they provide

incentives and rewards for new product and process developments; on the other hand, they do not

appear to create formidable barriers to entry. The

record of innovation is a good one, covering a

for almost all other components of the tariff category “optical goods, ” yet imports account for

only a small share (7 percent in 1980) of total domestic purchases (56). (Many of the imported contact lenses, of course, may come from the foreignowned enterprises of U.S. producers. )

Direct government procurement, an influential

economic force in many other industries, is minimal for contact lenses, and Federal third-party

payment mechanisms, mainly Medicare and Medicaid, pay for contact lenses only as a therapeutic item for aphakia and a few other ophthalmic

conditions. This adds to the use of lenses for these

conditions, and probably spurs some research and

development along related lines, but has little effect on the much larger general market.

However, not all Federal policies are so easily

discounted as factors influencing the contact lens

industry. Three, in particular, warrant closer examination. In ascending order of impact, they are:

1) patent policy; 2) policies toward the enforcement and maintenance of competition within markets; and 3) regulatory policies that require government approval prior to the general marketing

and use of products such as drugs and medical

devices, including contact lenses.

wide range of lens materials, many lens designs

for similar applications, and a variety of manufacturing processes. Further, the majority of these

developments are accessible to any lens producer.

Other evidence shows that entry barriers from

patents are not high: upwards of three dozen firms

produce soft lenses and over 50 make hard lenses.

Although relatively few firms manufacture and

sell gas-permeable lenses, the market barrier in

this case (and in some others) is not the unavail47
48 ● Health Case Study 31: The Contact Lens Industry: Structure, Competition, and Public Policy

ability of materials or techniques because of

patents, but premarket approval by the Food and

Drug Administration (FDA), which will be examined later in this chapter.

Patents may still be important in the contact

lens industry, however, because they can reserve

superior materials, designs, and processes for one

or a few firms to the disadvantage of others.

Among the more important patents are those

deriving from Wichterle’s original work on soft

lenses in Czechoslovakia, for which the National

Patent Development Corp. (NPD) obtained certain rights, which were then sublicensed to Bausch

& Lomb. The headstart provided by the NPD

patents on hydrogel material and the spin-casting

method for making soft contact lenses enabled

Bausch & Lomb to enter the market first (1971)

and remain as the sole seller of soft lenses until

1975. The subsequent development of other

hydrophilic polymer plastics allowed many rivals

to get around the NPD-Wichterle product patent,

and vigorous price competition has been one of

the results. However, the economical spin-casting

manufacturing process has continued to work to

the advantage of Bausch & Lomb, enabling it to

operate profitably in the face of large price declines.

However, neither of the original patents successfully blocked entry by others; the product

patent was quite easy to invent around and the

process patent, although very advantageous and

durable, covers but one of several manufacturing methods. The resulting entry of other firms

has brought lens prices down by a considerable

amount since 1975, as shown in table 7 (soft lens

wholesale prices were $68.70 in 1975, but only

$30 in 1982). Accordingly, patents seem to be a

rather noncontroversial element in the contact lens

industry. However, to remain so, they should

continue to be carefully defined, affording only

the reasonable minimum degree of exclusivity

warranted by the particular discovery or invention.

THE MAINTENANCE OF MARKET COMPETITION

Policies to protect competition in the markets

of the U.S. economy are administered at the Federal level by the Department of Justice and the

Federal Trade Commission (FTC). The two agencies enforce the Federal antimonopoly laws and

in other ways also seek to maintain, restore, or

create competition in society’s interest.

Two facets of the contact lens industry’s

ities relate to these laws and enforcement

activagencies. The first of these is the considerable merger

activity that has occurred up to the present time,

including the acquisition of smaller firms by larger

ones within the industry, and of larger firms by

external industrial corporations. Under the Clayton Act, mergers that may substantially lessen

competition are prohibited, and thus an examination of these mergers in the context of the

Clayton Act is instructive.

The second link between the contact lens industry and the antitrust enforcement agencies is

found in the distributional mechanism by which

lenses reach the consumer, particularly the presence or absence of competition, and the forms it

takes, among dispensers. In recent years the FTC

has addressed two restraints on distribution

competition: State limitations on the competitive

opportunities for opticians, and State approval

of professional prohibitions on price competition

by lens prescribers and fitters.

Mergers

Many of the numerous mergers that have occurred in the contact lens industry are identified

in appendix B. Since none of these involved the

acquisition of one major producer by another

(generally illegal under the Clayton Act), the observed degrees of market concentration, if some

what higher than had these mergers not occurred

are mostly explainable in other terms, mainly the

early phases of the typical industry life cycle.

But concentration levels are not the only basis

for judging the effect of mergers. The absorption
Ch. 7—The Role of Federal Policy “ 49

of smaller firms by larger ones threatens a major

source of innovation. The history of the industry is replete with the achievements of individual

scientists and small firms. For example, key contributions in the development of the soft lens sector include those of the then-small NPD in the

origination of the product, and the later research

contributions of such smaller firms as Milton-Roy

(since acquired by Bausch& Lomb), Calcon Laboratories, Polymer Optics, Salvatori Ophthalmic

(these last two recently have been acquired by

Syntex), Rynco Scientific, Danker Laboratories,

and others, none of which rank among the major firms.

State Commercial Practice Restraints

Regulation of the commercial practices of eyecare professionals occurs at the State level and has

an especially strong impact on the prices consumers ultimately pay for their contact lenses.

The acquisition cost of contact lenses includes,

in addition to the lenses, a refraction test and lens

prescription, post-refraction corneal measurement, trial lens fitting, and followup examinations

and care. Competition among lens manufacturers

has brought the price of lenses down substantially,

but lens prices are not the major component of

the total cost of obtaining contact lenses, at least

from ophthalmologists and optometrists. The predominant component is the professional services

required to examine the eye and to choose and

fit the lenses with satisfactory results. Thus the

potential gains from competition, including price,

in these services considerably outweigh those from

competition among lens manufacturers. In fact,

competition in the service component of contact

lens acquisition costs has been the main contributor to the price declines observed for all major

lens types.

State laws covering eye-care professionals vary

from one class of practitioner to another, and vary

sharply from State to State for optometrists and

opticians. Ophthalmologists, as medical specialists, are governed by medical practices acts, which

are essentially uniform from State to State. Optometrists and opticians, however, are subject to

other specific regulations such as those issued by

State optometry boards. Generally, the regulations on these two classes of practitioners cover

professional qualifications for licensure; restrictions on employment activities and optometric

and optician outlet locations, including branching;

and limitations on doing business under a trade

name. Optometrists are usually more restricted

than ophthalmologists and less restricted than opticians in their provision of eye-care services (55).

