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Possible Anticompetitive 

Barriers to E-Commerce: 

Contact Lenses

A Report from the Staff of the Federal Trade Commission 

MARCH 2004
Federal Trade Commission*

TIMOTHY J. MURIS Chairman

MOZELLE W. THOMPSON Commissioner

ORSON SWINDLE Commissioner

THOMAS B. LEARY Commissioner

PAMELA JONES HARBOUR Commissioner

Susan A. Creighton Director, Bureau of Competition

J. Howard Beales, III Director, Bureau of Consumer Protection

Luke Froeb Director, Bureau of Economics

William E. Kovacic General Counsel

Todd J. Zywicki Director, Office of Policy Planning

Rosemarie Straight Executive Director

Report Contributors

Maureen K. Ohlhausen, Deputy Director, Office of Policy Planning

John Delacourt, Chief Antitrust Counsel, Office of Policy Planning

Asheesh Agarwal, Assistant Director, Office of Policy Planning

James Cooper, Office of Policy Planning

C. Lee Peeler, Deputy Director, Bureau of Consumer Protection

Thomas B. Pahl, Assistant Director, Division of Advertising Practices, Bureau of Consumer Protection

Kial Young, Division of Advertising Practices, Bureau of Consumer Protection

Paul A. Pautler, Deputy Director for Consumer Protection, Bureau of Economics

Dennis Breen, Assistant Director, Economic Policy Analysis, Bureau of Economics

Joseph Mulholland, Bureau of Economics

Debra Holt, Bureau of Economics

Patricia Galvan, Bureau of Competition

Anant Raud, Bureau of Competition

Theodore A. Gebhard, Bureau of Competition

Rachel Hertzman, Bureau of Competition

Inquiries

Please direct inquiries concerning this report to:

Maureen Ohlhausen, (202) 326-2632, or mohlhausen@ftc.gov,

Asheesh Agarwal, (202) 326-3558, or aagarwal@ftc.gov.

Acknowledgment

R. Ted Cruz, the former Director of the Office of Policy Planning, and Jerry Ellig, the former Deputy

Director of the Office of Policy Planning, oversaw much of this report prior to leaving the FTC.

* This report represents the views of the staffs of the Office of Policy Planning, Bureau of

Competition, Bureau of Consumer Protection, and Bureau of Economics. It does not necessarily

represent the views of the Commission or any individual Commissioner. The Commission has,

however, voted to authorize the staff to publish this report.
TABLE OF CONTENTS

 Page

I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

II. Current Status of Online Contact Lens Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

III. Issues Related to Online Contact Lens Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

A. State Licensing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

B. Prescription Release and Verification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 6

C. Other Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

IV. Consumer Risks and Benefits from Online Contact Lens Sales . . . . . . . . . . . . . . . . . . . . 8

A. The Sale of Contact Lens Raises Significant Health Issues . . . . . . . . . . . . . . . . . 8

B. Cost and Convenience Benefits from Online Contact Lens Sales . . . . . . . . . . . 12

C. Consumer Protection for Online Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

V. Policies Affecting Online Contact Lens Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

A. Professional Licensing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

1. Effect of Licensing on Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

2. Effect of Licensing on Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . 18

3. Forms of Licensing and Licensing Alternatives . . . . . . . . . . . . . . . . . . . 21

4. Benefits and Costs of Licensing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

B. Prescription Release and Verification Requirements . . . . . . . . . . . . . . . . . . . . . 24

1. Prescription Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

2. Prescription Verification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

C. Other Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

1. Private Label Contact Lens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2. Prescription Length . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

VI. Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Appendix A FTC Staff Comment Before the Connecticut

Board of Examiners for Opticians (Mar. 27, 2002)
1 See, e.g., Keith Croes, Contact Lens Market: Specialty Lenses and Favorable

Demographics Are Driving Growth Worldwide, OPTISTOCK MARKETWATCH, Nov. 2002

available at <http://www.optistock.com/mw/2002_11all.htm>; Joseph T. Barr, The Contact Lens

Spectrum Millennium Report, CONTACT LENS SPECTRUM, Jan. 2000.

2 See Health Products Research (VIS) – Annual 2000 Year-End Consumer Contact

Lens Survey (cited in BAUSCH & LOMB, 2001 ANNUAL REPORT TO VISION CARE

PROFESSIONALS: TRENDS IN CONTACT LENSES & LENS CARE 8), available at

<http://www.optistock.com/trends_contact_lenses_2001_dec.pdf>.

3 16 C.F.R. Part 456.

1

Possible Anticompetitive Barriers 

to E-Commerce: Contact Lenses

I. Introduction

Sales of contact lenses in the United States are well over a billion dollars a year.1

 Recent

data indicate that nearly 36 million people - almost 13% of all Americans - wear contact lenses.2

There are numerous manufacturers of contact lenses (e.g., Johnson & Johnson, Bausch & Lomb,

and CIBA Vision) and many different channels of distribution, including eye care practitioners

(ophthalmologists and optometrists), national and regional optical chains, mass merchants, and

mail order and Internet firms.

In the past, contact lenses were designed to be worn for long periods of time, required

daily removal, and involved extensive cleaning regimens. Consumers generally purchased these

lenses from their eye care providers after an eye exam and lens fitting and replaced them

infrequently. The advent of disposable soft contact lenses – which consumers wear for only a

few weeks and throw away – followed by the growth of non-practitioner lens sellers, such as

Internet-based contact lens retailers, have changed the market dynamics. While eye care

providers still control the prescription process, consumers now not only purchase more lenses

with greater frequency but they also have a greater choice of lens suppliers and modes of

delivery. These changes have caused tension among eye care practitioners, bricks-and-mortar

lens sellers, contact lens manufacturers, Internet lens sellers, and state officials over issues such

as licensing contact lens sellers, contact lens prescription release requirements, and methods of

verifying prescriptions. These tensions have led to state board proceedings, the adoption of new

state and federal legislation, and litigation.

The Commission has been active in the eye care industry for nearly three decades. It

enforces the Ophthalmic Practice Rules (“Eyeglass Rule”), which requires an optometrist or

ophthalmologist to provide a patient, at no extra cost, a copy of the patient=s eyeglass

prescription after completion of an eye exam.3

 The Rule also prohibits optometrists and

ophthalmologists from conditioning the availability of an eye examination on a requirement that
4 16 C.F.R. §§ 456.1(c), 456.2(b). 

5 16 C.F.R. § 456.2(d) (It is an unfair act or practice to “[p]lace on the prescription,

or require the patient to sign, or deliver to the patient a form or notice waiving or disclaiming the

liability or responsibility of the ophthalmologist or optometrist for the accuracy of the eye

examination or the accuracy of the ophthalmic goods and services dispensed by another seller.”)

6 Advertising of Ophthalmic Goods and Services, Statement of Basis and Purpose

and Final Trade Regulation Rule, 43 Fed. Reg. 23,992, 23,998 (June 2, 1978).

7 16 C.F.R. § 456; see also Ophthalmic Practice Rules, Final Trade Regulation

Rule, 54 Fed. Reg. 10,285, 10,299, 10,303 (Mar. 13, 1989).

8 15 U.S.C.A. §§ 7601-7610. The Commission issued a Notice of Proposed

Rulemaking seeking comment on a proposed “Contact Lens Rule” to implement the Fairness to

Contact Lens Consumers Act. See 69 Fed Reg. 5440 (Feb. 4, 2004). The Commission also

issued a notice regarding the completion of the regulatory review of the Eyeglass Rule. 69 Fed

Reg. 5451 (Feb. 4, 2004).

9 FTC Staff Comment Before the Connecticut Board of Examiners for Opticians

(Mar. 27, 2002) available at <http://www.ftc.gov/be/v020007.htm>.

2

the patient agree to purchase ophthalmic goods (which the Rule defines as eyeglasses and

contact lenses) from the practitioner4

 and from placing on the prescription, or delivering to the

patient, certain disclaimers or waivers of liability.5 In adopting the Eyeglass Rule, the

Commission found that many consumers were deterred from comparison shopping for

eyeglasses because eye care practitioners refused to release prescriptions, even when asked to do

so, or charged an additional fee for release of a prescription.6 The Rule currently does not

require an optometrist or ophthalmologist to release a contact lens prescription to a patient after

an eye exam.7

 Recently enacted federal legislation, the Fairness to Contact Lens Consumers Act,

however, requires that when a prescriber completes a contact lens fitting, the prescriber must

provide the patient a copy of the contact lens prescription.8

In March 2002, the Commission staff filed a comment before the Connecticut Board of

Examiners for Opticians in a declaratory ruling proceeding on the interpretation and applicability

of various statutes and regulations concerning the sale of contact lenses.9

 The staff comment 

examined the issues surrounding the online sale of contact lenses while addressing whether the

Board should interpret state law to require out-of-state sellers of contact lenses to have a

Connecticut opticians license.

In October 2002, the Commission held a public workshop to evaluate possible
10 67 Fed. Reg. 48,472 (2002). The other industries were: auctions; automobiles;

caskets; cyber-charter schools; online legal services; real estate, mortgages, and financial

services; retailing; wine; and telemedicine and online pharmaceutical sales. More information is

available at the workshop’s homepage, at

<http://www.ftc.gov/opp/ecommerce/anticompetitive/index.htm.> The workshop’s transcript is

cited as “Tr.,” and is available at

<http://www.ftc.gov/opp/ecommerce/anticompetitive/021008antitrans.pdf>. All of the panelists’

written statements are available at 

<http://www.ftc.gov/opp/ecommerce/anticompetitive/agenda.htm>.

11 The following people testified at the workshop: Jonathan Coon, CEO, 1-800

Contacts, Inc. (the largest Internet contact lens retailer); Dr. J. Pat Cummings, Jr., O.D.,

President, American Optometric Association (“AOA”); Paul Halpern, National Association of

Optometrists and Opticians (“NAOO”); Gerald M. Ostrov, Company Group Chairman, Johnson

& Johnson Vision Care; and Morris Kleiner, Professor of Labor Policy, University of Minnesota

and National Bureau of Economic Research. 

The panelists also provided written submissions, as did James Saviola, O.D., Captain,

U.S. Public Health Service, Chief, Vitreoretinal and Extraocular Implants Branch, Division of

Ophthalmic and ENT Devices, Office of Device Evaluation, Center for Devices and

Radiological Health, Food and Drug Administration, and John Tennis, Assistant Attorney

General, State of Maryland. Commission staff also gathered evidence from a wide variety of

published sources, such as studies and court proceedings, and from other sources, such as state

attorneys general and the Food and Drug Administration. 

3

anticompetitive barriers to e-commerce in contact lenses and nine other industries.10

Commission staff heard testimony about the contact lens issue from many perspectives,

including eye care practitioners, a major contact lens manufacturer, an online seller, traditional

bricks and mortar lens sellers, and an economics professor with expertise in occupational

licensing issues.11 

After extensive review, Commission staff have reached several conclusions regarding

online contact lens sales:

• Although there are significant health issues concerning the use and sale of contact

lenses, requiring a professional license to sell replacement contact lenses over the

Internet is likely to raise prices and/or reduce convenience to consumers without

substantially increasing health protections. States wishing to consider regulation

of replacement lens sellers in addition to existing prescription requirements and

general consumer protection laws should consider adopting simple registration

requirements, as California recently did.
12 See 47 Fed. Reg. 53,411, 43,415 (1982).

13 Many manufacturers only have FDA clearance to market a lens for daily wear. It

would be an “off-label” use to prescribe a daily wear lens for extended wear. Comments of

4

• The release of contact lens prescriptions by eye care providers facilitates

consumer choice in replacement contact lens suppliers, and greater consumer

choice increases consumer welfare. Adherence to the prescription requirement is

important to consumer health, and online sales of contact lenses raise the question

of what prescription verification procedure best protects consumers by ensuring

compliance with the prescription requirement . The recently enacted Fairness to

Contact Lens Consumers Act requires prescription release and provides that

contact lenses must be sold in accordance with a prescription presented to a lens

seller directly or by facsimile, or verified by direct communication with the

prescriber. The Act permits passive verification of contact lens prescriptions,

stating that a prescription is verified if, after direct communication by the seller,

the prescriber confirms the prescription; corrects an inaccurate prescription; or

fails to reply to the seller within eight business hours, or a similar time as defined

by the Federal Trade Commission. Adherence by eye care practitioners to the

Act’s contact lens prescription release requirements and by contact lens sellers to

the Act’s prescription verification requirements should enhance consumer choice

and protect consumer health.

 

• Private label lenses and short prescription lengths can promote consumer health

and welfare but can also limit consumer choice and diminish consumer welfare.

Adherence to statutory provisions regarding private label lenses and prescription

lengths should ensure that contact lens seller and contact lens prescriber practices

generally promote consumer health and do not hamper consumer choice in a way

that ultimately harms consumers.

The report will first provide an overview of the current status of online contact lens sales

and then examine in detail a number of issues relevant to online contact lens sales raised at the

workshop and in other proceedings. The Fairness to Contact Lens Consumers Act, enacted after

the workshop, resolved many of these issues – prescription release, prescription verification, and

prescription length – but it did not resolve all issues, such as professional licensing for contact

lens sellers. After discussing these issues, the report will offer recommendations.

II. Current status of online contact lens sales

Online contact lens sales primarily involve disposable replacement soft contact lenses. 

The FDA first approved a soft contact lens in 1971.12 Beginning in the late 1980s, lens

manufacturers began to market and sell “disposable” and “frequent replacement” soft lenses,

designed to be replaced daily, weekly, or monthly.13 Most soft lenses are now sold in
James F. Saviola, O.D., FDA.

14 See, e.g., Summary of views of Gerald M. Ostrov, Company Group Chairman,

Johnson & Johnson Vision Care, Inc. (“It is true that disposable lens technology has eliminated

the need to have each individual replacement disposable lens fitted on the patient’s eye by an eye

care practitioner.”); Summary of testimony of Jonathan Coon, Chief Executive Officer, 1-800

Contacts, Inc. (“Technological advances led to the introduction of ‘soft’ disposable contacts in

the late 1980s. Disposable soft lenses are standardized, mass-produced commodities.”) See also

comments filed in the Rule review by the American Academy of Ophthalmology and the

California Optometric Association stating that while fabrication errors might present a problem

with respect to hard contact lenses, soft lenses, such as disposables, are relatively standard and

can be easily reproduced. Comment from COA, #112 at 8; Comment from AAO, #97 at 1-2. 

The comments from the FTC's Rule review are on file on the Commission's public record as

Document Nos. B21940700001, et seq. The comments are cited herein by the name of the

commenter, a shortened version of the comment number (the last one to three digits), and the

relevant page(s) or attachments of the comment.

15 See Summary of testimony of J. Pat Cummings, Jr., O.D., President, American

Optometric Ass’n.

16 See Summary of views of Gerald M. Ostrov, Company Group Chairman, Johnson

& Johnson Vision Care, Inc. (stating that consumers “have the option of purchasing from eye

care professionals who participate in Johnson & Johnson’s Acuvue® Patient Delivery Program,

which offers shipment of lenses to the patient at the doctor’s direction.”)

5

multipacks, with disposable lenses typically sold in packs of six. When first developed, soft

contact lenses were not manufactured in a way that always accurately reproduced the same fit on

a patient’s eye. In the past 20 years, however, manufacturers have developed production

methods for soft contact lenses that have eliminated these standardization problems.14 Now, the

replacement soft contact lenses that a patient receives pursuant to a prescription specifying brand

and power will be identical, regardless of whether the patient gets the lenses from an eye care

professional or from a non-traditional seller.15 

 

In light of these factors, after the prescription has been finalized through the fitting

process, eye care practitioners do not examine the fit of each replacement lens on the patient’s

eye. In fact, some lens manufacturers provide direct shipment of replacement lenses to

consumers, and some eye care practitioners mail replacement contact lenses to patients without

an office visit during the span of the patient’s prescription.16

The most recent step in the evolution of the market for contact lenses is the development

of stand-alone sellers, such as Internet sellers or pharmacies, who do not sell eyeglasses,

fabricate contact lenses, or fit them to the eye but only offer replacement lenses for which the
17 Testimony of Jonathan Coon, CEO, 1-800 Contacts, Inc., Tr. at 327 (“We don’t

have stores. We don’t do eye exams. We don’t have in-state locations. We only take orders

over the Internet and by phone, with nearly half of our sales online.”)

18 See supra note 9.

19 Connecticut Board of Examiners for Opticians, Declaratory Ruling Memorandum

of Decision (June 24, 2003).

6

customer has already been fitted by an eye care professional.17 Unlike traditional eye wear

sellers, their business consists simply of providing customers contact lenses that come from the

manufacturer in sealed boxes labeled with the relevant specifications. 

