Imagine you are shopping for a new car, but you’re forced by law to buy only from your local Chevy dealer. No cross-shopping other makes — or other dealerships. You have to buy from this one dealer — and only the models he’s got on the floor.
Luckily, there’s no law forcing you to do business with just one dealer — nor forbidding you from cross-shopping other dealerships (and trying out other models).
This competition for your business increases the choices available to you and decreases the costs of those choices.
Then there’s crony capitalism, which uses the power of the government to limit choices and increase prices for the artificial profit of the “connected” business.
The contact lens business, for instance.
It has been effectively cornered by a handful of companies — the 800-pound gorillas being Johnson & Johnson and Bausch & Lomb — that together own more than 90 percent of the market. But not because they outcompeted and out-priced other companies and secured their share of the market by offering more and better for less.
It’s actually the opposite. When it comes to contacts, you have limited (to no) choice and pay more for lenses because the government requires you to get a permission slip before you can buy them. The permission slip is only good at one “store” — the doctor’s office.
The permission slip is a doctor’s prescription — which may seem not-unreasonable until you reflect that you don’t need one to buy reading glasses. Why should you have to obtain one to buy contacts? You don’t need one in most European countries or Japan.
Because we have crony capitalism for contact lens.
You get steered by the eye doctor — via the prescription — to contact lenses sold by eye doctors and made by eye doctors’ cohorts.
The way the system is rigged, an eye doctor issues one prescription — often, with a specific, brand-name lens specified. And under the law, you have to buy those contacts, period. Not coincidentally, the doctor writing the prescription often has financial incentive to steer his patients toward certain brands, and the patient has little choice (assuming he wants to see clearly) but to pay whatever they’re charging.
A very cozy arrangement for everyone — except the person buying the contacts.
It’s amazing there isn’t more outrage — as there surely would be if a law required patients to buy only name-brand (rather than functionally identical but cheaper generic) drugs.
Back in 2004, a law was passed to try to — ahem — correct the contact lens problem by requiring doctors to give patients copies of their prescription, in order to enable them to shop around for the best price. The Federal Trade Commission recently added some bite to the ‘04 legislation by requiring that doctors obtain a signed form from their patients, indicating they, in fact, received the copy of their prescription. This will eliminate the problem of the doctors “forgetting” to mention to patients that they have the right to shop around.
Who could object to this?
The contact lens crony capitalists, of course.
They are waging an all-out public relations war with your tax dollars on both the Federal Trade Commission’s recent ruling and the ‘04 legislation, which they’d like to see repealed and replaced by a protectionist measure disingenuously titled the Contact Lens Consumer Health Protection Act (CLCHPA). This bill has about as much to do with protecting the health of consumers as the Patriot Act has to do with patriotism.
It would give eye doctors a de facto veto over any contact lens sale they wished to prevent by simply refusing to give their overt OK on the transaction. The CLCHPA would mandate that, before a third-party sale (from somewhere like Costco, 1-800 Contacts or Wal-Mart) could be transacted, the doctor who wrote the prescription would have to give his specific assent, via phone or email. If he fails to do so — without necessarily giving any medical reason for exercising his veto — the sale is illegal under the CLCHPA.
It’s understandable why the “gorillas” are pushing this. Just like the real great ape, they are trying to protect their turf. But they shouldn’t be able to use the power of the government to do that — especially when there is no evidence at all that stomping on the free market would somehow help contact lens buyers.
Is there, for example, any problem with the prescription-free model in place in Europe and Japan? Where people are free to buy contacts the same way people here in America buy reading glasses?
No, there isn’t.
Even the American Optometry Association concedes that the government-mandated over-doctoring prescribed by the CLCHPA isn’t necessary. Indeed, it’s now possible — and safe — for people to use smartphone apps like GlassesOn and Opternative to determine the strength of lens they need without even seeing an eye doctor at all.
Which has some crony capitalist eye doctors (and Johnson & Johnson, et al.) seeing red.
But as long as there’s no medically valid reason for restricting people’s ability to shop for the best deal on contacts — the government shouldn’t be partnering with crony capitalists to fleece them of their green.
• Eric Peters is the author of “Automotive Atrocities” and “Road Hogs” (MBI Publishing).