The greatest State-to-State variation in permissible activities is in the case of opticians. These

variations, shown as they relate to the provision

of contact lenses, are given in table 17. In no State

can opticians prescribe corrective lenses. In the

five States comprising group I, they are “expressly

Table 17.-Contact Lens Fitting by Opticians: Survey

of State Limitations (including District of Columbia)

1. States where opticians are expressly permitted to fit contact lenses:

Arizona North Carolina

Connecticut Ohio

Massachusetts

Il. States where opticians are expressly forbidden to fit conIII

IV

tact lenses:

Kansas New Mexico

Missouri Vermont

New Jersey

States where opticians may fit contact lenses on the

direction of or under the supervision of an ophthalmologist or optometrist:

Alaska Mississippi

California Nevada

Colorado New York

Delaware Oregon

Florida South Carolina

Hawaii Tennessee

Illinois Texas

Kentucky Virginia

States where opticians may dispense contact lenses on

a fully written “prescription: “

Alabama Florida

District of Columbia Wyoming

V. States where law on the question is ambiguous or nonexistent:

Arkansas Nebraska

Georgia New Hampshire

Idaho North Dakota

Indiana Oklahoma

Iowa Pennsylvania

Louisiana Rhode Island

Maine South Dakota

Maryland Utah

Michigan Washington

Minnesota West Virginia

Montana Wisconsin

SOURCE: U.S. Federal Trade Commission, Bureau of Consumer Protection, State

Restrictions on Vision Care Providers: The Effects on Consumers

(“Eyeglasses II”), Washington, DC, 1980.
50 ● Health Case Study 31: The Contact Lens Industry: Structure, Competition, and Public Policy

permitted” to do post-prescription corneal measurements, select appropriate lenses, and complete

the fitting procedure. In the five States in group

II, they are expressly forbidden to perform any

of these procedures. In the 16 States in group III,

they may perform the post-prescription procedures “on the direction or under the supervision”

of a prescribing ophthalmologist or optometrist.

The four jurisdictions in group IV permit opticians

to select and fit lenses for a patient with a “fully

written” prescription (containing both refraction

test information and post-refractive eye measurements) from an optometrist or ophthalmologist,

and in the 22 States in group V the law is “ambiguous or nonexistent.”

An analysis of restrictions on opticians’ activities raises the question of the extent to which they

are warranted as consumer protections and the

extent to which they are intended to constrain the

competition posed by opticians against ophthalmologists and optometrists. The FTC has examined these questions and has come to view many

of the restraints to be both unnecessary in terms

of protecting the consumer and undesirable from

a competitive point of view. (These conclusions

have been strongly challenged by both ophthalmologic and optometric professional groups. ) Accordingly, in the proposed “Eyeglasses II rule, ”

the FTC staff recommended making contact lens

fitting by opticians more accessible to consumers.

The FTC staff did not suggest that a broad Federal law supplant the individual State laws (although Federal law can do so) so the effects of

the proposed rule would occur only in States

where opticians can fit or dispense contact lenses.

The ruling would require the initial examiner

(ophthalmologist or optometrist), initial fitter

(ophthalmologist, optometrist, or optician) and

any subsequent fitter to provide patients with

complete and fillable copies of their contact lens

prescriptions so they could have the original or

subsequent lenses fit by opticians, if they so

choose and where the State law allows. At the

end of 1983, this proposal was “on hold, ” awaiting

the FTC’s decision whether or not to take action.

It may not be adopted, it may be adopted as is,

or it may be adopted in expanded form (29).

Although not suggested by FTC staff, the FTC

ruling could supersede all State laws, widely

broadening the rules on opticians’ practices to

make them fully competitive with optometrists

and more so with ophthalmologists. This type of

action could increase competition in the marketplace while allowing for due assurance of quality.

The less sweeping Eyeglass II rule would achieve

these results in lesser degree.

Last, the FTC has been a participant in a successful attempt to expand competition—specifically, price competition—in the fitting of contact

lenses. State laws directly or indirectly prohibiting

price advertising by professionals have been

severely narrowed on two grounds. First, limitations and sanctions imposed by professional

groups against price advertisers invite challenge

under the antitrust laws as price-fixing agreements. Second, this type of restriction on advertising and direct statutory prohibitions is of

doubtful enforceability because of their apparent

conflict with the rights of free speech granted by

the first amendment to the Constitution. The Supreme Court has ruled that truthful advertising

falls within these rights (3a, 39). Accordingly,

price advertising by optical outlets has become

common and has generated an increased awareness of prices by consumers. As a result, optical

outlets have priced their services at the lower end

of the price range and have pulled down prices

charged by other contact lens providers. Among

outlets, the large optical chain has been an especially vigorous price competitor, providing soft

lens fittings for an average price close to $100.

Thus, Federal policy, through the FTC, has contributed to price competition among lens care providers and has the potential, through the presently

shelved Eyeglasses II rule, to create more market

alternatives and further price competition, possibly in every State.
Ch. 7–The Role of Federal Policy ● 51

FDA REGULATORY POLICY

Of all the aspects of Federal policy that bear

on the operation of the contact lens industry, none

is more controversial or perhaps as influential as

the requirement that soft and gas-permeable lenses

be approved by the FDA for safety and efficacy

prior to general marketing. Such a requirement

generates both benefits and costs for society. The

benefits stem from the greater knowledge and experience acquired in the proapproval laboratory

and clinical studies, which may lead to more effective and safe products and their wiser use. The

costs are broader in variety, including the resources expended in any proapproval studies that

otherwise might not be conducted, the impacts

on consumers from delayed or denied approval

of new contact lenses, and any anticompetitive impacts of the regulatory barrier. Ideally, premarketing approval would impose only those costs

that are outweighed by the resulting benefits, but

for soft and gas-permeable lenses this may not be

the case. Controversy exists because the regulatory process places* a high benefit on problems

averted by cautious premarket testing. Producers,

on the other hand, since they bear much of the

costs directly, are especially sensitive to this side

of the equation relative to the benefits. Accordingly, it may be inevitable that regulators and the

regulated, with different perceptions of the weights

to give benefits and costs, are in conflict over the

appropriate extent of regulation. In the case of

contact lenses, FDA’s policies have remained unchanged, due largely to the complexity of the law

in effecting a lower level of regulation, and, to

a lesser extent, the opposition of some firms that

have gained marketing approval for their products under the current high standards.

The Origins, Development, and Scope of

FDA Authority Over Contact Lenses

An understanding of the economic effects and

current issues in the regulation of contact lenses

requires an understanding of the law itself, including a look at its origins and present features.

Prior to 1968, when only hard contact lenses

were available, there was little, if any, regulation.

However, in 1968, formal regulation of contact

lenses began as a result of two factors. These were

the development of hydrophilic soft lens material,

and two court cases (1,42) that established FDA’s

authority to regulate contact lenses, nylon sutures,

and several other “devices” as drugs, and to subject them to premarket approval requirements

comparable to those for new drugs. A medical devices group was set up to handle this responsibility, and some guidelines for contact lenses were

established in 1969. (The first approval under

these guidelines for soft lenses was granted to

Bausch & Lomb in 1971. ) In the 1976 Medical Devices Amendments to the Federal Food, Drug, and

Cosmetic Act, contact lenses were specifically

defined as medical devices.

The 1976 law established three classes for all

medical devices according to the degrees of risk

associated with their uses. Class I devices are not

used for sustaining human life and do not pose

significant risks to human health. Devices so

classified must be made in accordance with good

manufacturing practices (GMPs), which include

keeping a device master file that contains design

specifications, production and quality assurance

data, control numbers and dates of manufacture,

distribution information, and complaint records.

Devices placed in Class II are (somewhat

unclearly) defined as those for which the “general controls” of Class I offer insufficient assurance

of safety and effectiveness, and information exists for establishing “performance standards. ”

Class II devices must meet the Class I standard

of good manufacturing practices, as well as the

Class II performance standards; but no Class II

performance standards have been formulated, so

Class II devices are, in effect, treated as Class I

devices.

Class III was established for those devices for

which Class I controls offer inadequate protection, Class II performance standards do not exist

due to the absence of sufficient information, and

the device “supports life, prevents health impairment, or presents a potentially unreasonable risk

of illness or injury.” All medical devices produced

after 1976 that are not “substantially equivalent”

in intended use, safety, and effectiveness to de-
52 ● Health Case Study 31: The Contact Lens Industry: Structure, Competition, and Public Policy

vices marketed prior to 1976 are automatically

placed in Class III and require FDA “premarket

approval” prior to their general distribution and

use, unless they are reclassified to a lower class.