III. Issues related to online contact lens sales

A. State licensing

In its March 2002 comment to the Connecticut Board of Examiners for Opticians,

Commission staff argued against the board issuing a declaratory ruling that Internet sellers of

replacement contact lenses must have a Connecticut optician’s license, even though such sellers

merely mail out prepackaged lenses pursuant to an eye doctor’s prescription.18 The staff

concluded that such a requirement would increase consumer costs while producing no offsetting

health benefits and would be a barrier to the expansion of Internet commerce. Indeed, such

licensing could harm public health by raising the cost of replacement contact lenses, inducing

consumers to replace the lenses less frequently than doctors recommend or to substitute other

forms of contact lenses that pose greater health risks. The staff noted that current federal and

state prescription requirements and consumer protection laws are sufficient to address the health

problems associated with contact lens use and urged the Board to implement the prescription

requirement in a way that protects consumers’ health, promotes competition, and maximizes

consumer choice. On June 24, 2003, the Connecticut Board of Examiners for Opticians ruled

that, under state law, out-of-state contact lens sellers do not have to have a Connecticut opticians

license, although in-state sellers must have such a license.19 The Board also ruled that a contact

lens seller, whether in or outside the state, may only sell the lenses pursuant to a lawfully issued

prescription.

B. Prescription release and verification

The principal purpose of the FTC’s Eyeglass Rule is to provide consumers a greater

range of choices when buying ophthalmic goods and services. As noted above, the Rule’s

prescription release requirement applies only to eyeglass prescriptions, not contact lens

prescriptions. The Commission was considering whether to extend the prescription release

requirement to contact lenses during its review of the Eyeglass Rule, which was part of its

systematic review of its Rules and Guides to determine their effectiveness and impact. The

Commission requested public comment about the overall costs and benefits of the Rule and
20 See Request for Public Comments, 62 Fed. Reg. 15,865 (Apr. 3, 1997).

21 See Fairness to Contact Lens Consumers Act (H.R. 2221), 108th Cong. (2003); 

Contact Lens Prescription Release Act of 2002, 107th Cong. 2d Sess. (2002).

22 Fairness to Contact Lens Consumers Act (H.R. 3140), 108th Cong. (2003) (passed

Nov. 20, 2003, signed into law Dec. 6, 2003).

23 In re: Disposable Contact Lens Antitrust Litigation, No. MDL 1030, (complaints

filed M.D. Fla. 1994). 

7

related questions, and it received comments from numerous parties, including associations

representing various segments of the industry and professions, state attorneys general, state

optometry boards, and consumers.20 Given the passage of the Fairness to Contact Lens

Consumers Act, the Commission has ended this review. 

A number of states have statutes requiring eye care providers to release contact lens

prescriptions to patients. Congress considered several bills to impose a federal prescription

release and prescription verification requirements for contact lenses,21 and eventually passed the

Fairness to Contact Lens Consumers Act in November 2003.22 Whether verification must be

active – meaning that the eye care provider must affirmatively respond before the seller can

provide the lenses – or passive – meaning that the seller can provide the lenses unless the eye

care provider notifies him that the prescription is invalid – was a hotly contested issue with

important implications for consumer protection and competition in this market. Some contact

lens sellers were concerned that, under an active verification regime, eye care providers would

prevent their patients from patronizing a competing lens seller by not responding to the

verification request. Eye care providers were concerned that, under a passive verification

regime, patients would too easily receive lenses with expired or incorrect prescriptions. As

discussed below, the Fairness to Contact Lens Consumers Act addresses prescription release and

prescription verification requirements.

Tensions between online/mail order lens sellers, their more traditional competitors, and

contact lens manufacturers also led to litigation. In In re: Disposable Contact Lens Antitrust

Litigation,

23 a multidistrict litigation, the Attorneys General of 31 states and a certified class

alleged that eye care professionals engaged in an organized effort to prevent or hinder consumers

from obtaining their contact lens prescriptions. The complaints alleged two conspiracies: (1) that

the practitioners and their trade associations conspired to prevent the release of contact lens

prescriptions to consumers, and (2) that the manufacturers, practitioners, and trade associations,

including the American Optometric Association, conspired to eliminate sales of contact lenses

by pharmacies, mail order, and other alternative sellers. According to the complaints, the

conspiracy severely restricted the supply of contact lenses available to alternative sellers, which

has hampered the growth of such sellers, decreased the supply of lenses to consumers, and

increased the price of lenses. The parties reached settlements, the last of which the court

approved in November 2001. As part of the settlement, defendant manufacturers agreed to sell
24 15 U.S.C.A. § 7603(f).

25 15 U.S.C.A. § 7604.

26 See, e.g., FDA Center for Devices and Radiological Health, Buying Contact

Lenses on the Internet, by Phone, or by Mail: Questions and Answers (2002), available at

<http://www.fda.gov/cdrh/consumer/buycontactqa.html>.

8

lenses to alternative distribution channels. 

C. Other issues

Panelists at the workshop touched on additional issues involving online contact lens

sales. One of these issues is the practice of eye care practitioners writing prescriptions for lenses

that are not available from other lens sellers. For example, Dr. Jones may write a prescription

for Dr. Jones Brand lenses, which Dr. Jones contracts with a lens manufacturer to produce, or

merely to label, for him. These are called private label lenses. Dr. Jones’ patients who receive

these prescriptions typically cannot purchase their lenses elsewhere since only Dr. Jones carries

these lenses and most contact lens prescriptions do not allow substitution. Another issue was the

length of contact lens prescriptions. Unless limited by state law, eye care practitioners could

write prescriptions of any length, including theoretically a period so brief as to impair a patient’s

ability to purchase replacement lenses elsewhere. 

Passage of the Fairness to Contact Lens Consumers Act also affects these issues. The

Act permits a contact lens seller to substitute the same lens made by the same manufacturer as

the lens prescribed if it is sold under a different label.24 As for the length of prescriptions, the

Act specifies that contact lens prescriptions expire not less than one year after their issuance,

unless the prescriber specifies a shorter length based on the prescriber’s medical judgment with

respect to the health of an individual patient.25

IV. Consumer risks and benefits from online contact lens sales

A. The sale of contact lenses raises significant health issues

To ascertain whether restrictions on Internet contact lens sales benefit or harm

consumers, one must first consider the health issues involved in contact lens sale and use. 

Panelists and those who submitted comments to the workshop discussed this issue in detail. FTC

staff have also received pertinent medical information during the Commission’s Rule Review

and the declaratory ruling proceeding in Connecticut. 

The primary health care concern with contact lenses appears to be ensuring that contact

lens wearers return to their doctors regularly for eye examinations.26 Like other soft contact

lenses, disposable contact lenses prevent oxygen from reaching the cornea, and lack of oxygen

can lead to severe eye damage. Therefore, it can be important that a patient adhere to the
27 Id. (“Contact lens wear causes many changes to cells and tissues of the eye, and

sometimes wearing contact lenses can damage the cornea (the clear window of the eye). Even if

you are currently experiencing no problems, the lenses may be causing damage to your eyes.

Regular check-ups will reduce the likelihood of damage going undetected.”)

28 Summary of testimony of J. Pat Cummings, Jr., O.D., President, American

Optometric Ass’n.

29 Id.

30 21 C.F.R. § 886.5925(b)(1) (2001). Class II devices are devices for which

“general controls” are insufficient to provide a reasonable assurance of safety and effectiveness

but for which there are existing methods to provide such assurances. 21 U.S.C. § 360c(a)(B). 

These methods may include special guidelines, performance standards, and postmarket

monitoring. A prescription requirement is not explicitly mentioned. 

31 21 C.F.R. §§ 886.5916 and 886.5925(b)(2). Class III is the most stringent

regulatory category and applies to devices for which insufficient information exists to assure

safety and effectiveness solely through general or special controls, but again the statute is silent

regarding a prescription requirement. 21 U.S.C. § 360c(a)(C) . 

32 21 U.S.C. § 360j(e)(1) (“The Secretary may by regulation require that a device

be restricted to sale, distribution, or use – (A) only upon the written or oral authorization of a

practitioner licensed by law to administer or use such a device, or (B) upon other such conditions

9

doctor’s recommended wearing schedule, removing and replacing the lenses when

recommended. Some individuals may develop eye problems even if they follow the doctor’s

advice; their eyes may develop problems simply in response to wearing lenses.27 Contact lens

wearers incur health risks if they forego regular eye exams that would allow the optometrist or

ophthalmologist to spot emerging health problems in their early stages.28 Consumers may thus

endanger the health of their eyes if they obtain and wear replacement contact lenses without a

valid prescription. 

The AOA, while noting that consumers incur health risks if they skip regular eye exams,

testified that the crux of the health issue in online sales is “[n]ot where the patient purchases

replacement lenses, but that the validity of the prescription be properly verified by all sellers.”29

The primary means to ensure that contact lens wearers undergo periodic eye exams by qualified

practitioners appears to be the requirement that contact lenses be sold by prescription. 

FDA regulations state that a soft contact lens is a Class II medical device if it is intended

for daily wear.30 Rigid gas permeable contact lenses and soft contact lenses intended for

extended wear are Class III medical devices.31 The Food, Drug & Cosmetics Act gives the FDA

the authority to promulgate regulations to require that such a device be restricted to sale,

distribution, or use only upon the written or oral authorization of a licensed practitioner.32 There
as the Secretary may prescribe in such regulation.”).

33 The FDA regulations for Ophthalmic Devices appear at 21 C.F.R. §§ 886.1 -

886.5928. None of these regulations specifies that contact lenses be restricted to sale,

distribution, or use only upon the written or oral authorization of a practitioner licensed by law to

administer or use such a device. However, the Fairness to Contact Lens Consumers Act states

“A seller may sell contact lenses only in accordance with a contact lens prescription for the

patient that is (1) presented by the patient or prescriber directly or by facsimile; or (2) verified by

direct communication.” 15 U.S.C.A. § 7603(a).

34 A device is considered misbranded if its labeling does not contain “adequate

directions for use” and “adequate warnings against use in those pathological conditions or by

children where its use may be dangerous to health, or against unsafe dosage or methods or

duration of administration or application, in such manner and form, as are necessary for the

protection of users . . . .” 21 U.S.C. § 352(f).

35 See, e.g., Summary of views of Gerald M. Ostrov, Company Group Chairman.

Johnson & Johnson Vision Care, Inc. (“Every letter of FDA approval that Johnson & Johnson

has received for its lenses recites that contact lenses are prescription devices and warns that, if

lenses are sold in a manner inconsistent with the conditions under which they [have] been

approved, the FDA may withdraw its approval.”)

36 A general regulation for all prescription devices states that a device which “is not

safe except under the supervision of a practitioner licensed by law to direct the use of such

device, and hence for which ‘adequate directions for use’ cannot be prepared,” will be exempt

from the statutory labeling requirements if the device is “sold only to or on the prescription or

other order of such practitioner.” 21 C.F.R. § 801.109(a)(2).

10

is no such blanket regulation specifically requiring a prescription for contact lenses.33

Instead, the FDA indirectly controls whether contact lenses are sold pursuant to a

prescription through its regulation of labeling for individual devices. The FDA has strict

labeling requirements, and it deems a device misbranded if its labeling does not contain, among

other things, adequate directions for use.34 When the FDA approves a device for sale by

prescription,35 however, the device is exempt from the requirement that its label contain adequate

directions for use. 36 The FDA treats devices, including contact lenses, sold without a

prescription and without adequate directions for use on the label as “misbranded” in violation of

the Food, Drug & Cosmetics Act.

Prescriptions for eyeglasses and prescriptions for contact lenses differ in several respects. 

In addition to the information about the degree of vision correction that is present in both types

of prescriptions, contact lens prescriptions include information regarding the fit of the lens on the

surface of the eye, which is determined by the base curve (shape) and diameter of the lens. Also,

unlike the case for eyeglass prescriptions, eye care practitioners generally denote the brand name
37 Comments of James F. Saviola, O.D., Captain, U.S. Public Health Service, Chief,

Vitreoretinal and Extraocular Implants Branch, Division of Ophthalmic and ENT Devices,

Office of Device Evaluation, Center for Devices and Radiological Health, Food and Drug

Administration.

38 For example, each contact lens approved for marketing by the FDA has a generic

name identifying the plastic polymer used to make it. The generic materials have different

physical and optical characteristics, with the key differences being water content and oxygen

permeability. Lens design elements are not considered in establishing a generic name and

manufacturers may use the same generic material but different lens design. These differences in

lens design may result in different amounts of oxygen being provided to the cornea from lenses

created by different manufacturers using the same generic material. Comments of James F.

Saviola, O.D., FDA.

39 Id.

40 See, e.g., Supplemental Report of Gerald E. Lowther, O.D., Ph.D., on behalf of

The American Optometric Association, et al., filed in In re: Disposable Contact Lens Antitrust

Litigation, at 9 (“A contact lens prescription cannot be determined until a patient has worn a

diagnostic lens for some time, usually days or weeks.” This is because the fit may change based

on various wearing factors. “Only after this time and process can a patient be given a contact

lens prescription.”)

41 See, e.g., Summary of Views of Gerald M. Ostrov, Company Group Chairman,

Johnson & Johnson Vision Care, Inc. (relating case of woman who sustained severe eye injury

after purchasing and wearing lenses not prescribed for her); Summary of position of the National

Association of Optometrists and Opticians (“Many NAOO customers have attempted to buy

11

of the contact lens in the prescription.37 Due to differences in manufacturing methods, lenses

with the same base curve and diameter made by different manufacturers may suit a patient’s eyes

differently.38 Lens fit affects corneal tolerance and patient comfort, and thus substituting one

manufacturers’s lens for another manufacturer’s lens even of the same generic material may

result in a different fit to the patient’s eyes and in a difference in oxygen transferability to the

cornea.39

Consumers are generally unlikely to try to “self-prescribe” vision-correcting contact

lenses. Unless he or she is willing to bear the expense of purchasing and trying on numerous

brands, types, and powers of contact lenses, it is difficult for a consumer to find out what to

order in the absence of an eye care practitioner’s assistance, especially because an eyeglass

prescription does not supply all the information necessary to choose suitable contact lenses. It is

thus reasonable to assume that a large majority of contact lens wearers have received a

prescription for those lenses at some time.40 Panelists did note, however, that some people do

use or purchase lenses based on someone else’s prescription or before their doctor has completed

the fitting process.41 Also, in a recent development, manufacturers have begun to offer cosmetic
lenses over the internet when they had never been fitted for lenses, or tried to purchase a lens

different from the one prescribed by their doctor.”)

42 Testimony of J. Pat Cummings, Jr., O.D. Tr. at 323.

43 Moreover, under the Preliminary Settlement Agreement, In re: Disposable

Contact Lens Antitrust Litigation, (filed Apr. 23, 2001, approved Nov. 1, 2001) at 1, the

American Optometric Association explicitly agreed that it: 

shall not represent directly or indirectly that the incidence or likelihood of eye health

problems arising from the use of replacement disposable contact lenses is affected by or

causally related to the channel of trade from which the buyer obtains such lenses. 

Specifically, AOA shall not represent directly or indirectly that increased eye health risk

is inherent in the distribution of replacement disposable contact lenses by mail order or

pharmacy or drug stores.

44 “Occupational Licensing and the Internet: Issues for Policy Makers,” statement

of Morris Kleiner, University of Minnesota and the National Bureau of Economic Research.

12

plano contact lenses, which do not correct vision but merely alter the appearance of the eye for

cosmetic purposes. This development may affect the number of consumers who might attempt

to buy lenses without a prescription. 

It is important to note that the medical purpose of the prescription requirement (aside

from describing the proper lenses) is to induce the customer to have regular eye exams – not to

control where the customer may purchase replacement lenses with a valid prescription.42 The

workshop, the Commission’s Rule review, the multidistrict litigation, and the Commission

staff’s own consultations with industry experts have revealed no systematic evidence that sales

through alternative channels, such as Internet or mail order, pose any additional health risk as

long as the retailer sells in accordance with a valid prescription.43

B. Cost and convenience benefits from online contact lens sales

Professor Morris Kleiner testified that the economic advantages of the Internet are well

documented. It gives consumers the ability to gather more easily information on prices, quality,

and availability, and this reduction in search costs leads to more efficient transactions and

reduced transaction costs.44 

Non-traditional contact lens sellers, such as Internet and mail order providers, represent a

unique alternative distribution channel and offer some consumers a combination of price and

convenience that they value highly. While data on price differences between non-traditional

sellers and bricks-and-mortar sellers of replacement lenses are sparse, a nationwide survey

commissioned by the state attorneys general as part of the Florida multidistrict litigation revealed

that, in 1998, the average price of a six-lens multipack purchased via mail order was $19.90,
45 It is not clear whether the mail-order price includes shipping and handling. 

Survey takers were instructed to tell respondents to omit shipping and handling charges only if

the respondent asked about the issue. In addition, some mail-order and Internet firms offer free

shipping and handling.

46 Susan Russell, Nationwide Survey of Contact Lens Wearers, SRI Consulting

(1999).

