FR Doc 04-9156

[Federal Register: April 22, 2004 (Volume 69, Number 78)]
[Notices]
[Page 21833-21836]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr22ap04-62]

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FEDERAL TRADE COMMISSION

Contact Lens Study

AGENCY: Federal Trade Commission.

ACTION: Notice and request for public comment.

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SUMMARY: In the Fairness to Contact Lens Consumers Act (``the Act''),
15 U.S.C. 7601 et seq., which provides for the availability of contact
lens prescriptions to patients and the verification of contact lens
prescriptions by prescribers, Congress required the Federal Trade
Commission (the ``Commission'' or ``FTC'') to conduct a study
(``Contact Lens Study'' or the ``Study'') of the strength of
competition in the sale of prescription contact lenses. In connection
with preparation of the Study, the Commission is requesting public
comment on several relevant issues.

DATES: Public comments must be received on or before June 24, 2004.

ADDRESSES: Interested parties are invited to submit written comments.
Comments should refer to ``Contact Lens Study, Project No. V040010,''
to facilitate the organization of comments. A comment filed in paper
form should include this reference both in the text and on the
envelope, and should be mailed or delivered to the following address:
Federal Trade Commission/Office of the Secretary, Room H-159 (Annex L),
600 Pennsylvania Avenue, NW., Washington, DC 20580. Comments containing
confidential material must be filed in paper form, as explained in the
Supplementary Information section. The FTC is requesting that any
comment filed in paper form be sent by courier or overnight service, if
possible, because U.S. postal mail in the Washington area and at the
Commission is subject to delay due to heightened security precautions.
Comments filed in electronic form (except comments containing any
confidential material)

[[Page 21834]]

should be sent to the following e-mail box: contactlensstudy@ftc.gov.
The FTC Act and other laws the Commission administers permit the
collection of public comments to consider and use in this proceeding as
appropriate. All timely and responsive public comments, whether filed
in paper or electronic form, will be considered by the Commission, and
will be available to the public on the FTC Web site, to the extent
practicable, at http://www.ftc.gov. As a matter of discretion, the FTC makes

every effort to remove home contact information for individuals from
the public comments it receives before placing those comments on the
FTC Web site. More information, including routine uses permitted by the
Privacy Act, may be found in the FTC's privacy policy, at http://www.ftc.gov/ftc/privacy.htm
.

FOR FURTHER INFORMATION CONTACT: Requests for additional information
should be addressed to Maureen Ohlhausen or James Cooper, Federal Trade
Commission, Office of Policy Planning, 600 Pennsylvania Avenue, NW.,
Washington, DC 20580. Telephone: 202-326-2632 (Maureen Ohlhausen) or
202-326-3367 (James Cooper); e-mail:
JC_contactlensstudy@ftc.gov or MO_contactlensstudy@ftc.gov.

SUPPLEMENTARY INFORMATION:

I. Background

On December 6, 2003, President Bush signed the Fairness to Contact
Lens Consumers Act (``the Act'').\1\ Among other things, the Act
requires that prescribers--such as optometrists and ophthalmologists--
provide contact lens prescriptions to their patients upon the
completion of a contact lens fitting.\2\ The Act also mandates that
prescribers verify contact lens prescriptions to third-party contact
lens sellers who are authorized by consumers to seek such
verification.\3\ The Act directs the Commission to prescribe
implementing rules.\4\
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\1\ 15 U.S.C. 7601 et seq.; Pub. L. 108-164.
\2\ Id. at 7601.
\3\ Id. at 7061, 7603.
\4\ Id. at 7607.
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The Act also directs the Commission to conduct a study to examine
the strength of competition in the sale of prescription contact lenses,
including an examination of several specified issues.\5\ The Commission
today solicits public comments on these issues, as set forth in section
II below.
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\5\ Id. at 7609.
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II. Request for Public Comments