They must also meet the general controls requirements for Class I and Class II devices.

Contact lenses were originally placed in Class

111, except for hard (PMMA) lenses, which were

placed in Class II. At the end of 1983, all lenses

with 95 percent or more PMMA were in Class II

(6), and the FDA was engaged in a lengthy procedure to reclassify daily-wear spherical soft lenses

and rigid gas-permeable lenses to Class I (or perhaps Class II). The reclassification of rigid gaspermeable lenses was denied by FDA in December 1983 because of inadequate, publicly available data on safety and effectiveness (43).

The route for obtaining premarket approval for

new Class III devices is the Investigational Device

Exemption (IDE) process, which allows a producer

to market a device on a limited scale, under controlled conditions, to obtain the information necessary for FDA evaluation. IDE guidelines are

established by the FDA, and the study protocols

set forth by manufacturer must conform to these

guidelines.

Typically, only the large contact lens manufacturers have performed full IDE studies from testing

the effects of the polymer on corneal tissue all the

way through the actual clinical trials of the finished lenses (28). Studies of this scope usually cost

$1 million or more (40). Smaller makers of contact lenses, who usually purchase the polymer

“buttons” from another source, leave tissue testing

and other related studies to the polymer manufacturer and just sponsor the clinical trials. These

trials usually take from 6 to 12 months and cost

between $250,000 and $350,000 (28,40).

The Effects of the Present System

of Regulation

Regulation has had several effects on the structures of contact lens markets, and the higher

classification for soft and gas-permeable lenses has

created larger effects on them than on hard lenses.

The negligible regulation of hard lens market entry before 1969 and the modest regulation since

then have kept the barriers to entry low, explaining in large part why this industry sector is characterized by many firms, mostly small, competing

in price, innovation, and service, usually on a

local basis.

In contrast, Class III status for other lens types

poses a formidable financial barrier for the small

firm; as a result, few of them have gained a position in these markets, although a small number

have managed to come into specialized sectors.

Thus, the soft and gas-permeable lens markets are

almost wholly accounted for by large firms, many

in the case of soft lenses, only a few in the case

of gas-permeable lenses. As both sectors grow

relative to hard lenses, the smaller firm may become less prominent in this industry. The number of small producers has declined sharply, and

most of the survivors have had to steadily reduce

their output and employment levels (22,28).

Paradoxically, regulation also offers a temporary method of survival, which many have

grasped. Since their survival depends on being

able to market the newer, more popular lens

types, but premarket approval is costly, many

smaller firms have capitalized on the letter, if not

the spirit, of the IDE. They have begun to produce and distribute lenses for supposed “clinical

investigation” purposes, but really to gain a

toehold in these otherwise foreclosed markets.

Since IDEs initially required that clinical investigations contain a minimum level of case studies but

specified no ceiling, they provided much more

than a modest level of opportunity. But even large

sales under an IDE may not be profitable if full

case files and reporting systems are maintained,

thus creating an incentive, even the necessity, for

such costly work to be foregone. The hope of

many of these firms seems to have been to market their lenses as investigatory products extensively and indefinitely, with little accountability

to the FDA as to results, or that reclassification

of soft and gas-permeable lenses would render the

whole IDE procedure moot before the time of accountability arrived.

Recent action by the FDA, however, may well

close this marketing of lenses. Open-ended investigational periods and data collection can now

be halted by mandatory FDA cutoff dates for
Ch. 7–The Role of Federal Policy “ 53

these IDEs and other new criteria that firms must

follow. In the absence of reclassification, this cutoff policy may render the small firm a minimal

factor in the new product markets.

The complex question of reclassification raises

two important points. First, standard, proven

materials, such as the HEMA polymer used for

soft lenses, might be reclassified to Class II or I,

while newer materials could remain in Class III.

In other words, reclassification could be ongoing

and determined more by actual risk and less by

possible risk, as time passes, than is presently the

case. Reclassification could rely heavily on general experience-in-use of lens materials and types

as they become more commonly adopted and

thereby become stronger candidates for reclassiication. f

Second, the professional literature and reporting of problems from lens use is also a contributor to the diminishing role of small firms. Unlike

he case of drugs, for which a large body of independent clinical literature is generated by professional sources and can be called on to support

premarket approval applications by small market entrants, almost all clinical studies of contact

roses are made by the larger manufacturers and,

hus, are proprietary information not to be used

by other producers in support of their applications without permission. In addition to the

redundancy of effort caused by the absence of a

common base of available clinical documentation,

this “ground zero” approach rewards early entry

and creates for those who clear the premarket approval hurdle a vested interest in keeping the barer high for other would-be entrants. Accordingly, independent professional clinical studies of

new lens materials, designs, and uses could be encouraged. (Although funding these studies poses

practical problem, it is not an insurmountable

one. One possibility is an excise tax on lenses, earmarked specifically for clinical research purposes. )

The likely structural effects of the Class III

premarket approval requirement in the contact

ns field are fewer firms entering at a slower rate.

Any entrant will be delayed; many, particularly

small firms, may not be able to enter at all. In

rn, any effects on structure are likely to be

translated into changes in market behavior. Competition among fewer firms often differs from that

among many, and competition among large firms

takes different forms than that among smaller

firms. Consequently, although price competition

may be seen in the market for soft and gas-permeable lenses, it may well be less than would occur if smaller firms were also in these markets.

The emphasis in rivalry threatens to shift increasingly to promotion and away from price. Vertical

ties between manufacturers, prescribers, and

outlets are more likely to emerge, narrowing product choice to consumers.

Smaller firms may continue to find ways to survive and to create some market competition, although in narrower roles than the protection of

maximum competition calls for. Operating as

licensees of other firms, especially those ranking

below the leaders in market share, smaller firms

can increase the challenge against the dominant

firms. By acting in consortia, small firms may

even generate a research effort. But neither their

price nor research roles are likely to approach the

magnitudes that small firms have achieved in the

hard lens market and in certain specialty areas of

the soft lens market (28,34).

Thus, the likely economic effects of FDA regulatory policy toward contact lenses are not the

elimination of competition or serious threats of

its large-scale curtailment, but a degree of limitation. What is at stake is the rigor of market competition. Consumers of contact lenses maybe less

well off if small firms, which history shows to be

especially vigorous competitors in contact lens development and pricing, are constrained, because

of limited economic resources, from entering the

market as effective rivals,

In conclusion, the study of regulatory and other

Federal policies toward contact lenses, their manufacturers, dispensers, and users, is instructive

both for what it tells us about the effects of these

policies on the economic performance of the contact lens industry, and for the broader implications offered about regulation in general. Either

way, the objective is wiser and more effective Federal policy determination and administration.
Appendixes
Appendix A.— FDA Approved Contact Lenses

and Current Prices

Company & (Parent) Lens Price per case Per lens

Daily-wear soft lenses:

Advanced Soft Optics . . . . . . . . . . . . . . . . . . . .

Alcon Optics (Nestle) . . . . . . . . . . . . . . . . . . . . .

American Hydron (National Patent

Development Corp.) . . . . . . . . . . . . . . . . . . . .

American Medical Optics (American

Hospital Supply) . . . . . . . . . . . . . . . . . . . . . . .

American Optical (M. Cunniffe &

R. Wood) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Barnes-Hind/Hydrocurve (Revlon, Inc.) . . . . . .

Baurs & Krey . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Bausch & Lomb, Inc. . . . . . . . . . . . . . . . . . . . . .