47 Testimony of Gerald Ostrov, Tr. at 332 (“We [J&J] also believe that the primary

role of Internet in this category is convenience, not price.”)

48 Research indicates that individuals tend to assign a significant value to their

transit time. The estimated value of transit time saved varies with the choice presented, trip

purpose, income, and trip distance. See, e.g., Small, Winston, and Yan, Uncovering the

Distribution of Motorists’ Preferences, at 3 UC Irvine Working Paper (2002); Calfee & Winston,

The Value of Automobile Travel Time: Implications for Congestion Policy, 69 J. PUB. ECON. 83,

84 (1998). One review of many studies that focused on the value of travel time saved for

business commutes concludes that “a reasonable average value of time for a journey to work is

50 percent of the gross wage rate,” while recognizing that it varies among different industrialized

cities from perhaps 20 to 100 percent of the gross wage rate, and among population subgroups by

even more. Kenneth Small, URBAN TRANSP. ECON. 44 (1992). To the extent that shopping may

take place during leisure time, the value of time saved during a business commute may overstate

or understate the value of time savings from online purchases. For example, a recent empirical

study of commuters in Sydney, Australia, finds the value of transit time savings for leisure

13

compared to an average of $23.76 for lenses purchased from ophthalmologists, optometrists, and

optical chains – a 19 percent difference.45 The survey data also suggested, however, that

consumers who purchase their lenses from traditional suppliers could achieve equivalent savings

at a mass merchant discounter, such as Wal-Mart, Costco, or BJ’s; the average price at such

retailers was $19.98.46

This survey data indicates that consumers can often achieve significant savings by

purchasing replacement lenses from sellers other than their eye care providers, especially

consumers who use independent eye care providers who are not associated with commercial

chains and mass merchandisers. While the survey also indicates that there is not a significant

difference in price between mass merchandisers and Internet lens sellers, online sales may have a

significant convenience advantage for some consumers.47 To enjoy the price savings at a mass

merchandiser, a consumer has to make a trip to the store and often wait in a line. Multiple trips

may be necessary if the store does not have the particular lenses in stock and must order them. 

Consumers who opt for an Internet seller, on the other hand, can have replacement lenses

delivered simply by visiting a web site. The convenience of shopping online for replacement

contact lenses could be substantial for consumers who attach high value to their time, must make

a special trip to the store just to obtain replacement lenses, or live in areas distant from mass

merchandisers.48
(including shopping) to range between 26 and 42 percent of the average wage, which falls within

the range of estimates of business commute time values. David A. Hensher, Uncovering the

Distribution of Motorists’ Preferences, in THE FULL COSTS AND BENEFITS OF TRANSPORTATION

(Green, Jones, and Delucchi eds. 1997). In addition, it appears that value of time varies directly,

but not proportionally, with income. See Small, at 43. For instance, Calfee and Winston find the

value of time saved more than doubles when comparing people with incomes of $7,500-$12,000

with those who earn $125,000-$175,000. See Calfee and Winston, at 93.

49 See FDA Center for Devices and Radiological Health, Buying Contact Lenses on

the Internet, by Phone, or by Mail: Questions and Answers, supra note 26..

50 Id. (“Some Internet sites will allow you to fill out a chart with the ordering

information about your contact lenses and ask you to fill in your doctor’s name and phone

number. The site may or may not ask for an actual copy of your prescription, but they should

comply with applicable State law concerning contact lens prescription verification.”)

51 See 21 U.S.C. §§ 353(b)(1), 331(a) and 333.

52 See, e.g., Buying Contact Lenses on the Internet, by Phone or by Mail: Questions

and Answers, supra note 26. The Fairness to Contact Lens Consumers Act requires that, after

completion of a contact lens fitting, the prescriber provide a patient with a contact lens

prescription, and it lists certain information that must be included in a contact lens prescription. 

15 U.S.C.A. §§ 7601, 7610. 

14

C. Consumer protection for online sales

As discussed previously, adherence to the prescription requirement is the most important

consumer protection concern in connection with online contact lens sales. According to an FDA

guide for consumers regarding the purchase of contact lenses over the Internet, however, a lens

seller does not have to receive a written prescription to comply with the federal prescription

device regulation.49 The FDA guide suggests that if the company checks with the eye care

provider in accordance with applicable state laws, the company has satisfied the prescription

requirement.50 Thus, the ability to check with the doctor orally or electronically satisfies the

federal requirement that lenses be sold pursuant to a prescription to avoid being mislabeled. 

Allowing a seller to provide lenses without possessing a written prescription is also plainly

contemplated by the Fairness to Contact Lens Consumers Act, which provides detailed methods

for verifying prescriptions – including by telephone, facsimile, or email – if the seller does not

have a written copy of the prescription.

The FDA has the authority to take action against the dispensing of a prescription device

without a valid prescription.51 State law determines what is included in a valid prescription,52

however, and the FDA generally defers to the states on enforcement concerning the dispensing

of a prescription device without a valid prescription. Its guide for purchasers of contact lenses
53 Id.

54 Letter from Linda Gangloff, Policy Analyst, Executive Secretariat, FDA, to

Thomas W. King, Jr., Executive Secretary, Office of the State Board for Optometry, New York

(Oct. 21, 1998).

55 15 U.S.C. § 45. In addition, Section 12 of the FTC Act prohibits the false

advertisement of “food, drugs, devices, services, or cosmetics.” 15 U.S.C. § 52.

56 The Commission entered a settlement with operators of a group of online

pharmacies that falsely claimed to be a full service clinic with a national network of physicians. 

The settlement prohibited such false claims and required them to disclose the name and location

of the dispensing pharmacies and physicians. International Outsourcing Group, Inc. (File No.

992 3245) (July 12, 2000). The Commission has also brought numerous cases challenging

claims for medical devices. See, e.g., London International Group, Inc., C-3800 (Apr. 7, 1998)

(consent order) (challenging claims that Ramses condoms are 30% stronger than leading brand

and break 30% less often); United States v. Lifestyle Fascination, Inc., No. 97-1487 (CSF)

(D.N.J. Mar. 27, 1997) (stipulated permanent injunction and $60,000 civil penalty) (challenging

representations for pain relief device and other products).

57 15 U.S.C. § 45(n); also see Unfairness Policy Statement, appended to

International Harvester Co., 104 F.T.C. 949, 1070 (1984).

15

over the Internet states that, “[s]ince individual states have different licensing requirements for

optical dispensers, enforcement of prescription device sales has usually been left to State

authorities.”53 However, the FDA is not powerless. In a 1998 letter, the FDA noted that it had

received complaints about sales of contact lenses by mail without a prescription and confirmed

that “FDA is itself investigating alleged violations of Federal law as a basis for possible

action.”54

A variety of other laws and regulations help protect contact lens consumers and ensure

that customers purchasing contact lenses from sources other than eye care practitioners receive

the lenses that are specified in the prescription. The Commission has authority under Section 5

of the FTC Act to bring an enforcement action against a contact lens seller who makes false or

misleading claims about the products or services it provides.55 For example, the Commission has

taken action pursuant to Section 5 against online pharmacies for making deceptive claims.56 The

Commission also has authority under its unfairness jurisdiction to regulate marketing practices

that cause or are likely to cause substantial consumer injury, which is not reasonably avoidable

by consumers and is not outweighed by countervailing benefits to consumers or to competition.57

States also have consumer protection statutes.

V. Policies affecting online contact lens sales

As discussed above, the prescription requirement helps ensure that contact lens wearers
58 See, e.g., Carolyn Cox and Susan Foster, The Costs and Benefits of Occupational

Regulation, Federal Trade Commission (1990); Morris Kleiner and Robert Kudrle, Does

Regulation Affect Economic Outcomes?: The Case of Dentistry, THE JOURNAL OF LAW AND

ECONOMICS, Oct. 2000.

59 “Occupational Licensing and the Internet: Issues for Policy Makers,” statement

of Morris Kleiner, University of Minnesota and the National Bureau of Economic Research. 

16

return to an eye care practitioner for regular eye exams, regardless of where they purchase

replacement lenses. To determine whether additional regulation of online lens sellers would

enhance consumer welfare, it is necessary to consider what additional costs and benefits such

regulation might generate. One possible additional regulation discussed in the workshop is

requiring contact lens sellers to have state professional licenses, such as an optician’s license. 

Panelists also considered possible registration requirements. Panelists discussed contact lens

prescription release requirements and also debated whether requirements for verifying

prescriptions impose different burdens on Internet sellers than on traditional contact lens sellers

and whether health concerns justify such burdens. In addition, they explored the issues

surrounding private label contact lenses.

A. Professional licensing 

1. Effect of licensing on costs

Workshop participants did not provide, and FTC staff does not know of, a study that

directly assesses the impact of optical licensing on costs or prices of contact lenses in general or

replacement lenses in particular. However, the idea that licensing requirements create additional

costs for consumers is hardly novel or unique to replacement contact lenses.58 Occupational

licensing necessarily involves some restriction on the ability of individuals to enter an

occupation, usually through a requirement of government permission and the demonstration of

some minimum degree of competency. The stated motivation for licensing is the desire to

maintain or increase the quality of service the regulated professionals provide. Members of the

occupation often serve as members of the licensing boards. 

Professor Kleiner testified about research on the economic costs and benefits of licensing

on consumers and the impact of licensing on those in the occupation.59 He observed that one of

the benefits of the Internet is that it often makes intermediaries unnecessary because consumers

and suppliers can more easily interact directly. Kleiner noted that provisions in state licensing

laws may restrict such benefits by requiring the participation of an intermediary in the

transaction. He further observed, “These state licensing provisions limit the ability of consumers

to take advantage of the economic benefits of internet transactions. To the extent that other

services such as dentistry, medical devices and pharmacy-related products have similar state

occupational licensing-related restrictions, this may limit the ability of consumers to purchase
60 Id. at 2.

61 Id.

62 See, e.g., Kleiner and Kudrle, supra note 58, at 575; COMMITTEE TO STUDY THE

ROLE OF ALLIED HEALTH PERSONNEL, INSTITUTE OF MEDICINE, ALLIED HEALTH SERVICES:

AVOIDING CRISES 253 (1989) ("It appears that widespread licensure carries with it higher costs

to consumers, reduced access to health care services, and reduced flexibility for managers. 

People in health care careers are inhibited from changing fields and from advancing within their

fields by rigid requirements imposed by state regulatory mechanisms. Although these control

mechanisms are designed and carried out in the stated interest of protecting the health and

welfare of the public, their effectiveness in this regard has been mixed at best.”); Arthur S.

DeVany, et al., The Impact of Input Regulation: The Case of the U.S. Dental Industry, THE

JOURNAL OF LAW AND ECONOMICS, Oct. 1982 (finding that state legal restrictions on the use of

paradentals decreased use of paradentals and raised dental fees for consumers). 

For example, several states have considered measures that would require borrowers to

hire attorneys to represent them in real estate loan closings, even in situations such as

refinancings that involve little legal work on behalf of the borrower. Evidence submitted in

these proceedings indicated that such requirements would increase prices to some borrowers by

between $150 and $400. See Letter from Charles A. James and Timothy J. Muris to the Ethics

Committee of the North Carolina Bar Re North Carolina State Bar Opinions Restricting

Involvement of Non-Attorneys in Real Estate Closings and Refinancing Transactions (Dec. 14,

2001) <http://www.ftc.gov/be/V020006.htm>; Letter from Joel I. Klein and William J. Baer to

the Supreme Court of Virginia Re Proposed UPL Opinion #183 (Jan. 3, 1997)

<http://www.ftc.gov/be/v960015a.htm>. 

63 Cox and Foster, supra note 58, at 31; Kleiner and Kudrle, supra note 58, at 547-

82.

64 Cox and Foster, supra note 58, at 31. But compare a more recent study by Philip

Parker (‘Sweet Lemons:’ Illusory Quality, Self-Deceivers, Advertising, and Price, JOURNAL OF

MARKETING RESEARCH, Vol.32, Aug. 1995, at 291-307), suggesting that the results of some of

17

products which have the lowest cost relative to quality.”60 

By restricting the supply of professionals into an occupation, licensing tends to raise their

wages,61 which in turn can lead to higher output prices. Licensing and various business practice

restrictions can also lead to higher prices by limiting the availability of lower cost suppliers to

consumers.62 Studies of the price effects of licensing are limited to industries for which a welldefined product can be identified. Studies of licensing in dentistry, perhaps the most analyzed of

the professions, find price increases of from 4 percent to 15 percent.63 Studies of the eye care

market report price increases from 5 percent to 33 percent that are attributable to a variety of

advertising and commercial practice restrictions.64
the earlier studies of the eye care market may be sensitive to alternative model specifications.

There is a larger range of studies assessing the effects of licensing restrictions on wage

rates, although the results tend to be mixed. Using a sophisticated test for the stringency of

licensing restrictions, Steven Tenn finds that licensing is an effective barrier to entry into the

legal profession and that it tends to increase the wages of lawyers appreciably. See Steven Tenn,

Three Essays on the Relationship Between Migration and Occupational Licensing (2001)

(unpublished Ph.D. dissertation, Univ. of Chicago).

65 See, e.g., Morris Kleiner, Occupational Licensing, JOURNAL OF ECONOMIC

PERSPECTIVES, Vol. 14, No. 4, Autumn 2000, at 198. Economic theory also cautions that

increased quality does not always benefit consumers. Higher quality by licensed professionals

may not be worth the extra cost to certain individuals, who would prefer lower quality for a

lower price.

66 See Sidney L. Carroll and Robert J. Gaston, Occupational Licensing and the

Quality of Service, LAW AND HUMAN BEHAVIOR, Vol. 7. Nos. 2/3 at p.145 (1983) (“The

evidence available indicates that licensing tends to enhance the capabilities of the licensed

professionals, resulting in better delivered quality. Often, however, this is not reflected in better

quality received in the society as a whole.”)

67 Of the 11 studies surveyed by Cox and Foster, supra note 58, at 26-27, only two

reported a positive association between the strength of restrictions on practitioners and quality. 

More recent studies are no more supportive of the purported tendency of licensing to improve

service quality. In a study of dental licensing, Kleiner and Kudrle, supra note 58, found that

more stringent licensing did not result in improved dental outcomes among a sample of 464 new

Air Force recruits. Similarly, Gary Colbert and Dennis Murray, (State Accountancy Regulations,

Audit Firm Size, and Auditor Quality: An Empirical Investigation, 16(3) JOURNAL OF

REGULATORY ECONOMICS, Nov. 1999, at 267-85) found no association between audit quality

and variations in the strictness of state accountancy regulations. Defining quality can be very

difficult, and typically it is studied for those outcomes where empirical definitions are feasible. 

There thus remains a large number of situations that have not been investigated.

18

2. Effect of licensing on quality

The effect of licensing on service quality is ambiguous as an a priori matter.65 A license

requirement may limit the market to providers who are initially more qualified but the reduced

competition faced by these providers may allow them to offer less innovative service without

losing their customers to new, more up-to-date entrants. Moreover, while the restriction of

supply from licensing typically leads to a higher average competence level for the professionals

allowed to practice, the higher price for their services can lead to less utilization by consumers. 

Thus, while outcomes for an individual consumer who can still afford the service may be

improved, beneficial outcomes for consumers overall may be lower.66 This indeterminancy is

reflected in the empirical research, where no clear link between licensing and service quality has

been demonstrated.67
68 See Report of Douglas F. Greer on Behalf of the Thirty-One Plaintiff States, filed

in In re: Disposable Contact Lens Antitrust Litigation, at 134-35 (citing studies).

69 Id. at 135-36.

70 Tr. at 359. (“I would support the concept that the more frequent the replacement

of the lenses or whatever the replacement schedule is, if it’s adhered to, that that is going to be in

the patient’s best interest.” Testimony of Dr. Pat J. Cummings, Jr., O.D.)

71 Tr. at 359-61.

72 Comment from NAOO (#119), at 3-4, 12.

73 McKinsey & Company, Consumer Fact Pack, filed in In re: Disposable Contact

Lens Antitrust Litigation, at 92. See also BAUSCH & LOMB, 2001 ANNUAL REPORT TO VISION

CARE PROFESSIONALS: TRENDS IN CONTACT LENSES & LENS CARE 14, available at

<http://www.optistock.com/trends_contact_lenses_2001_dec.pdf> (“Among consumers

prescribed lenses that are to be replaced monthly or more often, about a third do not do so.

Conversely, many more consumers replace their lenses at intervals longer than one month when

eyecare professionals have prescribed otherwise.”) 