In the Act, Congress directed the Commission to undertake a study
examining the following issues related to the strength of competition
in the sale of prescription contact lenses: (1) The incidence of
exclusive relationships between prescribers or sellers and contact lens
manufacturers and the impact of such relationships on competition; (2)
The difference between online and offline sellers of contact lenses,
including price, access, and availability; (3) The incidence, if any,
of contact lens prescriptions that specify brand name or custom labeled
contact lenses, the reasons for the incidence, and the effect on
consumers and competition; (4) The impact of the Federal Trade
Commission Eyeglass Rule (16 CFR Part 456 et seq.) on competition, the
nature of enforcement of the rule, and how such enforcement has
impacted competition; and (5) Any other issue that has an impact on
competition in the sale of prescription contact lenses.\6\
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\6\ Id.
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In connection with the Contact Lens Study, the Commission
particularly is interested in receiving comment on the questions that
follow. These questions are designed to assist the public and should
not be construed as a limitation on the issues on which public comment
may be submitted. Responses to these questions should cite the numbers
and subsection of the questions being answered. For all comments
submitted, please submit any relevant data, statistics, or any other
evidence upon which those comments are based.
With regard to the following questions: (1) Prescribers include eye
care practitioners (i.e., ophthalmologists, optometrists, or other
persons permitted under state law to issue prescriptions for contact
lenses) that sell contact lenses, as well as optical chains and other
retailers that offer eye care practitioner services and sell contact
lenses; (2) sellers include bricks-and-mortar retailers, as well as
mail order and Internet firms that sell contact lenses, but do not
offer any eye care practitioner services.

Exclusive Relationships

1. Please comment on the incidence of exclusive manufacturer-
prescriber and manufacturer-seller relationships: (a) How common is it
for a contact lens manufacturer to sell only to prescribers, to the
exclusion of sellers? (b) How common is it for a contact lens
manufacturer to sell only to sellers, to the exclusion of prescribers?
(c) If a contact lens manufacturer sells only to prescribers or
sellers, what type of limitations and restrictions on re-sale typically
are found in such agreements? (d) How common is it for prescribers to
agree to prescribe only certain manufacturers' contact lenses? (e) Do
the manufacturers that are parties to agreements in question (d)
restrict the sales they make to sellers and prescribers that are not
parties to the type of agreements in (d)?
2. Please comment on whether contact lens prescribers advertise
their willingness to provide prescriptions for contact lenses available
from competing prescribers and sellers: (a) How prevalent is prescriber
advertisement of willingness to prescribe contact lenses available
through other prescribers and sellers? (b) How prevalent is consumer
awareness of prescribers' willingness to prescribe contact lenses
available from alternative prescribers and sellers? (c) Are consumers
able to shop for prescribers that will prescribe contact lenses
available from alternative prescribers and sellers? (d) What role do
state regulatory or self-regulatory bodies play in controlling
prescriber advertisements, especially with respect to a prescriber's
willingness to prescribe contact lenses that are available from
alternative prescribers and sellers? (e) Do manufacturers advertise
directly to consumers that their contact lenses are available both from
sellers and prescribers? (f) Do sellers advertise that lenses may be
purchased from sellers that are not prescribers?
3. Are there instances where exclusive relationships have prevented
market entry by a manufacturer, seller, or prescriber?
4. Please comment on the market shares of prescribers, sellers, and
manufacturers: (a) What are the national and local market shares of
contact lens manufacturers? (b) What are the national and local market
shares of sellers? (c) What are the local market shares of contact lens
sales by prescribers? (d) Are there instances where a specific
prescriber (including different eye care practitioners associated with
the same chain or retailer) issues a substantial share of contact lens
prescriptions at a local level?
5. Please comment on the benefits, if any, associated with
exclusive manufacturer-prescriber and manufacturer-seller
relationships: (a) To what extent do exclusive relationships lower
costs for manufacturers and/or for sellers and prescribers, and to what
extent are these cost savings passed on to consumers? (b) What role do
exclusive relationships play in assuring

[[Page 21835]]

that sellers or prescribers give a manufacturer's contact lenses the
desired level of promotion? (c) What role do exclusive relationships
play in assuring that sellers or prescribers provide customers with the
level of service that manufacturers desire to accompany their contact
lenses? (d) What role do exclusive relationships play in discouraging
sellers and prescribers from ``free-riding'' off the promotional or
customer service efforts provided by other sellers or prescribers?
6. Please comment on how, if at all, current patterns of exclusive
relationships may change in response to the Act.
7. Please provide any other information regarding the impact of the
exclusive relationships on competition.