Briggs Ophthalmic . . . . . . . . . . . . . . . . . . . . . .

Channel/Lombart (Channel Industries) . . . . . .

Ciba Vision Care (Ciba Geigy Corp.) . . . . . . . .

Coast Contact Lens, Inc. . . . . . . . . . . . . . . . . . .

Contact Lens Corp. of America . . . . . . . . . . . .

Custom Contact Lens Labs. . . . . . . . . . . . . . . .

Dow Corning Ophthalmic (Dow

Corning Corp.) . . . . . . . . . . . . . . . . . . . . . . . . .

Flexlens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Kontur Kontact Lens Co., Inc. . . . . . . . . . . . . .

Metro Optics . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Omega Optical. . . . . . . . . . . . . . . . . . . . . . . . . . .

Optech, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Paris Softsite Lens Co. . . . . . . . . . . . . . . . . . . .

PDC Corp.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Rynco Scientific . . . . . . . . . . . . . . . . . . . . . . . . .

Salvatori Ophthalmic (Syntex Ophthalmic) .

Stricter Laboratories . . . . . . . . . . . . . . . . . . . . . .

Syntex Ophthalmics(Snytex Corp.) . . . . . . . . .

UCO Optics (CooperVision) . . . . . . . . . . . . . . . .

Vent-Air Optics . . . . . . . . . . . . . . . . . . . . . . . . . .

Vision-Ease Contact Lens Co. (BuckbeeMears Co) . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Vistakon (Johnson & Johnson) . . . . . . . . . . . . .

Wesley-Jessen (Schering-Plough, Inc.) . . . . . .

Softics . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Tresoft . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Hydron . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Zero 4 Ultra-Thin . . . . . . . . . . . . . . . . . . . . .

Sauflon 70 . . . . . . . . . . . . . . . . . . . . . . . . . .

AOSoft . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

AOThin . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Softcon . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Hydrocurve ll,45%:

15.5/16.Omm . . . . . . . . . . . . . . . . . . . . . .

13.5/14.5mm . . . . . . . . . . . . . . . . . . . . . .

Hydrocurve, 55%:

14.0, 14.5 mm . . . . . . . . . . . . . . . . . . . . .

Weicon . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Softens . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

U3,U4 (thin) . . . . . . . . . . . . . . . . . . . . . . . . .

Hydracon 55% . . . . . . . . . . . . . . . . . . . . . .

Amsof . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Amsof thin.... . . . . . . . . . . . . . . . . . . . . . .

Cibasoft . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Cibathin . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Softint . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Hydracon 55% . . . . . . . . . . . . . . . . . . . . . .

Softact . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Softact II . . . . . . . . . . . . . . . . . . . . . . . . . . .

Custom-Flex . . . . . . . . . . . . . . . . . . . . . . . .

Gelflex . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Gelflex M-T . . . . . . . . . . . . . . . . . . . . . . . . .

Silsoft . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Flexlens . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Hydracon 55% . . . . . . . . . . . . . . . . . . . . . .

Metrosoft II . . . . . . . . . . . . . . . . . . . . . . . . .

Metrosoft M Series (thin) . . . . . . . . . . . . .

Omega Soft . . . . . . . . . . . . . . . . . . . . . . . . .

Omega Soft &Thin . . . . . . . . . . . . . . . . . .

Omega D& DT . . . . . . . . . . . . . . . . . . . . . .

Fre-Flex . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Softsite . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PDC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CeluSoft . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Sof-Form II . . . . . . . . . . . . . . . . . . . . . . . . .

Accugel . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Accugel Thin . . . . . . . . . . . . . . . . . . . . . . . .

CSl . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Aquaflex . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Nu-Soft . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Aqua Soft . . . . . . . . . . . . . . . . . . . . . . . . . .

Hydro-Marc . . . . . . . . . . . . . . . . . . . . . . . . .

Hydro-Marc Ultra Thins . . . . . . . . . . . . . . .

Vistamarc 58% . . . . . . . . . . . . . . . . . . . . . .

Original Durasoft . . . . . . . . . . . . . . . . . . . .

Durasoft 2 . . . . . . . . . . . . . . . . . . . . . . . . . .

Durasoft 3 . . . . . . . . . . . . . . . . . . . . . . . . . .

24.00 17.00

— 15.95

30.00 20.00

30.00 18.00

— 35.00

Prices set by distributors

Prices set by distributors

Prices set by distributors

38.00 28.00

38.00 18.00

— 49.50

Price information not available

30.00 18.00

30.00 18.00

— 20.00

23.00 15.90

23.00 15.90

— 16.00

— 23.00

— 20.00

— 20.00

— 12.00

Price information not available

22.50 12.95

— 15.00

— 15.00

39.50 —

— 37.50

— 20.00

24.50 15.50

24.50 15.50

— 25.00

— 27.20

— 17.00

— 30.00

— 18.50

— 19.95

— 20.50

— 19.95

26.00 16.00

26.00 16.00

— 25.00

28.00 22.00

50.00 50.00

— 17.00

— 20.00

— 20.00

— 35.00

— 20.00

— 20.00

— 29.50

57
58 ● Health Case Study 31: The Contact Lens Industry: Structure, Competition, and Public Policy

Company & (Parent) Lens Price per case Per lens

Extended-wear soft lenses:

American Medical Optics . . . . . . . . . . . . . . . . .

American Optical . . . . . . . . . . . . . . . . . . . . . . . .

Barnes-Hind/Hydrocurve . . . . . . . . . . . . . . . . . .

Bausch & Lomb, Inc. . . . . . . . . . . . . . . . . . . . . .

CooperVision . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Danker Laboratories . . . . . . . . . . . . . . . . . . . . . .

Dow Corning . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Paris Softsite . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Toric soft lenses:

American Hydron . . . . . . . . . . . . . . . . . . . . . . . .

Barnes-Hind/Hydrocurve . . . . . . . . . . . . . . . . . .

Bausch & Lomb, Inc. . . . . . . . . . . . . . . . . . . . . .

Ciba Vision Care . . . . . . . . . . . . . . . . . . . . . . . . .

Optech, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Salvatori Ophthalmic . . . . . . . . . . . . . . . . . . . .

Vistakon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Wesley-Jessen . . . . . . . . . . . . . . . . . . . . . . . . . . .

Bifocal soft lenses:

Bausch & Lomb, Inc. . . . . . . . . . . . . . . . . . . . . .

Ciba Vision Care . . . . . . . . . . . . . . . . . . . . . . . . .

Wesley-Jessen . . . . . . . . . . . . . . . . . . . . . . . . . . .

Gas-permeable lenses:

Barnes-Hind Hydrocurve . . . . . . . . . . . . . . . . . .

Danker Laboratories . . . . . . . . . . . . . . . . . . . . . .

Dow Corning . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Rynco Scientific . . . . . . . . . . . . . . . . . . . . . . . . .

Syntex Ophthalmics . . . . . . . . . . . . . . . . . . . . . .

Sauflon P.W. (aphasia). . . . . . . . . . . . . . . .

Sauflon 70 (cosmetic use) . . . . . . . . . . . .

Sauflon P.W. (pediatric aphakia) . . . . . . .

Softcon (aphakia) . . . . . . . . . . . . . . . . . . . .

Hydrocurve 45% (aphakia) . . . . . . . . . . . .

Hydrocurve 55% (aphakia and

cosmetic use) . . . . . . . . . . . . . . . . . . . . .