74 Id. at 97.

19

 While the restriction of supply from professional licensing may lead to a higher average

competence level for providers, the resulting higher prices or greater inconvenience can impair

health by reducing consumer utilization. For contact lenses, higher prices or less convenient

purchase options may influence how often consumers replace their contact lenses. Disposable

lenses, especially when worn properly, are generally healthier than conventional daily wear

lenses.68 Doctors have reported that frequent replacement of lenses has yielded a significant

decrease in eye infections and inflammation among their patients who wear disposables.69 The

AOA also confirmed that frequent replacement is in the patient’s best interest.70 To the extent

that it raises costs for Internet sellers of replacement lenses that are passed along to consumers

through higher prices or reduced convenience, licensing may actually increase the incidence of

health problems associated with contact lens use. Several panelists confirmed that consumers, if

they found it inconvenient or expensive to obtain replacement lenses, might wear their lenses for

a longer period than recommended by their eye care providers.71 Some commenters in the FTC

Rule review also noted that fostering competition in contact lens sales can be expected to

increase the quality of care rather than decrease it.72

Specifically, many consumers who wear disposable lenses over-wear their lenses, thus

diminishing the health benefits of such lenses. One survey revealed that fewer than 50 percent

of consumers comply with the recommended wearing schedule.73 Fifty-seven percent of

consumers stated they would replace their lenses more frequently if the lenses cost less,74 and 30

percent specifically identified cost savings as the reason they over-wear their lenses, stating they
75 Id.

76 Id. 

77 Statement of Jonathan Coon, Tr. at 359 (“[O]ur data supports the Attorneys

General position which is the industry average is about 28 lenses per year. Our average

customer consumes about 40 lenses per year of the average disposable contact lenses.”) The

general recommendation for disposable lenses is that patients replace them every two weeks. 

Thus, a typical consumer who follows this recommended replacement schedule would use 52

lenses per year (26 lenses per eye).

78 See Declaration of Douglas F. Greer on Behalf of the Thirty-One Plaintiff States,

filed in In re: Disposable Contact Lens Antitrust Litigation, at 36 (“Some wearers of

conventional contact lenses and eye glasses would also respond to the lower prices by switching

over to these disposable and frequent replacement lenses.”) 

79 See, e.g., Conn. Gen. Stat. § 20-150 (2003), Conn. Gen. Stat. § 20-151.

20

“try to save money by wearing [their] contact lenses for more days than [their] doctor

recommends before disposing of them.”75 Twenty-two percent said they do not replace their

lenses as often as they should because “purchasing them is inconvenient.”76 An Internet provider

of replacement lenses testified that its sales data supports the position that consumers who find it

more convenient or less expensive to obtain replacement lenses might be less likely to wear their

lenses for a substantially longer period than that recommended by their eye care providers.77 Not

only will many disposable lens wearers over-wear their lenses in order to save money, but

studies also suggest that more consumers would opt to switch from conventional lenses to the

healthier disposable lenses if disposables cost less.78

Increasing the cost and inconvenience of obtaining disposable replacement lenses may

induce more individuals to over-wear their replacement lenses; decreasing the cost and

inconvenience may induce more individuals to comply with eye doctors’ instructions. Imposing

licensing requirements on stand-alone sellers of replacement lenses thus has the potential to

increase health risks for consumers by raising the cost or inconvenience of purchasing

replacement lenses. 

3. Forms of licensing and licensing alternatives

Some licensing regimes are more onerous than others. For example, if a state requires

that replacement lenses be sold through a licensed optical establishment, the establishment has to

have a license, which may cost several hundred dollars a year, and may also have to be under the

direct supervision of a licensed optician.79 Obtaining a license as an optician involves a
80 For example, in Connecticut a candidate for an optician’s license must have four

years of approved apprenticeship or an Associate’s degree in ophthalmic dispensing from an

approved school and have passed the American Board of Opticianry’s National Opticianry

Competency examination, the National Contact Lens Examination, and the Connecticut Practical

Examination. See Conn. Gen. Stat. § 20-146. See also Connecticut Department of Health,

Detailed Information for Optician Licensure, available at <http://www.ctclic.com/detail.asp?code=1746.> Section 20-146 of the Connecticut statute also permits an

optician licensed in another state to be eligible for a license in Connecticut without examination

if the other state has licensing requirements similar to or higher than those of Connecticut. 

81 There is a question whether the Fairness to Contact Lens Consumers Act

preempts some state laws regulating the sale of contact lenses. A federal enactment may

preempt state law either through (1) express statutory preemption; (2) implied preemption where

the intent of the federal law is to occupy the field exclusively ("field preemption"); or (3) implied

preemption where state and federal law actually conflict ("conflict preemption"). See Lorillard

Tobacco Co. v. Reilly, 533 U.S. 525, 121 S. Ct. 2404, 2414 (2001); Crosby v. National Foreign

Trade Council, 530 U.S. 363, 372-73 (2000); English v. General Elec. Co., 496 U.S. 72, 78-79

(1990). Determining whether the Act preempts a particular state law is beyond the scope of this

report. 

82 GA. CODE ANN. § 31-12-12(h) (2003) (“No person, other than persons licensed

and regulated by Chapter 29, 30, or 34 of Title 43 [regulating optometrists, ophthalmologists,

and opticians], shall sell, dispense, or serve as a conduit for the sale or dispensing of contact

lenses to the ultimate user of such contact lenses in this state through the mail or any other means

other than direct, in-person delivery to such ultimate user by such person after having personally

ascertained by reliable means the identity of the deliveree.”)

83 CAL. BUS. & PROF. CODE § 2546.5 (2004).

21

substantial amount of education and training.80 If licensing regulations such as these are applied

to Internet sellers of replacement lenses, such sellers must pay for a permit and arrange for a

licensed optician to supervise their operations. The need to employ an optician would likely be a

costly proposition for an Internet seller of replacement lenses. Because such firms do not sell

eyeglasses or conduct contact lens fittings, they may not already have an optician on staff. Some

states apply even more burdensome requirements.81 For example, Georgia specifies only an

optometrist, ophthalmologist, or optician in a face-to-face transaction can sell contact lenses.82 

Some states impose a registration requirement on Internet contact lens sellers rather than

a license requirement. For example, California requires a non-resident contact lens seller to be

authorized in its home state, to maintain records of lenses sold into California, and to provide a

toll-free number where patients can ask questions or make complaints and a toll-free number or

e-mail address where eye care practitioners can confirm their prescriptions.83 

Not all registration requirements completely supplant professional license requirements,
84 See Ariz. Rev. Stat. Ann. § 32-1773 (2004) (a nonresident dispenser may register

with the board of optometry to dispense replacement soft contact lenses; registered dispensers

shall maintain a valid pharmacy license in their state of domicile); N.H. RSA 327:31 (No person

shall operate a business outside the state for the retail sale of contact lenses into the state unless

the business has a permit issued by the board of pharmacy, if the business is a pharmacy, or by

the board of registration in optometry, if the business is not a pharmacy).

85 In comments submitted to the workshop, AOA stated that sales of contact lens

without a valid prescription were frequent, and NAOO stated that it was difficult for state boards

to reach out-of-state sellers who sold without a prescription. See Summary of Testimony of J.

Pat Cummings, Jr., O.D., President, AOA ; Summary of the Position of the NAOO.

86 Also, some states have pursued direct enforcement of their prescription

requirements. For example, the Texas Optometry Board brought suit against a Florida mail order

contact lens seller for violating the Texas statute requiring an unlicensed seller to obtain a

complete physical copy of the patient's prescription before providing the lenses to the patient.

The parties ultimately settled, with the seller agreeing to refrain from selling lenses without a

proper prescription. See Lens Express, Inc. v. Ewald, 907 S.W.2d 64 (Ct. App. Tx. 1995)

(describing history of proceedings).

87 Section IV C supra.

22

however. Some states make out-of-state contact lens sellers register with state boards and, as a

condition of the registration, require the seller to have a professional license – such as a

optometry or pharmacy license – in the seller’s home state.84 While this is less burdensome than

requiring the seller to have a professional license from every state into which it sells, it still

requires a substantial investment in professional licensing that may not otherwise be relevant to

the seller’s activities in supplying prepackaged replacement lenses. 

4. Benefits and costs of licensing

One potential benefit of licensing out-of-state sellers is that the license may give a state

additional leverage to protect consumers.85 If an out-of-state seller fails to comply with

prescription requirements or sends consumers the wrong lenses, then the State could prompt

compliance by threatening to revoke the seller’s license. If the seller still refuses to comply, the

State could then revoke the license, thus protecting consumers from the health risks that seller

poses. The Fairness to Contact Lens Consumers Act, which provides for federal enforcement of

its requirement that contact lenses be sold pursuant to a prescription, obviates much of this

concern about the difficulty of reaching out-of-state sellers.86

As discussed earlier,87 however, existing regulatory requirements already address the

primary health concerns at issue and, if enforced, ensure that appropriate safeguards will be

maintained to protect consumers’ health when purchasing replacement contact lenses online. 

The key question is whether there are benefits to consumers from additional, more restrictive
88 See, e.g., Conn. Gen. Stat. § 20-127(3) (defining the practice of optometry to

include the examination of the human eye and eyelid for the purpose of diagnosis).

23

regulations, such as licensing, that would outweigh the additional consumer costs. As noted

above, online sellers of replacement lenses simply provide customers contact lenses that come

from the manufacturer in sealed boxes labeled with the relevant specifications. Concerns about

quality of care related to follow-up examinations can be addressed by enforcing contact lens

prescription requirements, rather than by inhibiting sales by online providers. Requiring

customers to return to an eye care professional to purchase replacement lenses does not reduce

the individual’s incentive or ability to wear lenses for too long and may even exacerbate them by

increasing costs or inconvenience. Moreover, in the case of requiring an optometry license, state

laws generally do not allow opticians to examine eyes or treat eye problems, so forcing

consumers to purchase replacement lenses from an optician does not advance the health goal of

more frequent eye exams.88 Accordingly, it is doubtful that requiring an optician’s license to sell

replacement lenses is necessary to protect consumers. 

If additional safeguards are desirable, there are safeguards that are less restrictive than

professional licensing, such as a registration requirement. A registration system like

California’s, unlike licensing, would not require that individuals or firms that want to sell

replacement lenses fulfill expensive and unnecessary training requirements to do so. Rather,

replacement lens sellers would merely file their names and other required contact information

with the state. The state would thereby know who is selling replacement lenses into the state and

would have sufficient information in the event that a particular seller engages in practices that

create health risks for consumers. 

Registration that requires professional licensing in the seller’s home state is a hybrid

approach that imposes a lesser burden on Internet sellers than requiring a professional license

from the state into which sales are made. Nevertheless, requiring any professional license for an

Internet contact lens sellers seems unlikely to diminish any of the genuine health risks associated

with contact lenses and is not necessary to ensure sellers follow prescriptions. 

In sum, professional licensing for replacement lens sellers can increase the quality of care

for consumers. Because it will almost certainly impose additional costs on Internet sellers of

replacement lenses, however, it also can induce Internet sellers to charge higher prices or exit the

market entirely, harming consumers. Moreover, the increase in price or reduction in

convenience may lead some consumers to over-wear their lenses or forego replacement lenses

altogether, reducing health benefits for consumers overall. Less burdensome regimes, such as

simple registration requirements, are likely to provide consumer protections at a much lower

cost. 

B. Prescription release and verification requirements

1. Prescription release 
89 15 U.S.C.A. § 7601(a).

90 E.g., 22 Tex. Adm. Code § 181.3 (“each physician who performs an eye

examination and fits a patient for contact lenses shall, on request, prepare and give a contact lens

prescription to the patient;”) Conn. Gen. Stat. § 20-7c (requiring practitioners to release to a

patient or his authorized representative a copy of the patient’s health record, including “contact

lens specifications.”)

91 Tr. at 383.

92 Tr. at 324.

93 Tr. at 334-35.

94 Tr. at 342-43.

95 Tr. at 352, 369-70.

24

The FTC’s Eyeglass Rule does not cover contact lens prescriptions. Instead, the Fairness

to Contact Lens Consumers Act, which was enacted after the workshop, requires that upon the

completion of a contact lens fitting a prescriber “(1) whether or not requested by the patient,

shall provide to the patient a copy of the contact lens prescription; and (2) shall, as directed by

any person designated to act on behalf of the patient, provide or verify the contact lens

prescription by electronic or other means.”89 In addition, many states have similar

requirements.90 

The panelists seemed to agree about the desirability of prescription release. For example,

the AOA testified, “The patient is entitled to choice. They are entitled to have that prescription,

to purchase their replacement contact lenses where they choose . . . not just the private

practitioner, but the big box retailers, mass merchandisers, the Internet and mail order.”91 The

real point of disagreement among the panelists was whether consumers generally have had

difficulty in obtaining a copy of their contact lens prescriptions. The AOA testified that “[s]ales

figures for online sellers and studies on the release of contact lens prescriptions suggest the

answer is no.”92 Similarly, the contact lens manufacturer stated that in the experience of his

company’s customers, prescription release has not been a problem,93 and the NAOO testified that

while prescription release was a pressing issue a few years ago, it is no longer an issue today.94 

By contrast, the online contact lens seller testified that before the state law was recently changed

to require prescription release, the “most common complaint in California was refusal to release

a contact lens prescription,” and he provided numerous signed complaints from Texas consumers

to the state optometry board regarding their eye care practitioners’ refusal to release their lens

prescription, despite a state law requiring release.95 

Enactment of a federal prescription release requirement will help reduce any existing
96 Testimony of J. Pat Cummings, O.D., Tr. at 324 (“AOA believes there’s a simple

answer: a Federal legislative requirement that providers must release and verify prescriptions and

that sellers must obtain positive [i.e., active] verification of the prescription before lenses are

shipped to patients, with appropriate penalties for both for non-compliance.”); testimony of

Jonathan Coon, Tr. at 385 (“At the very least, contact lens wearers deserve a Federal right to

their contact lens prescription like they’ve had for eyeglasses for over 20 years. In addition to

that, we don’t think that the competitors should be allowed to veto the consumer’s choice to

purchase from somewhere else by simply ignoring the request for a prescription.”).

97 CAL. BUS. & PROF. CODE § 2546.6(a), “A prescription shall be deemed confirmed

upon the occurrence of one of the following: 1) The prescriber or the prescriber’s agent confirms

the prescription by communication with the seller. 2) The prescriber fails to communicate with

the seller by 2 p.m. of the next business day after the seller requests confirmation, or the

prescriber fails to communicate with the seller by the next business day on or before the same

time of day that the seller requested confirmation, whichever is sooner.”

98 N.M. STAT. ANN. § 61-2-10.5(M) & (N) (2003) (The statute specifies that

verification takes place when “the prescribing licensed optometrist has orally or in writing

verified the valid, unexpired prescription to a seller designated by the patient to act on his

behalf,” and that “[u]nder no circumstances shall a non-response to a verification request be

deemed to authorize, validate or confirm any prescription.”)

99 Texas’ Contact Lens Prescription Act provides that when contacts are dispensed

by a party other than a physician or licensed optician, the party must be, “an employee of a

physician, optometrist, therapeutic optometrist, or pharmacist who performs contact lens

dispensing services only under the direct supervision and control of the physician, optometrist,

therapeutic optometrist, or pharmacist.” Tex Occ. Code Ann § 353.051. See also Tex. Adm.

25

problems with prescription release, and officials should be vigilant for violations.

2. Prescription verification

According to the panelists, another issue – prescription verification – effectively eclipsed

concerns about prescription release. Panelists had differing views on whether a valid

prescription, communicated to the seller by the patient, can be presumed verified if the eye care

practitioner is contacted and given sufficient opportunity to correct any errors, a practice known

as passive verification. Active verification, by contrast, requires the seller to get an affirmative

communication from the eye care practitioner confirming the validity of the prescription. 

Several panelists advocated a federal verification requirement but they differed on whether it

should require active or passive verification.96

Existing state prescription verification regimes vary. For example, California has 

passive verification,97 and New Mexico requires active verification.98 Texas has an even stricter

regime that requires the seller actually to possess the valid prescription either in writing or

electronically and permits telephone verification only in an emergency.99
Code. § 279.2 (The statute provides, at (e)(3), that valid prescriptions are issued by providing a

signed original copy, sending an original signed prescription by facsimile, or “transmitting a

complete prescription . . . by e-mail or other computerized electronic means,” and it also

specifies, at (e)(4), that if the eye care practitioner, “determines that the patient needs an

emergency refill of the contact lens prescription, the prescription may be telephoned to a person

authorized to fill the prescription.”)

100 Tr. at 367-68.

101 Id.

102 Id. at 371-372.

103 Id. at 374-75.

104 Id. at 378.

26

 A leading Internet seller of contact lenses strongly supported passive verification. The

seller testified that 1-800 Contacts, Inc. requires a doctor’s name and telephone number on every

order, uses a database to verify that the number belongs to a doctor’s office, and contacts the

doctor’s office by telephone or facsimile to request confirmation of the prescription.100 If the

doctor gives notice within a reasonable period that the prescription is expired or invalid, the

seller stated it will not fill the order.101 

The NAOO expressed concern that a passive verification system allowed contacts to be

shipped even if the customer lacked a valid prescription.102 A major contact lens manufacturer

asserted that passive verification “opens the door for people who don’t really want to comply to

wink at the system and it will give a competitive advantage to people who want to be efficient . .

