Updated: Contact Lens Makers Weigh Options After Appeals Court Denies Injunction

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DENVER—A U.S. Court of Appeals early last week ruled against three leading contact lens makers in their bid to delay enforcement of a Utah law that prohibits minimum retail pricing policies, prompting one of the companies to end its minimum pricing strategy immediately and another to consider a request that the appeals court review the case “en banc.”

The 10th U.S. Circuit Court of Appeals here on Dec. 19 affirmed a lower court’s decision to deny the contact lens companies – Alcon, Bausch + Lomb and Johnson & Johnson Vision Care Inc. – the injunction they wanted to delay enforcement of the Utah law until a decision could be made on whether the state’s minimum pricing law is constitutional. The court’s 2-1 split decision, however, included a strongly worded dissent that may influence the contact lens companies’ response.

A few days following the court’s decision, Alcon announced Dec. 23 that it has decided to end its Unilateral Pricing Policy (UPP) on contact lenses “effective immediately.” A statement issued by Alcon, which first initiated UPP in 2013 in response to aggressive pricing strategies by online retailers and mass merchants, also noted that Alcon “believes that continuing to challenge the Utah law, and maintaining different policies for retailers in Utah from those in other states, could distract from efforts to serve customers to the best of [our] ability.”

Utah’s Contact Lens Consumer Protection Act became law in early 2015 but has been the issue of several court battles. It also often is referred to as the 1-800 Contacts law because the online retailer is based in the state and opposed the minimum retail price policies that the contact lens makers wanted to enforce.

The three contact lens companies sued the state of Utah in 2015 claiming that the minimum retail price law violated the Commerce Clause of the U.S. Constitution, and they sought a preliminary injunction to prohibit the state from enforcing the law until the lawsuit was decided.

As VMail reported, an earlier injunction was vacated, thus allowing the law to go into effect during the appeals process. J&J Vision Care has subsequently dropped its minimum pricing policy, according to a spokeswoman, but remains a party in the suit.

In response to the court’s decision, a Bausch + Lomb spokeswoman said the company is “evaluating its options for further review, including seeking rehearing by the en banc 10th Circuit and filing a petition for a writ of certiorari to the U.S. Supreme Court.” (Asking to grant a writ of certiorari is the “primary means to petition the [Supreme] court for review,” according to the federal court’s website, and it “usually only does so if the case could have national significance.”)

The spokeswoman also noted that Bausch + Lomb “agrees with the persuasive reasoning of the dissenting opinion, which concluded that the Utah statute discriminates against out-of-state retailers in violation of the Commerce Clause.”

A J&J Vision Care spokeswoman told VMail the “court’s ruling does not affect Johnson & Johnson Vision Care” because the company discontinued its Unilateral Pricing Policy in April and moved to an “evolved strategy grounded in the same efforts to deliver meaningful innovation to meet patients’ needs while improving patient affordability and access.”

Additionally, a spokeswoman for 1-800 Contacts noted that the company is “pleased with the decision from the 10th U.S. Circuit Court of Appeals, which will help insure a free market that produces the lowest prices for consumers.”

In the dissent, Justice Robert E. Bacharach wrote that the “contact-lens market is different” than other consumer product markets and he said he believes that “the district court relied heavily on its mistaken view of the manufacturers’ likelihood of success” in its decision to deny the request an injunction.

“Contact-lens prescriptions are brand-specific; thus, if one of the contact-lens manufacturers left Utah, Utah retailers would be completely foreclosed from fulfilling prescription orders for that manufacturer’s prescriptions, limiting consumers’ access to certain contact lenses,” the justice wrote. “Unlike gasoline, a fungible good, brand-specific contact lenses are unique goods that cannot be ‘promptly replaced’ by another manufacturer when one manufacturer exits a market.”

According to a Circuit court spokesman, the contact lens companies will have about three weeks to consider their options before the lawsuit is officially sent back to federal district court in Salt Lake City.