03,04 (cosmetic use) . . . . . . . . . . . . . . . .

OW79 (aphakia). . . . . . . . . . . . . . . . . . . . . .

B & L 70 (cosmetic use) . . . . . . . . . . . . . .

Permalens (aphakia, cosmetic use)

High Plus. . . . . . . . . . . . . . . . . . . . . . . . .

Minus (therapeutic) . . . . . . . . . . . . . . . .

Piano . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Low Plus . . . . . . . . . . . . . . . . . . . . . . . . .

SilaRx (aphakia) . . . . . . . . . . . . . . . . . . . . .

(pediatric aphakia) . . . . . . . . . . . . . . . . .

Silsoft (aphasia, cosmetic) . . . . . . . . . . . .

Silsoft Super Plus (aphasia) . . . . . . . . . . .

Silsight . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Softsite (therapeutic)

Minus (therapeutic) . . . . . . . . . . . . . . . . . .

Plus (therapeutic) . . . . . . . . . . . . . . . . . . . .

Aphakic (therapeutic).. . . . . . . . . . . . . . . .

Piano (therapeutic). . . . . . . . . . . . . . . . . .

Hydron (Custom) . . . . . . . . . . . . . . . . . . . .

Hydron (Stock) . . . . . . . . . . . . . . . . . . . . . .

Hydrocure ll Daily

Wear Toric-45% . . . . . . . . . . . . . . . . . .

Hydrocure ll Extended

Wear Toric-55% . . . . . . . . . . . . . . . . . .

B&L Toric . . . . . . . . . . . . . . . . . . . . . . . . . .

Torisoft . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fre-Flex Custom Toric. . . . . . . . . . . . . . . .

Bal-Flange Toric . . . . . . . . . . . . . . . . . . . . .

Hydro-Marc Toric . . . . . . . . . . . . . . . . . . . .

Original DuraSoft TT . . . . . . . . . . . . . . . . .

DuraSoft 2 Toric . . . . . . . . . . . . . . . . . . . . .

DuraSoft 2 Custom Toric . . . . . . . . . . . . .

P.A. 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Bi-Soft . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Durasoft-Tru Focal . . . . . . . . . . . . . . . . . . .

GP II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Dura-Sil Standard . . . . . . . . . . . . . . . . . . . .

Dura-Sii Super Thin . . . . . . . . . . . . . . . . . .

Front Surface Bifocal . . . . . . . . . . . . . . . .

Memo. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Silcon Inventory . . . . . . . . . . . . . . . . . . . . .

Silcon Custom . . . . . . . . . . . . . . . . . . . . . .

RX-56 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Celuflex . . . . . . . . . . . . . . . . . . . . . . . . . . . .

— ‘50.00 — “35.00 — ‘60.00

Prices set by distributors —

—

—

—

—

—

—

—

—

45.00

100.00

70.00

90.00

50.00

—

—

—

—

75.00

30.00

52.00

59,50 —

—

—

—

—

—

—

—

—

—

—

32.00

29.00

30.00

55.00

32.50

28.00

33.00 —

—

Polycon . . . . . . . . . . . . . . . . . . . . . . . . . . . . —

“Prices provided by the firms Aug. 10, 1983.

49.50

49.50

*20.00

“40.00

‘20.00

55.00

40.00

45.00

40.00

35.00

80.00

50.00

70.00

39.50

22.00

23.00

35.00

29.00

—

—

—

—

33,00

43.00

**75.00

40.00

45.00

35.00

39.50

65.00

40.00

45.00

● 59.50

—

19.00

20.00

45.00

22.50

20.00

27.50

27.50

30.00

33.00

“*Suggested distributors’ price. -

SOURCE: P. Sposato, “The ’Bosses’ Behind the Private Eyes," Contact Lens Forum 8(4)35-55, April 1983; and U.S. Department of Health and Human Services, Food

and Drug Administration, National Center for Devices and Radiological Health, Division of Ophthalmic, Ear, Nose, Throat and Dental Devices, “Contact Lens

Premarket Approval Application Approvals as of July 25, 1983, Silver Spring, MD, 1983.
Appendix B.— Major Contact Lens Manufacturers,

Methods of Entry, and Acquisitions

and License Agreements

Bausch & Lomb

Method of entry: Entered de novo in daily-wear soft

lenses in 1971, using exclusive licenses obtained from

National Patent Development Corp. (NPD) in 1966 to

produce and sell soft lenses made of basic hydrophilic

polymer developed in Czechoslovakia and to use spincasting production method also developed in Czechoslovakia.

Acquisitions: Bausch & Lomb acquired design for

toric soft lenses from Milton Roy Co. when that firm

went out of business in 1979 and sold its manufacturing facilities to Bausch & Lomb. Recently acquired

worldwide rights to two soft lens tinting processes

from Leroy Meshel, M. D., of California. In October

1983 Bausch & Lomb acquired Polymer Technology

Corp., a maker of gas-permeable lens material and lens

care solutions.

Revlon (Barnes= Hind/Hydrocurve)

Method of entry: Acquired number three firm in

contact lens industry, Continuous Curve, in August

1980.

Other acquisitions: Acquired Coburn Optical Industries (1975), maker of plastic and glass eyeglass lenses

and interocular lenses. In 1976 acquired Barnes-Hind

Pharmaceutical, major producer of lens care products. Continuous Curve and Barnes-Hind operations

combined to form Barnes-Hind/ Hydrocurve. Revlon

has been licensed by National Patent Development

Corp. (NPD) to manufacture and sell soft lenses, after

NPD’s successful suit for patent infringement in 1982.

CooperVision

(controlled by Cooper Laboratories)

Method of entry: Entered de novo. Created from

formerly wholly owned subsidiary of Cooper Labs in

1980.

Acquisitions: In June 1983, acquired UCO Optics

from Union Corp., giving CooperVision 15 percent of

overall soft lens market and number two position in

industry. Before acquisition CooperVision had 8 percent of market and was tied for number four position

with American Hydron; UCO Optics had 7 percent

and was ranked number five. In 1980, acquired Smith,

Miller & Patch and Flow Pharmaceuticals from Cooper

1 Parent company is listed first and acquired companies are in italics.

Labs; also acquired Global Vision, a soft lens maker,

from Cooper Labs. In 1981, bought C.V. Labs Ltd.,

a British lens manufacturer, and International Lens

Corp., which holds patents on cast molding lens manufacturing process.

Syntex Corp. (Syntex Ophthalmic)

Method of entry: Acquired Polymer Optics, maker

of the polycon gas-permeable lens, in 1977.

Acquisitions: In November 1978 acquired Corneal

Sciences, Inc., maker of soft lenses. In May 1983 acquired Salvatori Ophthalmics, maker of soft lenses,

obtaining a daily wear lens, and extended wear and

bifocal lenses then in FDA approval process. Prior to

this acquisition, Syntex had daily wear and gaspermeable lenses only, and was developing toric and

bifocal lenses.

National Patent Development Corp.

(American Hydron)

Method of entry: Entered de novo. Company

formed by NPD in 1978.

Acquisitions: Acquired original patents for soft lens

hydrophilic polymer and spin-casting production

method from Czechoslovakian Academy of Science in

1964. Sublicensed Bausch& Lomb to manufacture soft

lenses by spin-cast method. Has reacquired some rights

to make soft lenses via spin-casting, and some rights

to the cast molding process through partial acquisition of international Lens Corp. stock in 1973. International Lens subsequently bought by CooperVision.