. but who don’t think that the consumer health is at risk or don’t care about the consumer health .

. . .”103 The AOA testified that active verification is in the patient’s best interest because some

consumers will attempt to get contact lenses without a prescription or with an expired

prescription.104

The Fairness to Contact Lens Consumers Act, which was enacted after the workshop,

adopted a federal passive verification regime:

(a) PRESCRIPTION REQUIREMENT– A seller may sell contact lenses only in

accordance with a contact lens prescription for the patient that is – 

(1) presented to the seller by the patient or prescriber directly or by facsimile; or

(2) verified by direct communication. . . . 
105 15 U.S.C.A. § 7603.

106 The Act states that if the prescriber fails to communicate with the seller within “8

business hours, or a similar time as defined by the Federal Trade Commission,” of the seller’s

direct communication with the prescriber the prescription is verified. 15 U.S.C.A. § 7603(d)(3) 

The Commission is conducting a rulemaking to define this time period under the Act. See n.8

supra.

107 15 U.S.C.A. § 7603(b).

27

(d) VERIFICATION EVENTS – A prescription is verified under this Act only if one of

the following occurs:

(1) The prescriber confirms the prescription is accurate by direct communication 

with the seller.

(2) The prescriber informs the seller that the prescription is inaccurate and 

provides the accurate prescription.

(3) The prescriber fails to communicate with the seller within 8 business hours, or

a similar time as defined by the Federal Trade Commission, after receiving from 

the seller the information described in subsection (c) [patient information, 

prescription details, and contact information for the lens seller].

(e) INVALID PRESCRIPTION – If a prescriber informs a seller before the deadline

under subsection (d)(3) that the contact lens prescription is inaccurate, expired, or otherwise

invalid, the seller shall not fill the prescription. The prescriber shall specify the basis for the

inaccuracy or invalidity of the prescription. If the prescription communicated by the seller to the

prescriber is inaccurate, the prescriber shall correct it. . . .

(g) DIRECT COMMUNICATION – As used in this section, the term “direct

communication” includes communication by telephone, facsimile, or electronic mail.105

Some panelists argued that active verification for prescriptions is necessary to ensure that

consumers are not harmed by obtaining contact lenses without a valid prescription, and others

countered that strict active verification requirements also have risks for consumers, both in terms

of possible anticompetitive abuses by competitors and possible negative effects on patient

adherence to lens replacement schedules. The Fairness to Contact Lens Consumers Act seeks to

protect consumer choice and promote competition, while also reducing health risks for

consumers, by imposing obligations both on lens sellers and eye care providers. A lens sellers

can only sell contact lenses pursuant to a prescription received directly or verified by direct

communication with a prescriber. When verifying a prescription by direct communication with a

prescriber, the seller must wait 8 business hours after the communication for the prescriber to

respond before selling the lenses.106 In addition, a lens seller must maintain records of all such

direct communications.107 An eye care practitioner who prescribes lenses must release the

contact lens prescription to the patient and, as directed by the patient or any person designated to
108 15 U.S.C.A. § 7601(a).

109 See, e.g., GA. CODE ANN. § 31-12-12(e)(4) & (g) (2003), (requiring that the

contact lens prescription explicitly state a brand name and stating that, “[a]t no time, without the

direction of a prescriber, shall any changes or substitutions be made in the brand or type of

lenses the prescription calls for with the exceptions of tint change if requested by the patient.”) 

But cf. CAL. BUS & PROF. CODE § 2541.2(e) (“When a provider prescribes a private label contact

lens for a patient, the prescription shall include the name of the manufacturer, the trade name of

the private label brand, and, if applicable, the trade name of the equivalent national brand.”)

110 Tr. at 379-381 (“They offer sometimes lower prices, sometimes not lower prices. 

But it’s a competitive aspect of the marketplace. . . . So, as long as we do a good job . . . and

keep ahead of the competition, we’ll do [fine] against private label. If we stop innovating, they

eat into our market share, and that’s the way it is.”)

111 Tr. at 381-82.

28

act on the patient’s behalf, “provide or verify the contact lens prescription by electronic or other

means.”108 To protect consumer choice, promote competition, and reduce health risks for

consumers, enforcement officials should ensure that contact lens sellers and eye care

practitioners comply with contact lens prescription release and verification requirements.

C. Other issues

1. Private label contact lenses

Most contact lens prescriptions, unlike eyeglass prescriptions, specify a particular brand

of lens. Some states require this and prohibit a dispenser from substituting a different brand.109

Some eye care practitioners – including individual practitioners and those associated with chain

optical stores and big box retailers – prescribe private label lenses that are available for purchase

only through that practitioner or associated retailer. Panelists debated whether these private

label lenses promoted or impeded consumer choice. 

 A leading contact lens manufacturer explained that, although it does not manufacture

private label lenses, the practice is a competitive part of the market, which spurs the branded

manufacturers to continue to innovate.110 The NAOO stated that consumers are very aware of

the branded products and that “they can and they do ask about the differences in cost and quality

between the branded product and private label product that they can choose between at the time

of the prescription process . . . in concert with a medical professional who is not entirely

unbiased, but is a necessary intermediary for the health and safety of the process.”111 The

Internet contact lens seller, however, drew a distinction between private labels in consumer
112 Tr. at 383-84 (“There’s a little difference between contact lenses and chocolate

chip cookies in the sense that at least I’m not aware of anyone writing a prescription for

chocolate chip cookies. . . . But once somebody writes a prescription, if they did, for chocolate

chip cookies, it would be a shame if I couldn’t go buy Chips Ahoy or Mrs. Field’s Cookies

somewhere else because I had been prescribed Sam’s Choice of chocolate chip cookies.”)

113 Using Private Label Lenses to Keep Patients in the Practice, supplement to

CONTACT LENS SPECTRUM, Jan. 2002. 

114 Id. (“Now when patients want to order a lens, they like the particular lens that we

provide. It’s a private label, so they can’t get it anywhere else. It makes it a lot easier for them

to come back to us. If they go down to Wal-Mart or Costco or someplace like that and ask, ‘Do

you have this lens?’ Costco or Wal-Mart or 1-800 would say, ‘Yes, we do, but it’s a different

name on the box.’ That creates the problem within the patient’s mind about whether or not it’s

the same lens. . . . I often don’t give the patients a choice. I don’t say this is a private label lens. 

I just say, ‘This is the best lens for you. It’s the one you should be wearing.’”)

115 15 U.S.C.A. § 7603(f).

29

goods in general, which clearly increase consumer choices, and private labels in contact lenses,

where the prescription locks the consumer into purchasing all replacement lenses from that

practitioner.112 The seller also emphasized that a consumer would have to pay for and undergo

another eye exam to get a new prescription for a different brand of lens if the consumer wanted

to purchase lenses from a different supplier. 

Eye care practitioners offer similarly mixed views of private label lenses. In January

2002, Contact Lens Spectrum magazine ran an article in which eye care practitioners discussed

how they use private label lenses.113 Some of the practitioners stated that they use such lenses to

help ensure that patients cannot buy lenses without a valid prescription, which might endanger

their eyes. Other practitioners stressed, however, that they use private label lenses to prevent

patients from buying their replacement lenses from other sellers, specifically Internet sellers.114

The Fairness to Contact Lens Consumers Act addresses the issue of private label lenses. 

Although it prohibits a seller from altering a contact lens prescription, the Act also provides that

“if the same contact lens is manufactured by the same company and sold under multiple labels to

individual providers, the seller may fill the prescription with a contact lens manufactured by that

company under another label”115 Thus, when a seller receives a prescription for a type of lens

made by a single manufacturer but packaged under different names – for example, Dr. Jones

lenses and Big Box lenses – the seller may fill the prescription for Dr. Jones lenses with Big

Box lenses of the same type. This preserves the expanded consumer choice private label lenses

may offer while preventing a prescriber from effectively evading the prescription release

requirement by prescribing a private label lens only he or she sells. 
116 McKinsey & Company, Consumer Fact Pack, filed in In re: Disposable Contact

Lens Antitrust Litigation, at 90.

117 5 U.S.C.A. § 7604(a) & (b). 

30

2. Prescription length

Another way that eye care practitioners may constrain consumer choice is by writing

prescriptions with very short expiration periods, thereby making it difficult for consumers to

purchase replacement disposable lenses at the interval they would typically choose. For

example, a consumer who buys two six-packs of lenses from his practitioner upon completion of

the fitting and follows a recommended replacement schedule of every two weeks, would need to

purchase replacement lenses approximately three months later. If his practitioner wrote a

prescription with a 60-day expiration period, the consumer may have to obtain a new

prescription to purchase replacement lenses, unless he purchases additional lenses before the end

of two months, which is at least a month before he exhausts his initial supply. Some evidence

suggests that most consumers prefer to purchase replacement disposable contact lenses less

frequently, however, with the greatest percentage of consumers purchasing three to four times a

year or less.116 

The workshop panelists did not discuss the practice of writing short prescriptions. The

Fairness to Contact Lens Consumers Act, however, addresses the issue:

(a) In General – A contact lens prescription shall expire – 

(1) on the date specified by the law of the State in which the prescription was 

written, if that date is one year or more after the issue date of the prescription;

(2) not less than one year after the issue date of the prescription if such State law 

specifies no date or a date that is less than one year after the issue date of the 

prescription; or

(3) notwithstanding paragraphs (1) and (2), on the date specified by the

prescriber, if that date is based on the medical judgment of the prescriber with respect

to the ocular health of the patient.

(b) Special rules for prescriptions of less than 1 Year – If a prescription expires in less 

than 1 year, the reasons for the judgment referred to in the subsection (a)(3) shall be 

documented in the patient’s medical record. In no circumstances shall the prescription 

expiration date be less than the period of time recommended by the prescriber for a 

reexamination of the patient that is medically necessary.117 
31

This provision protects consumer choice by ensuring that most consumers can purchase

replacement disposable lenses at convenient intervals throughout the year. It also protects

consumer health by permitting eye care practitioners to issue shorter prescriptions when

medically justified, as long as the justification is documented in the patient’s record. 

VI. Recommendations

Consumer health and consumer choice are closely intertwined in the issues surrounding

Internet contact lens sales. The FTC staff recommends that policymakers and other officials can

advance both of these interests if they:

• Rescind, or refrain from adopting, requirements that an Internet seller have a

professional license to sell replacement contact lenses. If states want to regulate

such sellers beyond prescription requirements and general state and federal

consumer protection laws, they should adopt a simple registration requirement.

• Enforce prescription release requirements and prescription verification

requirements to ensure that both consumers’ health and consumers’ economic

interests are protected, especially given that consumers are more likely to adhere

to recommended replacement schedules if lenses are less expensive and/or more

conveniently available.

• Enforce statutory provisions regarding private label lenses and prescription length

to ensure that contact lens seller and contact lens prescriber practices generally

promote consumer health and welfare and do not hamper consumer choice in a

way that ultimately harms consumers.
APPENDIX A
1 This comment expresses the views of the Bureau of Consumer Protection and the

Office of Policy Planning of the Federal Trade Commission. The comment does not necessarily

represent the views of the Commission or of any individual Commissioner. The Commission

has, however, voted to authorize the Office of Policy Planning and the Bureau of Consumer

Protection to submit this comment.

1

STATE OF CONNECTICUT

DEPARTMENT OF PUBLIC HEALTH

CONNECTICUT BOARD OF EXAMINERS FOR OPTICIANS

IN RE: DECLARATORY RULING )

PROCEEDING ON THE )

INTERPRETATION AND )

APPLICABILITY OF VARIOUS )

STATUTES AND REGULATIONS )

CONCERNING THE SALE OF )

CONTACT LENSES )

March 27, 2002

COMMENTS OF

THE STAFF OF THE FEDERAL TRADE COMMISSION,

INTERVENOR

The staff of the Office of Policy Planning and the Bureau of Consumer Protection of the

Federal Trade Commission (hereinafter, the “FTC”) welcome the opportunity to submit this

comment as an intervenor in the above-captioned proceeding.1

 The Notice of Declaratory Ruling

Proceeding, as published in the CONNECTICUT LAW JOURNAL on November 20, 2001, stated that

the Board of Examiners for Opticians would hold a declaratory ruling proceeding on the

following issues:

 1. Is a contact lens seller located in Connecticut in compliance with state law if it

sells lenses to Connecticut residents without a Connecticut optician license and

optical establishment permit, or an optometric or medical license; 

2. Is a contact lens seller located outside Connecticut in compliance with state law if

it sells lenses to Connecticut residents and does not hold a Connecticut optician

license and optical establishment permit, or an optometric or medical license; and 

3. Is a contact lens seller, whether located in or out of Connecticut, that sells lenses

to a Connecticut consumer without first receiving a prescription from a licensed

physician or optometrist in compliance with Connecticut law? 
2 Replacement contact lenses means contact lenses that are sold to replace the

contact lenses prescribed by the eye care professional after the initial fitting is complete.

2

The staff of the FTC was designated an intervenor in accordance with Conn. Gen. Stat.

' 4-176(d) and Conn. Agencies Regs. ' 19a-9-27 by the Board of Examiners for Opticians on

February 13, 2002. 

The questions posed by the Board raise three issues: (1) the regulation of intrastate

sellers, (2) the regulation of out-of-state sellers, and (3) the adherence of all sellers to

prescription requirements. The questions are phrased in a general manner, apparently covering

sellers of all types of contact lenses. However, we understand that the principal controversies

concern the sale of disposable replacement lenses.2

 In any event, our comments address the

three questions in the context of replacement lenses, the lion’s share of which are sold as

disposable replacement lenses.

Other parties to this proceeding, such as the Connecticut Attorney General, can be

expected to address more fully the proper interpretation of Connecticut law. This comment will

instead focus on the core concern of the Federal Trade Commission, which is how rules adopted

in this proceeding will likely affect consumer welfare. 

Executive Summary

To help ascertain the possible impact of the Board’s decision on consumer welfare, this

submission examines the likely costs and benefits to consumers of any incremental changes in

regulation and barriers to entry that may result from this proceeding. Based on the

Commission’s significant expertise concerning regulation and competition, and considerable

experience with the eye care industry in particular, FTC staff believe that an overly restrictive

interpretation of the Connecticut statutes and regulations is likely to adversely affect consumer

welfare by raising prices for at least some consumers without offsetting benefits in health or

safety. To summarize our analysis:

 

1. Existing federal and state regulations already provide significant protections for

the health and safety of contact lens wearers, even if the Board imposes no new

requirements in this proceeding. 

2. It is likely that mandatory licensing of stand-alone sellers of replacement contact

lenses would both increase prices and reduce convenience for contact lens

consumers and thus adversely affect consumer welfare. The critical inquiry is

whether requiring Connecticut licenses for firms who sell only replacement lenses

will create sufficient new benefits for contact lens wearers to offset these adverse

effects.
3 Federal Trade Commission Act, 15 U.S.C. § 45.

4 See, e.g., Alaska Healthcare Network, Inc., Docket No. C-4007 (Apr. 25, 2001);

Colegio de Cirujanos Dentistas de Puerto Rico, Docket No. C-3953 (June 12, 2000); FTC v.

Superior Court Trial Lawyers Ass’n, 493 U.S. 411 (1990); FTC v. Indiana Federation of

Dentists, 476 U.S. 447 (1986).

5 16 C.F.R. Part 456.

6 Ophthalmic Practice Rules (“Eyeglasses II”), Statement of Basis and Purpose, 54

Fed. Reg. 10,285, 10,286 (Mar. 13, 1989).

3

3. The ways in which prescription requirements are interpreted and enforced may

also have competitive consequences. The staff of the FTC believe that the Board

can maximize consumer welfare by following the most procompetitive approach

consistent with the protection of consumers’ health. In other words, it is desirable

to accomplish regulatory objectives in a way that is least restrictive of innovative

distribution methods.

I. Interest and experience of the FTC

In answering the questions at issue in this proceeding, the Board will no doubt wish to

consider a variety of factors. One significant factor that needs to be taken into account is the

impact of the Board’s decisions on competition and consumer welfare. The FTC’s primary

expertise is in competition and consumer protection policy, and we offer these comments to

assist the Board in assessing how its decisions may affect competition and consumer welfare. 