Online and Offline Sellers

8. Are there differences in the prices charged for similar contacts
lenses by online and offline merchants?
9. Are there any cost advantages associated with selling contact
lenses online versus offline?
10. Please comment whether consumers find it more convenient to
purchase contact lenses online or offline: (a) Do consumers save time
by purchasing their contacts online rather than at an offline store, or
vice-versa? (b) What is the value consumers place on any time savings?
(c) Do consumers find greater lens availability online or offline? (d)
Irrespective of any time savings, do consumers find it more convenient
to purchase contact lenses online rather than at an offline store, or
vice-versa? (e) Do consumers who purchase contact lenses from online
sellers differ from consumers who purchase from bricks-and-mortar
sellers and prescribers with regard to income, education, geographic
location, or any other attribute? (f) What is the cost to consumers of
home delivery of contact lenses?
11. Do consumers who purchase contact lenses from offline sellers
have any differing concerns with regard to the quality of the lenses
they receive from those who purchase contact lenses online?
12. Please comment on the extent to which online and offline
contact lens sellers compete: (a) To what extent are offline contact
lens sellers' pricing decisions affected by prices offered by online
sellers? (b) To what extent are online contact lens sellers' pricing
decisions affected by prices offered by offline sellers? (c) To what
extent do prices charged for identical contact lenses vary among online
sellers, and is the variance any greater or smaller than that found
between prices offered by offline sellers? (d) Are some online sellers
perceived by customers as preferable to other online sellers in terms
of customer service, ease of shopping, trustworthiness, or any other
non-price characteristic? (e) Are some offline sellers perceived by
customers as preferable to other offline sellers in terms of customer
service, ease of shopping, trustworthiness, or any other non-price
characteristic? (f) Do contact lens manufacturers charge different
prices to online and offline sellers? (g) If there are differences in
the prices manufacturers charge to online and offline sellers, to what
extent do they reflect differences in the cost of serving online and
offline sellers, and/or different levels of customer service and
promotion provided by online and offline sellers?
13. Please provide any other information regarding the difference
between online and offline sellers of contact lenses.

Prescriptions That Specify Brand Name or Custom Labeling

14. Please comment on the incidence of brand name and custom label
contact lens prescriptions: (a) What is the incidence of contact lens
prescriptions that specify a brand name? (b) What is the incidence of
contact lens prescriptions for custom labeled contact lenses? (c) Is
the incidence of the prescribing practices in (a) and/or (b) increasing
or decreasing? (d) Please comment on how, if at all, current patterns
of prescriptions requiring brand name or custom-labeled contact lenses
may change in response to the Act.
15. What are the benefits of contact lens prescriptions that
specify a brand name or custom labeled contact lenses? What are the
costs of contact lens prescriptions that specify a brand name or custom
labeled contact lenses?
16. What role do state laws or regulations play in determining what
a prescriber must include on a prescription, including whether a
prescription must contain a brand name?
17. What is the incidence of brand name or custom labeled contact
lenses being available only through the prescriber?
18. How prevalent is consumer awareness that a prescriber may
prescribe custom labeled or brand name lenses that are available only
from the prescriber?
19. Please comment on whether contact lens prescribers advertise
their ability to prescribe custom labeled lenses or their willingness
to prescribe contact lenses available from a variety of sellers: (a)
How prevalent are prescriber advertisements that they prescribe custom
labeled lenses or advertisements that they prescribe contact lenses
available from a variety of sellers? (b) Are consumers able to shop for
prescribers based on whether they prescribe custom labeled contact
lenses or contact lenses available from a variety of sellers? (c) What
role do state regulatory or self-regulatory bodies play in controlling
prescriber advertisements with respect to their ability to prescribe
custom labeled lenses or their willingness to prescribe contact lenses
available from a variety of sellers?
20. Please provide any other information regarding the impact on
competition of prescriptions that specify brand name or custom labeled
contact lenses.