American Hydron has entered joint ventures with

French, Japanese, Canadian, and English firms to market products in those countries. As a result of successful infringement suits, NPD receives an 8 percent

royalty on lens sales from Revlon, Johnson & Johnson

(Vistakon), Ciba-Geigy, Nestle (Alcon), ChannelLombart, Schering-Plough (Wesley-Jessen), and American Optical. Also has a joint venture (1983) with

American Hospital Supply (American Medical Optics)

to develop extended-wear soft lens.

Schering-Plough (Wesley-Jessen)

Method of entry: Acquired Wesley-lessen in 1980,

number seven in industry at that time.

Other acquisitions: None.

59
60 ● Health Case Study 31: The Contact Lens Industry: Structure, Competition, and Public Policy

American Hospital Supply

(American Medical Optics)

Method of entry: Acquired Heyer-Schulte in 1974,

Created American Medical Optics around contact lens

technology acquired from Heyer-Schulte.

Other acquisitions: Sauflon International in 1978.

Joint venture with NPD in 1983 to develop extended

wear lens. Majority of current sales are to Bausch &

Lomb, which markets American Medical Optics’

extended-wear lens for aphakic and cosmetic use.

Ciba-Geigy Corp. (Ciba Vision Care)

Method of entry: Formed joint venture with TitmusEurocon (West Germany), Europe’s largest maker of

contact lenses, to sell Titmus-Eurocon products in the

United States (1980). In 1983, Ciba-Geigy Corp. purchased Titmus-Eurocon.

Other acquisitions: None.

Johnson & Johnson (Vistakon)

Method of entry: Acquired Frontier Contact Lenses

(now Vistakon) in 1981. Frontier Contact Lenses

ranked ninth in soft lenses market at time of acquisition.

Other acquisitions: Purchased Iolab Corp., a maker

of interocular lenses.

Danker Laboratories

Method of entry: Entered de novo (1958). Company

makes hard and gas-permeable lenses only.

Acquisitions: Purchased hard lens and solutions

business from Milton Roy in 1979. May have acquired

some technology in gas-permeable lenses through this

acquisition.

Dow Corning

(Dow Corning Ophthalmic)

Method of entry: Purchase of lens technology from

Breger in 1972. Dow Corning itself is a joint venture

of Dow Chemical Corp. and Corning Glass; created

Dow Corning Ophthalmic to market silicone contact

lenses.

Acquisitions: Calcon Labs (1978); thereby obtaining Gelflex, the material used in daily-wear lenses

made by Dow Corning. (Currently suing Danker Laboratories for patent infringement as a result of latter’s

introduction of 100 percent silicone lenses. )

Channel- Lombart

Method of entry: Acquired Lombart Lenses, largest

maker of hard lenses, from American Sterilizer Corp.

in 1982.

Other acquisitions: None.

Rynco Scientific

Method of entry: Entered de novo in 1962. Produce

mostly gas-permeable lenses; may also make hard

lenses.

Acquisitions: Three, perhaps four small lens manufacturers. CAB (cellulose acetate butyrate) gaspermeable technology may have come from these acquisitions.

Maurice Cunniffe and Rudolf Wood

(American Optical Co.)

Method of entry: Acquired American Optical Co.

in 1982 from Warner-Lambert Corp.

Other acquisitions: American Optical and thenparent Warner-Lambert were licensed for 17 years, beginning in 1973, to make and sell soft contact lenses

of material developed by Frigitronics, Inc. WarnerLambert paid royalties to Frigitronics. When American Optical was sold to Cunniffe and Wood, Frigitronics would not allow Warner-Lambert to automatically transfer licenses to new owners. Until this dispute

is settled, American Optical will act as a contractor

to Warner-Lambert, who will continue to be responsible to Frigitronics for royalties. Warner-Lambert also

is paying 8 percent royalties to NPD.

Frigitronics

Method of entry: Hard lenses—acquisition of Precision-Cosmet Co. in 1969; soft lenses—acquisition of

Griffin Labs (now Frigi-Griffen labs) in 1971. Frigitronics markets both hard and soft lenses through

Precision-Cosmet Co.

Other acquisitions: In 1980 acquired Custom Contact Lens Lab, maker of hard contact lenses. Some

other firms also acquired, possible makers of contact

lenses. Also acquired Bensons (1969) and House of Vision (1982), two optical chains, with a combined total

of 400 outlets.

Nestle (Alcon)

Method of entry: Acquired Alcon in 1977.

Other acquisitions: Burton Parsons & Co., a maker
App. B—Major Contact Lens Manufacturers, Methods of Entry, and Acquisitions and License Agreements ● 61

of lens care products (1979) and Scanlens, a Swedish Manns, A., Bausch& Lomb, Inc., Rochester, NY, letcontact lens maker (1982). ter and data packet, July 15 and Nov. 23, 1983.

Moody’s Industrial Manual, 1982, vols. 1 and 2 (New

Sources York: Moody’s Investor Service, 1982).

Schwarz, L., and Temple, D. K., Contact Lens InContact Lenses, Vision Press International, Sylmar, dustry-Shakeout Continues (New York: SaloCA, May 1982. mon Bros., Inc., 1983).

Davidson, S., “Market Data Book,” unpublished, Dow

Corning Ophthalmic, Norfolk, VA, 1983.
Appendix C.— Glossary of Terms and Acronyms

Glossary of Terms

Aphakia: The absence of the crystalline lens of the eye,

commonly due to the surgical removal of lens

cataracts. Aphakia is usually an age-related condition in which the lens transparency is lost. The

resulting opaque quality of the lens may diminish

vision to light perception only, necessitating surgical

intervention.

Astigmatism: A defect of vision usually caused by irregular conformation of the cornea of the eye,

because of which light rays fail to meet at a single

focal point, resulting in a lack of sharpness or evenness of focus.

Bifocal lenses: Eyeglass or contact lenses divided into

two separate focal lengths for near and far vision.

Contact lens: A ground or molded lens of glass or

plastic that fits over the corneal portion or more

of the scleral surface of the eye, for the purpose of

correcting vision problems or for protection.

Cornea: A clear, central portion of the sclera, which

serves as the first element in the light focusing

system of the eye.

Corneal ulcers: Pits, perforations, or other lesions of

the cornea.

Gas-permeable lenses: Contact lenses made of materials through which gases can penetrate so that oxygen can reach the underlying cornea.

Extended-wear lenses: Contact lenses that can be worn

for an extended period (e.g., 1 month) because of

being made of gas-permeable materials or otherwise

constructed so that oxygen can reach the underlying cornea.

Hard lenses: Contact lenses made of rigid, non-gaspermeable plastic materials.

Hydrogel (hydrophilic material): Highly water-absorbent, plastic material from which most soft lenses are

made. The most commonly used of these materials

is hydroxyethylmethacrylate (HEMA).

Hypermetropia: Same as hyperopia.

Hyperopia: Farsightedness; a condition in which visual

images come to a focus behind the retina, resulting

especially in defective vision of near objects.

Intraocular lens: A lens implanted in the eye to replace

the natural lens removed during cataract surgery.

Keratoconus: A pathological condition of the eye in

which the cornea becomes distended into a conical

or nipple shape.

Monovision: A sight difficulty in one eye only.

Myopia: Nearsightedness; a condition in which the

visual images come to a focus in front of the retina,

resulting especially in defective vision of distant

objects.

Photo-chromatic lenses: Eyeglass lenses that brighten

62

or darken in response to changes in the available

surrounding light.

Polymer: A large molecule consisting of a chain of

small molecules. Most contact lenses are made from

polymer plastics.