The FTC’s statutory mission is to protect consumers. The FTC is charged by statute with

enforcing those laws that prohibit unfair methods of competition and unfair or deceptive acts or

practices in or affecting commerce.3

 Pursuant to this statutory mandate, the Commission

encourages competition in the licensed professions to the maximum extent compatible with other

state and federal goals. The Commission has extensive experience assessing the impact of

regulation and business practices on competition in many regulated professions.4

The Commission also has significant expertise concerning competition in the eye care

industry in particular and has been active in this area for nearly three decades. The Commission

enforces the Ophthalmic Practice Rule (“Prescription Release Rule”), originally promulgated in

1978, which requires an optometrist or ophthalmologist to provide a patient, at no extra cost, a

copy of the patient=s eyeglass prescription after completion of an eye exam.5 In another

rulemaking proceeding during the 1980s, the Commission examined other kinds of restraints on

the business practices of eye care professionals and concluded that restrictions on commercial

practices have caused significant injury to consumers, resulting in both monetary losses and less

frequent vision care, without offsetting consumer benefits.6

 Based on the evidence assembled in

that rulemaking proceeding, the Commission adopted a rule that prohibits state-imposed
7 The Court of Appeals ultimately vacated this “Eyeglasses II” rule on the ground

that the Commission lacked the statutory authority to make rules declaring these state statutes

unfair. However, the Commission’s findings that the restrictions harmed consumers were not

disturbed. See California State Bd. of Optometry v. FTC, 910 F.2d 976 (D.C. Cir. 1990).

8 See, e.g., Massachusetts Board of Registration in Optometry, 110 F.T.C. 549

(1988) (challenging Board regulation that unreasonably restricted truthful advertising by

optometrists; final order required Board to allow truthful advertising and to repeal regulation). 

9 16 C.F.R. § 456; see also Ophthalmic Practice Rules, Final Trade Regulation

Rule, 54 Fed. Reg. 10,285, 10,299, 10,303 (Mar. 13, 1989).

10 16 C.F.R. §§ 456.2(b), 456.1(c) .

11 Advertising of Ophthalmic Goods and Services, Statement of Basis and Purpose

and Final Trade Regulation Rule, 43 Fed. Reg. 23,992, 23,998 (June 2, 1978).

4

restrictions on several types of commercial arrangements by eye care professionals.7 The

Commission has also taken action against anticompetitive restrictions on competition in the eye

care industry through administrative litigation.8

The Prescription Release Rule requires an optometrist or ophthalmologist to provide a

patient, at no extra cost, a copy of the patient’s eyeglass prescription immediately after the eye

examination is completed. The Rule also prohibits optometrists and ophthalmologists from

conditioning the availability of an eye examination on a requirement that the patient agree to

purchase ophthalmic goods from the optometrist or ophthalmologist and from placing on the

prescription, or delivering to the patient, certain disclaimers or waivers of liability. The Rule

currently does not require an optometrist or ophthalmologist to release a contact lens prescription

to a patient after an eye exam.9 However, the Rule does state that it is an unfair practice for an

ophthalmologist or optometrist to condition the availability of an eye exam on a requirement that

the patient agree to purchase any ophthalmic goods, including contact lenses, from the

ophthalmologist or optometrist.10 In adopting the original Prescription Release Rule, the

Commission found that many consumers were deterred from comparison shopping for

eyeglasses because eye care practitioners refused to release prescriptions, even when asked to do

so, or charged an additional fee for release of a prescription.11

The Commission is conducting a review of the Prescription Release Rule, as part of its

systematic review of its Rules and Guides to determine their effectiveness and impact. The

Commission requested public comment about the overall costs and benefits of the Rule and

related questions and received comments from numerous parties, including associations

representing various segments of the industry and professions, state attorneys general, state
12 See Request for Public Comments, 62 Fed. Reg. 15,865 (Apr. 3, 1997).

13 1978 Statement of Basis and Purpose, supra note 11, 43 Fed. Reg. at 23,994.

14 Id. at 23,995-96; 1989 Statement of Basis and Purpose, supra note 6, 54 Fed.

Reg. at 10,288.

15 425 U.S. 748 (1976) (holding that the state’s blanket ban on advertising

prescription drug prices violated the First Amendment).

5

optometry boards, and consumers.12 Those comments have contributed further to the

Commission’s expertise regarding the eye care marketplace. 

II. Competition and innovation in eyewear markets have been enhanced by entry of

nontraditional firms

The current proceeding stems from a decades-long evolution of the eyewear marketplace. 

A brief review of that evolution provides a useful context for understanding the larger policy

issues involved.

The principal purpose of the Ophthalmic Practice Rules was to provide consumers a

greater range of choices when buying ophthalmic goods and services. Prior to the Rule,

prohibitions and restrictions on advertising of ophthalmic goods and services were

commonplace; advertising of ophthalmic goods and services by either optometrists or opticians

was prohibited or severely restricted by state or private regulation in every state but one.13

Therefore, there was virtually no price competition and a general lack of consumer knowledge

concerning purchasing eyeglasses and eye exams. Comparison shopping and obtaining

information about goods and services offered in the ophthalmic market was difficult or

impossible.14

In contrast, competition has increased dramatically in the eye care marketplace since the

1970s. In the wake of Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council,

Inc.,

15 and other commercial speech cases, advertising of ophthalmic goods and services is now

common. Chain firms have become a fixture in the optical industry marketplace, and the market

share of “alternative” retail sources of contact lenses, including mail order, pharmacy and mass

merchants (such as Costco and Wal-Mart), grew significantly during the 1990s. Many of these

entities advertise heavily and widely, in publications, direct mail coupon packs, on television,

and on the Internet. 

Many significant innovations in the sale of eyewear came from the entry of nontraditional

players. In some cases, the innovators offer the services of both optometrists and opticians, by

employing or entering various kinds of contractual agreements with both types of professionals. 

In other cases, new entrants have focused on selling eyewear, relying on the customer to first

obtain a prescription from an optometrist or ophthalmologist. Both types of firms typically offer
16 In re: Disposable Contact Lens Antitrust Litigation, No. MDL 1030, (complaints

filed M.D. Fla. 1994). 

6

multiple types of eyewear, including eyeglasses, hard contacts, regular soft contacts, and

disposable contacts.

The most recent step in the evolution of this market, and the one that brings us to the

current controversy, is the development of stand-alone sellers of replacement contact lenses. 

Such firms tend to focus on the sale of replacement lenses. They do not sell eyeglasses. They do

not fabricate lenses or fit them to the eye; they sell only replacement lenses for which the

customer has already been fitted by an eye care professional. Unlike other eyewear sellers, their

business consists simply of shipping to customers lenses that come from the manufacturer in

sealed boxes labeled with the relevant specifications. Many of these businesses are located in a

single state but ship orders to customers nationwide. Some of the largest are located outside the

state of Connecticut.

Disagreements between these firms, their more traditional competitors, and contact lens

manufacturers came to a head in In re: Disposable Contact Lens Antitrust Litigation.

16 In that

multidistrict litigation, the Attorneys General of 31 states and a certified class alleged that eye

care professionals engaged in an organized effort to prevent or hinder consumers from obtaining

their contact lens prescriptions. The complaints alleged two conspiracies: (1) that the

practitioners and their trade associations conspired to prevent the release of contact lens

prescriptions to consumers, and (2) that the manufacturers, practitioners, and trade associations,

including the American Optometric Association, conspired to eliminate sales of contact lenses

by pharmacies, mail order, and other alternative sellers. According to the complaints, the

conspiracy severely restricted the supply of contact lenses available to alternative sellers, which

has hampered the growth of such sellers, decreased the supply of lenses to consumers, and

increased the price of lenses. The parties reached settlements, the last of which the court

approved in November 2001.

As part of the settlement, Johnson & Johnson agreed to sell its lenses to alternative

distribution channels, as long as those firms sell lenses to customers in accordance with a valid

prescription and in compliance with all federal and state laws and regulations. Johnson &

Johnson petitioned the Board for this proceeding in order to clarify Connecticut’s regulations, to

aid Johnson & Johnson in ascertaining whether alternative lens sellers are in compliance with all

Connecticut laws and regulations.

The three questions in this proceeding are phrased in a way that implies that each

question has a single answer that applies to all sellers of contact lenses. However, it is clear

from the historical context that the real issue is how the Connecticut laws and regulations apply

to a particular type of seller: the stand-alone seller of replacement lenses that merely sells lenses

and does not fabricate lenses or fit them to the eye. For this reason, we will focus on the relevant

factors that should be considered in determining how the Connecticut laws and regulation should
17 See, e.g., Supplemental Report of Gerald E. Lowther, O.D., Ph.D., on behalf of

The American Optometric Association, et al., filed in In re: Disposable Contact Lens Antitrust

Litigation, at 9 (“A contact lens prescription cannot be determined until a patient has worn a

diagnostic lens for some time, usually days or weeks.” This is because the fit may change based

on various wearing factors. “Only after this time and process can a patient be given a contact

lens prescription.”) See also Conn. Gen. Stat. § 20-7c(b) (practitioners must release “contact

lens specifications based on examinations and final contact lens fittings” (emphasis added)).

7

apply to firms that sell only replacement lenses. We offer no opinion on how the laws and

regulations should apply to contact lens providers who also sell eyeglasses, fabricate lenses, or

fit them to the eye.

III. There are significant health issues concerning the sale of contact lenses

The sale of contact lenses raises significant health issues that many current federal and

state laws and regulations are intended to address. This proceeding will determine whether some

of Connecticut’s regulations will be applied in a more or less restrictive fashion. 

To ascertain whether a more restrictive interpretation would create incremental consumer

benefits, one must first consider the health issues involved in contact lens sale and use. The

Board will no doubt hear evidence from a number of medical experts in this proceeding. In the

interest of making the record as complete as possible, we offer a brief summary of the pertinent

medical evidence concerning health issues and contact lenses that FTC staff have encountered in

the course of the Commission’s Rule Review and the multidistrict antitrust litigation.

The primary health care concern with contact lenses appears to be ensuring that contact

lens wearers return to their doctors regularly for eye examinations. Disposable contact lenses

prevent oxygen from reaching the cornea, and lack of oxygen can lead to severe eye damage. 

Therefore, it can be important that a patient adhere to the doctor’s recommended wearing

schedule, removing and replacing the lenses when recommended. Some individuals may

develop eye problems even if they follow the doctor’s advice; their eyes may develop problems

simply in response to wearing lenses. Customers incur health risks if they forego regular eye

exams that would allow the optometrist or ophthalmologist to spot emerging health problems in

their early stages.

The primary means by which federal and state regulators ensure that contact lens wearers

undergo periodic eye exams by qualified practitioners is to require sale of contact lenses by

prescription. In contrast to prescription drugs, virtually no consumer is likely to try to “selfprescribe” vision-correcting contact lenses. Unless a consumer is willing to bear the expense of

purchasing and trying on countless brands, types, and powers of contact lenses, it is impossible

for the consumer to find out what to order in the absence of an optometrist’s or

ophthalmologist’s assistance. It is thus reasonable to assume that every contact lens wearer has

received a prescription for those lenses at some time.17 
18 There is anecdotal evidence that some customers who purchase lenses through

these alternative channels developed eye problems. See, e.g., Deposition of George Kenneth

Johnson, O.D., filed in In re: Disposable Contact Lens Antitrust Litigation, at 102-3, 168. These

patients, however, purchased lenses using invalid or incorrect prescriptions. We are aware of no

systematic study demonstrating that lens wearers who purchase replacement lenses through

alternative channels in accordance with a valid prescription show any greater incidence of eye

health problems. 

19 See 47 Fed. Reg. 53,411, 43,415 (1982).

20 See Report of Gerald E. Lowther, O.D., Ph.D., on behalf of The American

Optometric Association, et al., filed in In re: Disposable Contact Lens Antitrust Litigation, at 18-

20.

21 Id.

22 Comment from COA, #112 at 8; Comment from AAO, #97 at 1-2. The

comments from the FTC's Rule review are on file on the Commission's public record as

Document Nos. B21940700001, et seq. The comments are cited herein by the name of the

commenter, a shortened version of the comment number (the last one to three digits), and the

relevant page(s) or attachments of the comment. 

8

For the purposes of this proceeding, it is important to note that the medical purpose of the

prescription requirement (aside from describing the proper lenses) is to induce the customer to

have regular eye exams – not to control where the customer may purchase replacement lenses

with a valid prescription. The Commission’s Rule review, the multidistrict litigation, and

Commission staff’s own consultations with industry experts have revealed no systematic

evidence that sales through alternative channels, such as Internet or mail order, pose any

additional health risk as long as the retailer sells in accordance with a valid prescription.18

The FDA first approved a soft contact lens in 1971.19 Beginning in the late 1980s, lens

manufacturers began to market and sell “disposable” and “frequent replacement” soft lenses,

which are designed to be replaced daily, weekly, or monthly. Most soft lenses are now sold in

multipacks, with disposable lenses typically sold in multipacks of six lenses. When first

developed, soft contact lenses were not manufactured in a way that always accurately reproduced

the same prescription.20 In the past 20 years, however, manufacturers have developed production

methods for soft contact lenses that have eliminated these standardization problems.21 According

to commenters during the Rule review, the soft contact lenses that a patient receives will be

identical regardless of whether the patient gets the lenses from an eye care professional or from a

non-traditional seller. In comments filed in the FTC’s review of the Rule, the American

Academy of Ophthalmology and the California Optometric Association both stated that while

fabrication errors might present a problem with respect to hard contact lenses, soft lenses, such

as disposables, are relatively standard and can be easily reproduced.22 
23 Report of Douglas F. Greer on Behalf of the Thirty-One Plaintiff States, filed in

In re: Disposable Contact Lens Antitrust Litigation, at 59-64.

24 Preliminary Settlement Agreement, In re: Disposable Contact Lens Antitrust

Litigation, (filed Apr. 23, 2001, approved Nov. 1, 2001) at 1. 

25 Report of Douglas F. Greer on Behalf of the Thirty-One Plaintiff States, filed in

In re: Disposable Contact Lens Antitrust Litigation, at 131-34.

9

Due to this difference, medical professionals do not always follow the same fitting and

sales procedures with soft replacement lenses as they do with hard contacts. Several

commenters have noted that medical practitioners do not examine the fit of each replacement

lens on the patient’s eye after the prescription has been finalized through the fitting process. 

In fact, some lens manufacturers provide direct shipment of replacement lenses to

consumers, and some eye care practitioners mail replacement contact lenses to patients without

an office visit during the span of the patient’s prescription.23 Thus, the practice, even among

some traditional eyecare professionals, suggests that replacement lenses can be marketed and

delivered somewhat differently from other lenses, without adverse health effects.

Under the terms of the settlement agreement of the multidistrict litigation, the American

Optometric Association explicitly agreed that it: 

“shall not represent directly or indirectly that the incidence or likelihood of eye health

problems arising from the use of replacement disposable contact lenses is affected by or

causally related to the channel of trade from which the buyer obtains such lenses. 

Specifically, AOA shall not represent directly or indirectly that increased eye health risk

is inherent in the distribution of replacement disposable contact lenses by mail order or

pharmacy or drug stores.”24

Not surprisingly, this aspect of the settlement agreement is precisely consistent with

medical evidence presented in the multidistrict litigation: 

C The Wisconsin Optometric Association in 1988 repeatedly urged members to notify the

association of any health problems that occurred when patients took their prescriptions

and ordered lenses from a source other than the doctor. As of 1998, the association still

had not received any documented reports of such health problems.25

C In 1992, Vistakon (a subsidiary of Johnson & Johnson) tracked complaint calls and

sorted them into various categories. Only three phone calls – 0.8 percent of the total –

involved any type of link between health problems and purchases of lenses from
26 Id.

27 Id. at 138.

28 Contact Lenses: Fitting, Follow-up and Complications, Report of A. Christopher

Snyder, O.D., M.S., for The American Optometric Association, et al., filed in In re: Disposable

Contact Lens Antitrust Litigation, at 48. 

29 21 C.F.R. § 886.5925(b)(1) (2001). Class II devices are devices for which

“general controls” are insufficient to provide a reasonable assurance of safety and effectiveness

but for which there are existing methods to provide such assurances. 21 U.S.C. § 360c(a)(B). 

10

alternative channels. This is a disproportionately low percentage, since at least 5-10

percent of Vistakon lenses were sold though alternative channels in 1992.26

C Multiple optometrists who testified as witnesses were asked if they knew of any scientific

studies showing that consumers face greater health risks if they purchase contact lenses

from a mail order firm. No optometrist could cite such a study. Several said that the

source from which the consumer purchases the lens should make no difference as long as

the seller follows the prescription. One ophthalmologist was quoted as saying, “If the

lens comes directly from the manufacturer in a sealed container, it should not matter

where that lens is obtained by the patient.”27

C In fact, Johnson & Johnson’s own expert witness acknowledged that the “[s]teps which

can be taken to minimize episodes of contact lens related complications include careful

and appropriate lens selection and fitting, continuing patient education on proper lens

care procedures, good hygiene, prompt reporting of symptoms by patients, and on-going

monitoring and care of patients through regular aftercare visits.”28 Notably, none of these

recommended steps involve obtaining replacement lenses directly from an optician or

other eye care professional. 