Impact of the FTC Eyeglass Rule on Competition

21. Describe the state of competition in the market for the retail
sale of prescription eyeglasses at the time that the Commission issued
the Eyeglass Rule in 1978, including, but not limited to, a description
of the products included in the market, the market's geographic scope
(e.g., national, regional, local), the market shares of firms, and any
barriers to entry.
22. Referring to the factors listed in question 21, describe how
competition in the market for the retail sales of prescription
eyeglasses has changed since the Commission issued the Eyeglass Rule in
1978.
23. To what extent are the differences in competition in the market
for the retail sale of prescription eyeglasses since 1978 attributable
to the following factors: (a) Changes in federal law, including the
issuance and enforcement of the Eyeglass Rule; (b) changes in state
law; (c) changes in industry standards or trade association rules or
policies; (d) changes in technology; or (e) other changes in the
marketplace?
24. To the extent that the changes in competition in the market for
the retail sale of prescription eyeglasses since 1978 are attributable
to the issuance and enforcement of the Eyeglass Rule, identify the
specific Rule provisions that have affected competition, how those
provisions have affected competition, and the extent of the effect on
competition.
25. Has the issuance and enforcement of the Eyeglass Rule affected
prices in the market for the retail sale of prescription eyeglasses? If
so, how and to what extent?
26. Has the issuance and enforcement of the Eyeglass Rule caused or
prompted states to change their laws or policies regarding prescription
eyeglasses? If so,

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what changes were made and what effect did they have?
27. Has the issuance and enforcement of the Eyeglass Rule caused or
prompted private entities (e.g., trade associations) to change their
rules or policies relating to prescription eyeglasses? If so, what
changes were made and what effect did they have?
28. Please provide any other information regarding the impact on
competition of the Eyeglass Rule.

Other Issues Related to Competition in the Sale of Prescription Contact
Lenses

29. Do state licensing requirements affect out-of-state sellers'
abilities to compete with in-state sellers or prescribers for the sale
of prescription contact lenses?
30. What role do state licensing requirements applicable to sellers
of contact lenses play in protecting consumers?
31. Please provide any other information regarding issues that
affect competition in the sale of prescription contact lenses.
All persons are hereby given notice of the opportunity to submit
written data, views, facts, and arguments addressing the issues raised
by this Notice. Written comments must be submitted on or before June
24, 2004. Comments should refer to ``Contact Lens Study, Project No.
V040010,'' to facilitate the organization of comments. A comment filed
in paper form should include this reference both in the text and on the
envelope, and should be mailed or delivered to the following address:
Federal Trade Commission/Office of the Secretary, Room H-159 (Annex L),
600 Pennsylvania Avenue, NW., Washington, DC 20580. If the comment
contains any material for which confidential treatment is requested, it
must be filed in paper (rather than electronic) form, and the first
page of the document must be clearly labeled ``Confidential.''\7\ The
FTC is requesting that any comment filed in paper form be sent by
courier or overnight service, if possible, because U.S. postal mail in
the Washington area and at the Commission is subject to delay due to
heightened security precautions. Comments filed in electronic form
should be sent to the following e-mail box: contactlensstudy@ftc.gov.
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\7\ Commission Rule 4.2(d), 16 CFR 4.2(d). The comment must be
accompanied by an explicit request for confidential treatment,
including the factual and legal basis for the request, and must
identify the specific portions of the comment to be withheld from
the public record. The request will be granted or denied by the
Commission's General Counsel, consistent with applicable law and the
public interest. See Commission Rule 4.9(c), 16 CFR 4.9(c).
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The FTC Act and other laws the Commission administers permit the
collection of public comments to consider and use in this proceeding as
appropriate. All timely and responsive public comments, whether filed
in paper or electronic form, will be considered by the Commission, and
will be available to the public on the FTC Web site, to the extent
practicable, at http://www.ftc.gov. As a matter of discretion, the FTC makes

By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 04-9156 Filed 4-21-04; 8:45 am]

BILLING CODE 6750-01-P