Presbyopia: Inelasticity of the lens, which causes difficulty in the viewing of near objects. The condition usually is age related, beginning normally

around 45 and continuing until about 70, when it

levels off.

Refractive disorders: Conditions of the eye in which

the light-bending properties do not provide for clear

focusing. Most common among these conditions are

myopia (nearsightedness), hypermetropia (farsightedness), and astigmatism.

Retina: A thin tissue consisting of several layers of

cells, which contains the light-receptor cells that

allow the sense of sight.

Sclera: The elastic coating of connective tissues that

covers the eye, including the “white” of the eye.

Single-vision disorder: Hypermetropia, myopia, and

other disorders that involve only one type of vision

difficulty, rather than presbyopia, which involves

difficulties with both near and far vision.

Soft lenses: Contact lenses made of water-absorbing

materials. They are more comfortable to wear

because of flexibility and gas-permeability, but

relatively more difficult to handle and of poorer optical quality than hard lenses.

Spin-casting: A technique for manufacturing contact

lenses, in which the lens material, in soft form, is

placed in a cup-like mold, and the desired lens curvatures are achieved by spinning the mold at an appropriate speed.

Toric lenses: Contact lenses used to correct for uneven

focusing of the eye due to corneal abnormalities.

Trachoma: A chronic, contagious conjunctivitis characterized by the presence of inflammatory granulations on the conjunctival surfaces (the mucous

membrane covering the inner surface of the eyelid).

These granulations eventually are replaced by scar

tissue.

Glossary of Acronyms

CAB —cellulose acetate butyrate

FDA —Food and Drug Administration, U.S. Department of Health and Human Services

FTC —Federal Trade Commission

HEMA —hydroxyethylmethacrylate

IDE —investigational device exemption by FDA

NPD —National Patent Development Corp.

PMMA —polymethylmethacrylate
Appendix D.—Acknowledgments and

Health Program Advisory Committee

This case study has benefited from the advice and review of several people in addition to the advisory panel.

The staff would like to express its appreciation to the following people for their valuable guidance:

Constance W. Atwell Daniel J. Manelli

National Institutes of Health Thompson & Mitchell

Department of Health and Human Services Washington, DC

Bethesda, MD

Neal J. Bailey

Contact Lens Forum

Columbus, OH

James W. Clark, Jr.

American Optometric Association

Washington, DC

J. Richard Crout

Boehringer-Mannheim Corp.

Rockville, MD

Oliver H. Dabezies, Jr.

Contact Lens Association of Ophthalmologists,

Inc.

New Orleans, LA

Scott C. Davidson

Dow Corning Ophthalmic

Norfolk, VA

Margaret J. Giannini

Veterans Administration

Washington, DC

Melinda Hatton

American Academy of Ophthalmology

Washington, DC

George K. Meszaros

Capitol Contact Lenses, Inc.

Kensington, MD

Peter O. Safir

Contact Lens Institute

Washington, DC

Lorraine Schwarz

Salomon Brothers, Inc.

New York, NY

Patty Sposato

Contact Lens Forum

Columbiana, OH

Norman E. Wallis

International Association of Boards of Examiners

in Optometry, Inc.

Washington, DC

Ann M. Witt

Office of General Counsel

Food and Drug Administration

Department of Health and Human Services

Rockville, MD

Thomas O. Henteleff

Contact Lens Institute

Washington, DC

63
64 ● Health Case Study 31: The Contact Lens Industry: structure, Competition, and Public Policy

HEALTH PROGRAM ADVISORY COMMITTEE

Sidney S. Lee, Committee Chair

President, Milbank Memorial Fund

New York, NY

Stuart H. Altman*

Dean

Florence Heller School

Brandeis University

Waltham, MA

H. David Banta

Deputy Director

Pan American Health Organization

Washington, DC

Carroll L. Estes**

Chair

Department of Social and Behavioral Sciences

School of Nursing

University of California, San Francisco

San Francisco, CA

Rashi Fein

Professor

Department of Social Medicine and Health Policy

Harvard Medical School

Boston, MA

Harvey V. Fineberg

Dean

School of Public Health

Harvard University

Boston, MA

Melvin A. Glasser***

Director

Health Security Action Council

Committee for National Health Insurance

Washington, DC

Patricia King

Professor

Georgetown Law Center

Washington, DC

Joyce C. Lashof

Dean

School of Public Health

University of California, Berkeley

Berkeley, CA

Alexander Leaf

Professor of Medicine

Harvard Medical School

Massachusetts General Hospital

Boston, MA

Margaret Mahoney****

President

The Commonwealth Fund

New York, NY

Frederick Mosteller

Professor and Chair

Department of Health Policy and Management

School of Public Health

Harvard University

Boston, MA

Norton Nelson

Professor

Department of Environmental Medicine

New York University Medical School

New York, NY

Robert Oseasohn

Associate Dean

University of Texas, San Antonio

San Antonio, TX

Nora Piore

Senior Advisor

The Commonwealth Fund

New York, NY

Mitchell Rabkin*

President

Beth Israel Hospital

Boston, MA

Dorothy P. Rice

Regents Lecturer

Department of Social and Behavioral Sciences

School of Nursing

University of California, San Francisco

San Francisco, CA

 *Until April 1983.

 **Until March 1984.

***until October 1983.

****Until August 1983.
App. D—Acknowledgments and Health Program Advisory Committee “ 65

Richard K. Riegelman

Associate Professor

George Washington University

School of Medicine

Washington, DC

Walter L. Robb

Vice President and General Manager

Medical Systems Operations

General Electric Co.

Milwaukee, WI

Frederick C. Robbins

President

Institute of Medicine

Washington, DC

Rosemary Stevens

Professor

Department of History and Sociology of Science

University Of Pennsylvania

Philadelphia, PA

References

1.

2.

3.

3a.

4.

5.

6.

7.

8.

9.

10.

11.

12.

13.

.4.

5.

6.

7.

8.

AMP, Inc. v. Gardner, 389 F. 2d 825(1968); cert.

denied 393 U.S. 825 (1968).

“A Battle With the Chains for Contact Lens Patients, ” Contact Lens Forum 7(10):45-51, October

1982.

Aquavella, J. V. and Gulapali, N. R., “Which

Lens: Contact Lenses Currently Available for Extended Wear in Aphakia,” Ophthalmology 87(2):

151-54, February 1980.

Bates v. State Bar of Arizona, 1979.

Beatty, K., Health Care Financing Administration, Baltimore, MD, personal communication,

July 6, 1983.

Bennett, I., State of the Optical Industry (White

Plains, NY: Advisory Enterprises, 1983).

Brown, D., U.S. Department of Health and

Human Services, Food and Drug Administration,

Division of Ophthalmic, Ear, Nose, Throat and

Dental Devices, Silver Spring, MD, personal

communication, Aug. 3, 1983.

Carr, M., Health Products Research, Inc., Somerville, NJ, personal communication, July 7, 1983.

Check, W. A., “Contact!” Health 14(9):20-22,

September 1982.

“Contact Lenses, ’f Consumer Reports 45(5):288-

292, May 1980.

Contact Lenses, Vision Press International, Sylmar,

CA, May 1982.

Davidson, S., Dow Corning Ophthalmic, Norfolk, VA, personal communication, July 15, 1983.

Davidson, S., “Market Data Book,” unpublished,

Dow Corning Ophthalmic, Norfolk, VA, 1983.

Dixon, J. M., “Twenty Years and Twenty Thousand Contact Lens Patients, ” Transactions of the

American Ophthalmological Society 79:65-72,

1982.