IV. Current federal and state regulations address contact lens health concerns

The Connecticut Board is not being asked to make its decisions in a regulatory vacuum. 

Existing regulatory requirements already address the primary health concerns at issue in this

proceeding and ensure that appropriate safeguards will be maintained to protect consumers’

health. The key question is whether there are benefits to consumers from additional, more

restrictive regulations that would outweigh the substantial additional consumer costs. 

A. FDA prescription requirements

Federal law on the prescription requirement for replacement contact lenses is complex

and somewhat opaque. FDA regulations state that a soft contact lens is a Class II medical device

if it is intended for daily wear.29 Rigid gas permeable contact lenses and soft contact lenses
These methods may include special guidelines, performance standards, and postmarket

monitoring, but a prescription requirement is not explicitly mentioned. 

30 21 C.F.R. §§ 886.5916 and 886.5925(b)(2). Class III is the most stringent

regulatory category and applies to devices for which insufficient information exists to assure

safety and effectiveness solely through general or special controls, but again the statute is silent

as to a prescription requirement. 21 U.S.C. § 360c(a)(C) 

31 21 U.S.C. § 360j(e)(1) (“The Secretary may by regulation require that a device

be restricted to sale, distribution, or use – (A) only upon the written or oral authorization of a

practitioner licensed by law to administer or use such a device, or (B) upon other such conditions

as the Secretary may prescribe in such regulation.”).

32 The FDA regulations for Ophthalmic Devices appear at 21 C.F.R. §§ 886.1 -

886.5928. None of these regulations specifies that contact lenses be restricted to sale,

distribution, or use only upon the written or oral authorization of a practitioner licensed by law to

administer or use such a device.

33 21 C.F.R. § 801.109(a)(2).

34 21 U.S.C. § 352(f).

35 Conn. Gen. Stat. § 21a-106(f).

11

intended for extended wear are Class III medical devices.30 A provision in the Food, Drug &

Cosmetics Act gives the FDA the authority to promulgate a regulation to require that a device be

restricted to sale, distribution, or use only upon the written or oral authorization of a licensed

practitioner.31 Notably, there is no such regulation specifically requiring a prescription for

contact lenses.32 

Nevertheless, approval documents for individual lens products state that they must be

sold by prescription. Additionally, there is a general regulation that covers prescription devices

overall, which states that a device which “is not safe except under the supervision of a

practitioner licensed by law to direct the use of such device, and hence for which ‘adequate

directions for use’ cannot be prepared,” will be exempt from the statutory labeling requirements

if the device is “sold only to or on the prescription or other order of such practitioner.”33

Replacement contact lenses fall under this exemption.

The FDA also has strict labeling requirements. A device is considered misbranded if its

labeling does not contain “adequate directions for use” and “adequate warnings against use in

those pathological conditions or by children where its use may be dangerous to health, or against

unsafe dosage or methods or duration of administration or application, in such manner and form,

as are necessary for the protection of users . . . .”34 Connecticut’s Uniform Food, Drug, and

Cosmetic Act has a similar provision.35 
36 See 21 U.S.C. §§ 353(b)(1), 331(a) and 333.

37 Buying Contact Lenses on the Internet, by Phone or by Mail: Questions and

Answers, available at <http://www.fda.gov/cdrh/consumer/buycontactqa.html>.

38 Letter from Linda Gangloff, Policy Analyst, Executive Secretariat, FDA, to

Thomas W. King, Jr., Executive Secretary, Office of the State Board for Optometry, New York

(Oct. 21, 1998).

39 Hank Greenberg, 1-800 Contacts in FDA’s Sights, TheStreet.com (4/11/00).

40 Conn. Gen. Stat. § 20-139, entitled Purpose and legislative policy, states in

general terms that regulation is required of optical appliances, eyeglasses, lenses, and all aids to

human vision sold, dispensed, or supplied in the state and that persons “filling prescriptions

having to do with optical glasses from given formulas, and kindred products” shall have the

education, skill, and ability to properly fill any such formulas and shall be licensed. This section

imposes no specific licensing or prescription requirements, however.

41 Conn. Gen. Stat. § 20-150.

12

The FDA has the authority to take action against the dispensing of a prescription device

without a valid prescription.36 The FDA generally defers to the states on these enforcement

issues. Its guide for purchasers of contact lenses over the Internet states that, “[s]ince individual

states have different licensing requirements for optical dispensers, enforcement of prescription

device sales has usually been left to the state in which the company selling the contact lens is

located.”37 However, that does not mean the FDA is either passive or powerless. In a 1998

letter, the FDA noted that it had received complaints about sales of contact lenses by mail

without a prescription and confirmed that “FDA is itself investigating alleged violations of

Federal law as a basis for possible action.”38 In 2000, the agency reportedly launched an

investigation of 1-800 Contacts, as well as 96 other companies suspected of selling by mail

various types of prescription devices without first obtaining prescriptions.39

Even with a prescription requirement for replacement contact lenses, it is important to

note that federal law does not require that the prescription be written, nor does it define what

constitutes a valid contact lens prescription. Instead, state law determines what is included in a

valid prescription. 

B. Connecticut prescription and prescription release requirements

Connecticut law does not explicitly require that replacement contact lenses be sold

pursuant to a prescription.40 In fact, the main provision covering where optical goods may be

sold, while requiring the supervision of an optician for production or reproduction of optical

glasses or kindred products to personalized given formulas, does not require that this be done

pursuant to a prescription.41 
42 Conn. Gen. Stat. §§ 20-127 to 20-138d (optometry); §§ 2-139 to 20-162

(opticians); §§ 21a-91 to 21a-120 (Uniform Food, Drug and Cosmetic Act).

43 Conn. Gen. Stat. § 20-571(23).

44 Conn. Gen. Stat. § 20-7c(b) & (c).

45 See Lens Express, Inc. v. Lois Ewald, as Executive Director of Texas Optometry

Board, 907 S.W.2d 64 (Ct. App. Tx. 1995) (describing history of proceedings).

13

Neither the Connecticut statute for optometry, the statute for opticians, nor the Uniform

Food and Drug Act defines a prescription.42 The Connecticut Pharmacy Practice Act defines a

prescription as “a lawful order of a prescribing practitioner transmitted either orally, in writing or

by electronic means for a drug or device for a specific patient.”43 

Connecticut law requires that a practitioner of the healing arts, including optometry,

release to a patient or his authorized representative a copy of the patient’s health record,

including “contact lens specifications based on examinations and final contact lens fittings given

within the preceding three months or such longer period of time as determined by the provider

but no longer than six months,” unless the provider “reasonably determines that the information

is detrimental to the physical or mental health of the patient.”44 This strongly suggests that the

legislature intended consumers to have the option to purchase lenses separately from the

purchase of an eye examination. 

If the Board determines that a prescription is required for the purchase of replacement

lenses, it would then have a legal means of recourse against stand-alone firms that sell lenses

without a prescription, even if those firms were not licensed in Connecticut. States have pursued

direct enforcement of their prescription requirements in the recent past. For example, the Texas

Optometry Board brought suit against a Florida mail order contact lens seller for violating the

Texas statute requiring an unlicensed seller to obtain a complete physical copy of the patient’s

prescription before providing the lenses to the patient. The parties ultimately settled, with the

seller agreeing to refrain from selling lenses without a proper prescription.45

C. Other consumer protection laws

A variety of other laws and regulations help protect contact lens consumers and ensure

that customers purchasing contact lenses from sources other than doctors receive the lenses that

are specified in the prescription.

Consumers have relatively easy recourse if an Internet or mail order firm fails to deliver

the proper lenses. Unlike the situation with prescription drugs, consumers can easily determine

if they have received the correct product by checking the box to ensure that it matches the

prescription. In some instances, even if the consumer does not notice that he or she received the

incorrect product, the customer may well discover the error when trying to wear the lenses. The
46 15 U.S.C. § 45. In addition, Section 12 of the FTC Act prohibits the false

advertisement of “food, drugs, devices, services, or cosmetics.” 15 U.S.C. § 52.

47 The Commission brought a complaint against operators of a group of online

pharmacies that falsely claimed to be a full service clinic with a national network of physicians. 

International Outsourcing Group, Inc. (File No. 992 3245) (July 12, 2000). The Commission

has also brought numerous cases challenging claims for medical devices. See, e.g., London

International Group, Inc., C-3800 (Apr. 7, 1998) (consent order) (challenging claims that

Ramses condoms are 30% stronger than leading brand and break 30% less often); United States

v. Lifestyle Fascination, Inc., No. 97-1487 (CSF) (D.N.J. Mar. 27, 1997) (stipulated permanent

injunction and $60,000 civil penalty) (challenging representations for pain relief device and

other products).

48 15 U.S.C. § 45(n); also see Unfairness Policy Statement, appended to

International Harvester Co., 104 F.T.C. 949, 1070 (1984).

14

customer can then simply remove the incorrect lens. Obviously, this does not rise to the kind of

serious risk of harm as would occur if a consumer took the wrong prescription drug.

The Federal Trade Commission has authority under Section 5 of the FTC Act to bring an

enforcement action against a contact lens seller who makes false or misleading claims about the

products or services it provides.46 For example, the Commission has taken action pursuant to

Section 5 against online pharmacies for making deceptive claims.47 The Commission also has

authority under its unfairness jurisdiction to regulate marketing practices that cause or are likely

to cause substantial consumer injury, which is not reasonably avoidable by consumers and is not

outweighed by countervailing benefits to consumers or to competition.48 

 

V. The costs and benefits of licensing stand-alone sellers of replacement lenses

Federal and state regulations already seek to ensure that lens wearers receive the lenses

prescribed by their doctors. As long as these regulations are enforced, prescription requirements

ensure that lens wearers return to the doctor for regular eye exams, regardless of where the

customer purchases replacement lenses. To determine whether additional incremental regulation

of stand-alone replacement lens sellers beyond the prescription requirement would enhance

consumer welfare, it is necessary to consider what additional costs and benefits the additional

regulation might create.

A. Costs of licensing stand-alone replacement lens sellers could be substantial

1. Connecticut requirements

Connecticut law, Conn. Gen. Stat. § 20-150, provides “[n]o optical glasses or kindred

products or other instruments to aid vision which are produced or reproduced to personalized

given formulas, shall be sold at retail except under the supervision of a licensed optician and in a
49 When citing this law in its petition for declaratory ruling, Johnson & Johnson

omitted the crucial limitation on this provision, namely that it covers only sales of optical

devices that are produced or reproduced to personalized given formulas. 

50 Conn. Gen. Stat. § 20-151.

51 Conn. Gen. Stat. § 20-153.

52 Conn. Gen. Stat. § 20-145.

53 Conn. Gen. Stat. § 20-146. See also Connecticut Department of Health, Detailed

Information for Optician Licensure, <http://www.ct-clic.com/detail.asp?code=1746>. Section

20-146 also permits an optician licensed in another state to be eligible for a license in

Connecticut without examination if the other state has licensing requirements similar to or higher

than those of Connecticut. 

54 A regulation by the Board of Opticians defines contact lenses and says that the

“sale of contact lenses in the state of Connecticut is an inclusion under the provision that optical

glasses, instruments and kindred products to aid vision may be sold only by licensed opticians . .

. .” Conn. Agencies Regs. § 20-141-10. Assuming that this regulation refers to § 20-150, based

on the statute’s specific limitation to optical glasses and kindred products “produced or

15

registered optical establishment, office or store. An optical establishment, office or store is

defined as meaning one the owner of which has had issued to him an optical license selling

permit.”49 

To obtain a license as an optical establishment, the retail seller of optical glasses or

kindred products produced or reproduced to a personalized given formula must be under the

direct supervision of a licensed optician.50 These permits cost $250 and are generally valid for

one year, although they are terminated immediately if the licensed optician of record

disassociates himself from the establishment. Holders of such permits are permitted to use the

term “optician.”51

The statute defines a licensed optician as “[o]ne having a knowledge of optics and skilled

in the technique of producing and reproducing ophthalmic lenses and kindred products and

mounting the same to supporting materials and the fitting of the same to the eyes.”52 To obtain a

license as an optician, a candidate must have four years of approved apprenticeship or an

Associate’s degree in ophthalmic dispensing from an approved school and have passed the

American Board of Opticianry’s National Opticianry Competency examination, the National

Contact Lens Examination, and the Connecticut Practical Examination.53

The Connecticut statute and regulations apply when a retail seller of ophthalmic lenses

and kindred products is himself producing or reproducing lenses to “personalized given

formulas.”54 Connecticut’s regulatory regime for opticians thus focuses on the producing and
reproduced to personalized given formulas,” this regulation means that contact lenses produced

or reproduced to personalized given formulas must also be sold only by licensed opticians. 

55 See, e.g., Conn. Agencies Regs. §§ 20-141-1, Experience in the producing and

mounting of ophthalmic lenses, and 20-141-2, Experience in the fitting of ophthalmic lenses to

the eyes by mechanical manipulation. Both of these regulations discuss the grinding, polishing,

and forming of lenses and the fitting of ophthalmic lenses to the individual wearer. In fact, the

provision on mechanical manipulation specifies that it covers “the casting or fitting of contact

lenses;” it does not discuss supplying prepackaged lenses to a customer who has already been

fitted for them by an eye care professional.

56 It is instructive to compare the statute’s wording with the Food and Drug Act’s

definition of a custom device. See 21 U.S.C. § 360j(b) (a custom device is one that is generally

not available in finished form for purchase or dispensing upon prescription). In Contact Lens

Mfrs. Ass’n v. FDA, 766 F.2d 592, 599 (D.C. Cir. 1985), the manufacturers argued that lenses

were custom devices but the court upheld the FDA’s conclusion that contact lenses for “all but

the most pathological eyes” are not custom devices because they are replicated again and again

and are generally available.

57 Connecticut appears to have construed section 20-153's supervision requirement

stringently in the past. For example, the Board of Examiners for Opticians successfully brought

a proceeding against a chain of optical shops on the basis that the shops were open without

having a licensed optician on the premises at all times, even if the shops were not engaging in

the activities that must be performed under the direct supervision of a licensed optician when the

optician was absent. U.S. Vision, Inc. v. Board of Examiners for Opticians, 545 A.2d 565 (Ct.

App. Ct. 1988). This raises the possibility that a stand-alone seller of replacement lenses would

be required to have a Connecticut optician supervise operations at all times, even while the seller

was not engaging in the activities that, according to Connecticut law, must be performed by a

16

reproducing of lenses.55 However, once a patient has been fitted with contact lenses by an

optometrist or ophthalmologist, the patient merely purchases replacement contact lenses that

come prepackaged from the manufacturer and which are not produced or reproduced to a

personalized given formula by the seller.56 Providing replacement lenses in sealed packages

from manufacturers does not involve producing or reproducing lenses and clearly does not

require the seller to produce or reproduce lenses to “personalized given formulas”– which is the

practice, under the statute, that must be licensed.

If these licensing regulations nevertheless are applied to stand-alone sellers of

replacement lenses, such sellers would have to arrange for a licensed optician to supervise their

operations and pay a $250 fee. The need to employ an optician would likely be a costly

proposition for a stand-alone seller of replacement lenses. Because such firms do not sell

eyeglasses or conduct contact lens fittings, they may not already have an optician on staff. 

Alternatively, a large operation may not have a sufficient number of opticians to satisfy the

state’s “supervision” requirement.57 Therefore, a requirement that all contact lens sellers obtain
licensed optician.

58 Carolyn Cox and Susan Foster, The Costs and Benefits of Occupational

Regulation, Federal Trade Commission (1990), at 31; Morris Kleiner and Robert Kudrle, Does

Regulation Affect Economic Outcomes?: The Case of Dentistry, THE JOURNAL OF LAW AND

ECONOMICS, Oct. 2000, at 547-82.

59 Cox and Foster, supra note 58, at 31. But compare a more recent study by Philip

Parker (‘Sweet Lemons:’ Illusory Quality, Self-Deceivers, Advertising, and Price, JOURNAL OF

MARKETING RESEARCH, Vol.32, Aug. 1995, at 291-307), suggesting that the results of some of

17

an optical establishment permit and an optician’s, optometric, or medical license would likely

impose a potentially significant additional (and likely unnecessary) cost on these types of

alternative sellers.

2. Similar licensing regulations in other professions often raise costs

We know of no study that directly assesses the impact of optical licensing on costs or

prices of contact lenses in general or replacement lenses in particular. However, the idea that

licensing requirements create additional costs for consumers is hardly novel or unique to

replacement contact lenses. In assessing the impact of licensing in this area, it is helpful to

consider the effects of licensing on consumer costs in other markets served by regulated

professionals. We are more confident that licensing will raise prices for consumers of

replacement lenses because we observe that professional licensing tends to raise prices in many

other markets where it has been implemented. These price increases should be weighed against

any consumer benefits created by occupational licensing to assess whether incremental increases

in licensing improve consumer welfare. 