Feldman, G. L., “Contact Lens Materials, ” Complications of Contact Lenses, D. Miller and P. F.

White (eds. ) (Boston, MA: Little, Brown, 1981).

Graham, R., “Historical Development, ” Contact

Lens Practice, 3d cd., R. B. Mandell (cd.) (Springfield, IL: Charles C. Thomas, 1981).

Hayes, D. P., “Results From the Vision Care

Survey Relative to the Profile of Contact Lens Fitters," Contact and Intraocular Lens Medical Journal 7(1):9-10, January-March 1981.

Hollander, R., U.S. Department of Health and

Human Services, Public Health Service, Rockville, MD, personal communication, June 30,

1983.

“Keeping Posted, ” Contact Lens Forum 8(4):7,

April 1983.

19.

20.

21.

22.

23,

24.

25.

26.

27.

28.

29.

30.

31.

32.

33.

34.

35.

36.

37.

38.

39.

40.

Kersley, H. J., “Contact Lenses—Is There Progress?” Practitioner 224 (1344):614-20, June 1980.

Krezanoski, J. Z., “A New Look at Soft Lenses

and Their Solutions, ” Amer. Pharmacy NS21(5):

12-19, May 1981.

Lowther, G. E., Contact Lenses: Procedures and

Techniques (Boston, MA: Butterworths, 1982).

Manelli, D., Contact Lens Manufacturers Association, Washington, DC, personal communication, June 7, 1983.

Manns, A., Bausch& Lomb, Inc., Rochester, NY,

letter and data packet, July 15, 1983.

Manns, A., Bausch& Lomb, Inc., Rochester, NY,

letter, Nov. 23, 1983.

Moody’s Industrial Manual, 1982, vols. 1 and 2

(New York: Moody’s Investor Service, 1982).

“More About Contacts on Consignment, ” Contact Lens Forum 4(8):27-39, August 1979.

Morrison, R. J., “Contact Lens Materials—An

Overview,” J. Amer. Optometric Assoc. 47(3):

298, March 1976.

Platt, W., President, Platt Contact Lens Service,

Mt. Vernon, OH, personal communication, Aug.

3, 1983.

Pollard, M., U.S. Federal Trade Commission,

Washington, DC, personal communications, June

16 and July 27, 1983.

Ruben, M., Contact Lens Practice (Baltimore,

MD: The Williams & Wilkens Co., 1976).

Schwarz, L., and Temple, D. K., Contact Lens

Industry—The Shakeout Continues (New York:

Salomon Bros., Inc., 1983).

Sposato, P., “1982 Marketing Spiral,” Contact

Lens Forum 7(5):16-21, May 1982.

Sposato, P., “Contact Lenses: The Changing

Marketplace Revisited, ” Contact Lens Forum

4(9):73-81, September 1979.

Sposato, P., “Life Preservers for Small PMMA

Firms,” Contact Lens Forum 5(12):33-37, December 1980,

Sposato, P., “Marketing in Motion, ” Contact

Lens Forum 6(5):17-25, May 1981.

Sposato, P., “Marketing Spiral, Part 2,” Contact

Lens Forum 7(6):61-67, June 1982.

Sposato, P., “Marketing Update, Part 2: Quality

Counts, ” Contact Lens Forum 6(6):25-41, June

1981.

Sposato, P., “New Ideas in Marketing, ” Contact

Lens Forum 8(5):29-45, May 1983.

Sposato, P., ‘Taming the Marketplace,” Contact

Lens Forum 5(4):51-61, April 1980.

Sposato, P., “The ‘Bosses’ Behind the Private

69
70 ● Health Case Study 31: The Contact Lens Industry: Structure, Competition, and Public Policy

41.

42.

43.

44.

45.

46.

47,

48.

49,

Eyes,” Contact Lens Forum 8(4):35-55, April

1983.

“Union Corp. Says It Sold Contact Lens Business

to CooperVision Unit, ” Wall Street Journal, July

6:14 (col.2), 1983.

United States v. An Article of Drug . . . Bactounidisk, 394 U.S. 784 (1969).

U. S., Federal Register 48:56,778-56,798, Dec. 23,

1983.

U.S. Department of Commerce, Bureau of the

Census, Statistical Abstract of the United States,

1982-83 (103d cd.), Washington, DC, 1983.

U.S. Department of Health, Education, and Welfare, Characteristics of Persons With Corrective

Lenses, United States: July 1965-June 1966, Vital

and Health Statistics, series 10, No. 53, prepared

by M. M. Hannaford, DHEW publication No.

(PHS) 1000 (Washington, DC: Government

Printing Office, June 1969).

U.S. Department of Health, Education, and Welfare, Characteristics of Persons With Corrective

Lenses, United States: 1971, Vital and Health Statistics, series 10, No. 93, prepared by M. H.

Wilder, DHEW publication No. (HRA) 75-1520,

Washington, DC, 1974.

U.S. Department of Health, Education, and Welfare, National Center for Health Statistics, Office of Health Research Statistics and Technology,

Public Health Service, Health Manpower and

Health Facilities, 1976-77 cd., DHEW publication

No. (PHS) 79-1509, Hyattsville, MD, 1977.

U.S. Department of Health and Human Services,

Food and Drug Administration, National Center for Devices and Radiological Health, Division

of Ophthalmic, Ear, Nose, Throat and Dental Devices, “Contact Lens Premarket Approval Application Approvals as of July 25, 1983,” Silver

Spring, MD, 1983.

U.S. Department of Health and Human Services,

Health Care Financing Administration, The

Medicare and Medicaid Data Book, 1981, HCFA

publication No. 03128 (Baltimore, MD: HCFA,

April 1982).

50.

51.

52.

53.

54.

55.

56.

57.

U.S. Department of Health and Human Services,

Health Resources Administration, Division of

Health Professions Analysis, Bureau of Health

Professions, Supply and Characteristics of Selected Health Personnel, Washington, DC, 1981.

U.S. Department of Health and Human Services,

National Center for Health Services Research,

Eyeglasses and Contact Lenses: Purchases, Expenditures, and Sources of Payment, NCHSR

National Health Care Expenditures Study, Data

Preview 11, prepared by D. C. Walden, DHHS

publication No. (PHS) 82-3322 (Hyattsville, MD:

DHHS, October 1982).

U.S. Department of Health and Human Services,

Public Health Service, National Center for Health

Statistics, 1981 Summary: National Ambulatory

Medical Care Survey, NCHS Advance data, prepared by L. Lawrence and T. McLemore, No. 88,

Hyattsville, MD, Mar. 16, 1983.

U.S. Department of Health and Human Services,

Public Health Service, Office of Health Research,

Statistics, and Technology, Health United States,

1982, Hyattsville, MD, 1981.

U.S. Department of Health and Human Services,

Social Security Administration, Office of Family

Assistance, Characteristics of State Plans for Aid

to Families With Dependent Children Under the

Social Security Act Title IV-A, 1981 cd., SSA

publication No. 80-21235, Washington, DC,

1981.

U.S. Federal Trade Commission, Bureau of Consumer Protection, State Restrictions on Vision

Care Providers: The Effects on Consumers (“Eyeglasses II”), Washington, DC, 1980.

U.S. International Trade Commission, Summary

of Trade and Tariff Information: Unmounted

Ophthalmic Lenses, TSUS Item 708.01, USITO

publication No. 841, Washington, DC, October

1978.

Waldo, D. R., and Gibson, R. M., “National

Health Expenditures 1981, ” Health Care Finance

ing Rev. 4(1):1-35, September 1982.

0