Occupational licensing necessarily involves some restriction on the ability of individuals

to enter an occupation. This is accomplished through the need for government permission and

the demonstration of some minimum degree of competency. The stated motivation for licensing

is the desire to maintain or increase the quality of service provided by the professionals being

regulated. Business practice restrictions, such as limits on the commercial practice of optometry

or restrictions on business relationships between optometrists and opticians, have similar

rationales and effects as licensing. 

By restricting the supply of professionals into an occupation, licensing tends to raise their

wages, which in turn can lead to higher output prices. Licensing and various business practice

restrictions can also lead to higher prices by limiting the availability of lower cost suppliers to

consumers. Studies of the price effects of licensing are limited to those industries where a welldefined product can be identified. Studies of licensing in dentistry, perhaps the most analyzed of

the professions, find price increases of from 4 percent to 15 percent.58 Studies of the eye care

market report price increases from 5 percent to 33 percent that are attributable to a variety of

advertising and commercial practice restrictions.59
the earlier studies of the eye care market may be sensitive to alternative model specifications.

There is a larger range of studies assessing the effects of licensing restrictions on wage

rates, although the results tend to be mixed. Using a more sophisticated test for the stringency of

licensing restrictions, Steven Tenn, finds that licensing is an effective barrier to entry into the

legal profession and that it tends to increase the wages of lawyers appreciably. See Steven Tenn,

Three Essays on the Relationship Between Migration and Occupational Licensing (2001)

(unpublished Ph.D. dissertation, Univ. of Chicago).

60 See Letter from Charles A. James and Timothy J. Muris to the Ethics Committee

of the North Carolina Bar Re North Carolina State Bar Opinions Restricting Involvement of

Non-Attorneys in Real Estate Closings and Refinancing Transactions (Dec. 14, 2001)

<http://www.ftc.gov/be/V020006.htm>; Letter from Joel I. Klein and William J. Baer to the

Supreme Court of Virginia Re Proposed UPL Opinion #183 (Jan. 3, 1997)

<http://www.ftc.gov/be/v960015a.htm>.

61 Morris Kleiner, Occupational Licensing, JOURNAL OF ECONOMIC PERSPECTIVES,

Fall 2000, at 198. Economic theory also cautions that increased quality does not always make

consumers better off. The slightly higher quality of licensed professionals may not be worth the

significant extra cost to certain individuals, who would rather trade off some minimal reduction

in quality for a lower price.

62 Of the 11 studies surveyed by Cox and Foster, supra note 58, at 26-27, only two

reported a positive association between the strength of restrictions on practitioners and quality. 

More recent studies are no more supportive of the purported tendency of licensing to improve

service quality. In a study of dental licensing, Kleiner and Kudrle, supra note 58, found that

more stringent licensing did not result in improved dental outcomes among a sample of 464 new

Air Force recruits. Similarly, Gary Colbert and Dennis Murray, (State Accountancy Regulations,

Audit Firm Size, and Auditor Quality: An Empirical Investigation, 16(3) JOURNAL OF

REGULATORY ECONOMICS, Nov. 1999, at 267-85) found no association between audit quality

18

Laws, regulations, or other rules that unnecessarily require firms or customers to employ

members of the regulated professions for specified tasks can also raise consumer prices. Several

states, for example, have considered measures that would require borrowers to hire attorneys to

represent them in real estate loan closings, even in situations such as refinancings that involve

little legal work on behalf of the borrower. Based on evidence from several states, the Federal

Trade Commission and U.S. Department of Justice have concluded that such requirements would

typically increase prices to borrowers by between $150 and $400.60 

Licensing can either increase or decrease service quality.61 While the restriction of

supply from licensing typically leads to a higher average competence level for the professionals

allowed to practice, the higher price for their services can lead to less utilization by consumers. 

This indeterminancy is reflected in the empirical research, where no clear link between licensing

and service quality has been demonstrated.62
and variations in the strictness of state accountancy regulations. Defining quality can be very

difficult, and typically it is studied for those outcomes where empirical definitions are feasible. 

There thus remains a large number of situations that have not been investigated.

63 It is not clear whether the mail-order price includes shipping and handling. 

Survey takers were instructed to tell respondents to omit shipping and handling charges only if

the respondent asked about the issue. In addition, some mail-order firms offer free shipping and

handling.

64 Susan Russell, Nationwide Survey of Contact Lens Wearers (1999).

19

3. Adverse effects would be concentrated on customers who prefer stand-alone sellers

of replacement lenses

Most stand-alone sellers represent unique alternative distribution channels: Internet and

mail order. Internet and mail order offer some consumers a combination of price and

convenience that they value highly. Because licensing may impose additional costs on standalone sellers of replacement lenses, it has the potential to curtail these consumer benefits by

inducing mail-order firms to charge higher prices or exit the Connecticut market entirely.

Data on price differences between mail order and other sellers of replacement lenses are

sparse. The most recent data are from a nationwide survey by SRI commissioned by the state

attorneys general as part of the multidistrict litigation. In 1998, the average price of a six-lens

multipack purchased via mail order was $19.90, compared to an average of $23.76 for lenses

purchased from ophthalmologists, optometrists, and optical chains – a 19 percent difference.63

The survey also reported that price differences matter for most consumers, even if they were not

currently mail-order customers. Of the survey respondents who had not purchased their most

recent set of contact lenses via mail order, 62 percent said they would do so if the mail-order

price were 15 percent less than the last price they paid, and 78 percent said they would do so if

the mail-order price were 25 percent less. The SRI data also suggest, however, that consumers

who purchase their lenses from traditional suppliers could achieve equivalent savings at a mass

merchant discounter, such as Wal-Mart, Costco, or BJ’s; the average price at such retailers was

$19.98.64

The principal difference between the mail-order firms and the mass merchandisers thus

appears to be the delivery mode, not the price. The two delivery modes involve significantly

different convenience costs for consumers. To enjoy the price savings at a mass merchandiser,

the consumer has to make a trip to the store and often endure a wait in a line. Multiple trips may

be necessary if the store does not have the particular lenses in stock and must order them. 

Consumers who opt for mail order, on the other hand, can have replacement lenses delivered

simply by calling a toll-free phone number or visiting a web site. The inconvenience of visiting

a mass merchandiser is likely unimportant for consumers who attach a low value to their time or

who were going to the store to purchase other items anyway. It could be substantial, however,
65 Clifford Winston, Conceptual Developments in the Economics of Transportation:

An Interpretive Survey, 23 JOURNAL OF ECON. LIT., 1985, at 77.

66 Average wage is from Council of Economic Advisers, Economic Report of the

President (2002), at Table B-47.

67 See Conn. Gen. Stat. § 20-127(3) (defining the practice of optometry to include

the examination of the human eye and eyelid for the purpose of diagnosis).

20

for consumers who attach high value to their time, make a special trip to the store just to obtain

replacement lenses, or live in areas distant from mass merchandisers.

How much value might some customers place on the convenience of mail order? 

Research in transportation economics suggests that individuals value urban travel time by

automobile and public transit at between 75 and 178 percent of their wage rate.65 At the average

private hourly wage of $14.61 (December 2001), an hour-long trip to Wal-Mart to buy

replacement lenses has an implicit time cost of between $10.96 and $26.00.66 That figure

represents a markup of between 50 and 130 percent over the price of a multipack. Therefore, the

convenience cost of policies that impede entry by mail-order replacement lens sellers could be

substantial.

B. Licensing stand-alone replacement lens sellers offers no additional consumer

protection

Licensing stand-alone replacement contact lens sellers is unlikely to diminish any of the

genuine health risks associated with contact lenses. Licensing the lens seller will not induce

individuals to comply with the wearing or disposal schedules recommended by the doctor. 

Licensing the lens seller will also not induce individuals to have more frequent eye exams. 

Licensing is not necessary to ensure sellers follow prescriptions. Concerns about quality

of care related to follow-up examinations can be addressed by enforcing contact lens

prescriptions, rather than by inhibiting sales by non-traditional providers. Requiring customers

to return to an eye care professional to purchase replacement lenses does not reduce the

individual’s incentive or ability to wear lenses for too long. Moreover, Connecticut law does not

allow opticians to examine eyes or treat eye problems, so forcing consumers to purchase

replacement lenses from an optician does not advance the health goal of more frequent eye

exams.67

C. Licensing may produce unintended consequences harmful to consumers
68 Comment from NAOO (#119), at 11-12; Comment from State Attorneys General

(#118), at 7.

69 See Report of Douglas F. Greer on Behalf of the Thirty-One Plaintiff States, filed

in In re: Disposable Contact Lens Antitrust Litigation, at 134-35 (citing studies).

70 Id. at 135-36.

71 McKinsey & Company, Consumer Fact Pack, filed in In re: Disposable Contact

Lens Antitrust Litigation, at 92.

72 Id. at 97.

73 Id.

74 See Report of Douglas F. Greer on Behalf of the Thirty-One Plaintiff States, filed

in In re: Disposable Contact Lens Antitrust Litigation, at 138 (citing study). 

21

Several commenters in the FTC Rule review noted that fostering competition in contact

lens sales can be expected to increase the quality of care rather than decrease it.68 To the extent

that it raises costs for stand-alone sellers of replacement lenses, licensing of opticians and optical

establishments may actually increase the incidence of health problems associated with contact

lens use.

Stand-alone sellers of replacement lenses derive the bulk of their revenue from the sale of

disposable lenses. As a threshold matter, there seems to be consensus that disposable lenses,

especially when worn properly, are generally healthier than conventional daily wear lenses.69

Doctors have reported that frequent replacement of lenses has yielded a significant decrease in

eye infections and inflammation among their patients who wear disposables.70 

However, many consumers who wear disposable lenses over-wear their lenses, which

diminishes the health benefits of such lenses. One survey revealed that fewer than 50 percent of

consumers comply with the recommended wearing schedule.71 

Importantly, fifty-seven percent of consumers stated they would replace their lenses more

frequently if the lenses cost less.72 Moreover, 30 percent specifically identified cost savings as

the reason they over-wear their lenses, stating they “try to save money by wearing [their] contact

lenses for more days than [their] doctor recommends before disposing of them.”73 Twenty-two

percent said they do not replace their lenses as often as they should because “purchasing them is

inconvenient.” Not only will many disposable lens wearers over-wear their lenses in order to

save money, but studies also suggest that more consumers would opt to switch from

conventional lenses to the healthier disposable lenses if disposables cost less.74

Increasing the cost and inconvenience of obtaining disposable replacement lenses may

induce more individuals to over-wear their replacement lenses; decreasing the cost and
75 See Section IV above.

22

inconvenience may induce more individuals to comply with eye doctors’ instructions. Imposing

licensing requirements on stand-alone sellers of replacement lenses thus has the potential to

increase health risks for consumers. 

D. Licensing out-of-state sellers of replacement lenses

One potential additional benefit of licensing out-of-state sellers is that the license gives

the state additional leverage to protect consumers. If an out-of-state seller fails to comply with

prescription requirements, perhaps by sending consumers the wrong lenses or selling lenses

without receiving a valid prescription, then the State could prompt compliance by threatening to

revoke the seller’s license. If the seller still refuses to comply, the State could revoke the

license, thus protecting consumers from the health risks involved in dealing with that seller. 

It is doubtful that licensing is necessary to protect consumers in this way. Even in the

absence of licensing, both consumers and government have significant avenues of recourse if an

out-of-state seller fails to comply with prescription requirements.75 The Board could also

suggest that the Connecticut legislature authorize it to adopt additional safeguards that would be

less restrictive, such as registration. A registration system, unlike licensing, would not require

that individuals or firms that want to sell replacement lenses fulfill expensive and unnecessary

requirements in order to do so. Rather, replacement lens sellers would merely file their names

and other required contact information with the Board. The Board would thereby know who is

selling replacement lenses in Connecticut and would have sufficient contact information in the

event that a particular seller engages in practices that create health risks for consumers. For this

reason, it is doubtful that out-of-state sellers present any unique consumer protection problems

for which state licensing is a necessary solution. And, any theoretical increase in enforcement

authority is almost certainly outweighed by the additional costs likely to be passed on to

Connecticut consumers as a result of requiring replacement lens sellers to be licensed in

Connecticut.

 

VI. The prescription requirement

The third question asks whether a contact lens seller that sells lenses to a Connecticut

consumer without first receiving a prescription from a licensed physician or optometrist is in

compliance with Connecticut law. The way in which the prescription requirement is interpreted

and enforced could have a substantial impact on competition. 

The real prescription issue in this proceeding is not whether a prescription should be

required. The key question is what it means to say that the contact lens seller must receive this

prescription from a licensed physician or optometrist. This question can be answered in a way

that either restricts or promotes competition.
23

According to the FDA’s guide for consumers regarding the purchase of contact lenses

over the Internet, a lens seller does not have to receive a written prescription to comply with the

federal prescription device regulation. The FDA indicates that if the company checks with the

doctor, the company has satisfied the prescription requirement. The FDA guide notes that

websites allow the purchaser to fill out a chart with the ordering information and supply contact

information for the purchaser’s doctor. Thus, the federal prescription requirement may be

satisfied by the ability to check with the doctor orally. Connecticut’s requirements are similar,

since, by statute, a prescription can be transmitted either orally, in writing, or by electronic

means. 

It is clear that sales of lenses by alternate channels can easily satisfy federal and state

prescription requirements. Consumers who wish to order lenses by phone, mail, or Internet can

either mail in, call in, fax, or provide in electronic form their prescription information to the lens

seller. The lens seller can contact the eye care provider in the same ways, if prescription

verification is necessary. Likewise, a valid prescription, communicated to the seller by the

patient, can be presumed verified if the doctor is contacted and given sufficient opportunity to

correct any errors.

This multiplicity of ways to satisfy a prescription requirement is procompetitive in that it

provides consumers with a number of ways in which to obtain their replacement lenses, thus

allowing the market to respond to genuine consumer demand. The FTC staff believe it would

be detrimental to competition and consumers to overly restrict the ways in which prescription

information for replacement lenses may be transmitted.

Similarly, prescriptions that are narrowly drawn so as to favor one contact lens over

another, absent sound medical justification, or that have unduly short expiration dates, may also

raise significant anticompetitive problems. To the fullest extent consistent with necessary health

standards, consumers should be allowed the widest latitude to receive replacement lenses from

whichever providers they choose.

In neither the Rule review nor the multidistrict litigation has anyone suggested that

consumers should be permitted, or that they are remotely likely to try, to obtain contact lenses

without first being fitted for them by an eye care professional. Instead, the crucial question is

whether consumers should be able to obtain replacement contact lenses using the prescription

information they have from the box of lenses for which they were initially professionally fitted. 

Both industry representatives and government regulators have informed us that there is a strong

consumer demand to obtain replacement contact lenses in this manner.

The position of the staff of the Commission is that strong consumer demands should not

be thwarted lightly. The evidence suggests that the health concerns motivating the prescription

requirement are satisfied if the contact lens seller receives a valid prescription, however that

information is transmitted. If the Board disagrees with this assessment, we nevertheless urge the

Board to carefully weigh the health effects of a more restrictive policy against the potential harm

to competition and consumer choice. 
24

 

VII. Conclusion

The staff of the Federal Trade Commission has extensive expertise in analyzing

occupational regulation in general and eyewear issues in particular. When assessing the impact

of a regulatory change, we typically examine the incremental costs and benefits that would be

created by an increase or decrease in regulation. 

Based on the evidence we have seen, we believe that requiring stand-alone sellers of

replacement contact lenses to obtain Connecticut optician and optical establishment licenses

would likely increase consumer costs while producing no offsetting health benefits. Indeed,

such licensing could harm public health by raising the cost of replacement contact lenses,

inducing consumers to replace the lenses less frequently than doctors recommend or to substitute

other forms of contact lenses that pose greater health risks. 

An overly narrow interpretation of Connecticut law on these issues will likely have two

significant detrimental effects: (1) it will restrict the choices available to Connecticut consumers,

raise their costs, and reduce their convenience unnecessarily, and (2) it will serve as a barrier to

the expansion of Internet commerce in the State of Connecticut. Current federal and state

prescription requirements and consumer protection laws are sufficient to address the health

problems associated with contact lens use. Such requirements can be implemented in ways that

are either procompetitive or anticompetitive, and the FTC staff urge the Board to implement the

prescription requirement in a way that protects consumers health, promotes competition, and

maximizes consumer choice.
25

Respectfully submitted, 

J. HOWARD BEALES, III

Director, Bureau of Consumer Protection

____________________________

R. TED CRUZ

Director, Office of Policy Planning

JERRY ELLIG

Deputy Director, Office of Policy Planning

MAUREEN K. OHLHAUSEN

Attorney

KIAL S. YOUNG

Attorney

JOSEPH P. MULHOLLAND

Economist

Federal Trade Commission 

600 Pennsylvania Avenue, NW

Washington, DC 20580

(202) 326-3683