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Home | Blog | The Eye-Care Industry Wants Big Government to Crush the Competition

The Eye-Care Industry Wants Big Government to Crush the Competition

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Tags The EntrepreneurMonopoly and Competition

05/26/2017

Big Eye is watching you. For more than a decade, lobbyists from Johnson & Johnson (J&J), which controls over 40 percent of the contact lens market as a result of their cozy relationship with optometrists, and the American Optometric Association (AOA), which represents nearly 40,000 optometrists nationwide, have been fighting to create an artificial monopoly in the eye care industry. By inundating bureaucrats with large pieces of state and federal legislation, AOA and J&J hope to eliminate competition through regulatory capture.

Eye care professionals are unique in that they are some of the only professionals that sell what they also prescribe. In truth, optometry — unlike ophthalmology, which is composed of true medical doctors — is a dying industry. Most optometrists cannot do much other than measure prescription strength and fit lenses. They sell lenses in their shops and rely on those sales — and the kickbacks they receive from the big lens brands — as a means of keeping their shops open.

For years, J&J and the AOA have been trying to pass federal legislation called the Contact Lens Consumer Health Protection Act (CLCHPA), better known as “the Cassidy Bill,” which would essentially allow eye-care professionals to block contact lens sales from any third-party vendors that pose a market share risk. But this bill has failed miserably and has failed to be called for a roll call vote.

Now in their attempts to eliminate competition, Big Eye has moved on to target the fields of telehealth and telemedicine — online and digital forms of prescription-making that have radically changed how individuals access their doctors. Twenty-first century smartphone and tablet apps like Opternative allow consumers to measure their prescription strength from the comfort of their own homes, where a board-certified ophthalmologist then signs off on it to close the deal. Thanks to this technology, consumers now only have to go to the brick-and-mortar eye office once every two years for a comprehensive eye health exam rather than every single time a lens refill is needed.

Of course, Big Eye is afraid that this new technology will take away their customers, so they are doing everything in their power to get it outlawed.

Although these lobbyists have been fighting a losing battle thus far, they are certainly not giving up. Recently, Big Eye entered Connecticut and Rhode Island, trying to pass pieces of legislation that would corner the market by eliminating access to telemedicine. Led by Rep. Kevin Ryan in Connecticut and Sen. Frank Ciccone/Rep. Rob Jacquard in Rhode Island, the bills — one of which passed the House in Rhode Island — use tricky language. These bills argue that telehealth is a “dangerous” technology, and state governments should regulate the market in order to “protect” customers.

Yet there has been no evidence of telehealth’s danger. To say that apps like Opternative is not safe, is like saying that taxis are safer that Ubers. Big Eye is making an argument with smoke and mirrors, using the fear of “new” as the only reason to prevent innovative technology from entering the market.

Instead of fearing the new, legislators should look at telehealth with Uber in context. After Uber entered the market there was an incredible reduction of transportation costs and increase in the supply of available taxis and drivers. Additionally, Uber paved the way for competition in an industry where taxi companies controlled the market through federally created monopolies.

As Christopher Koopman, Matthew D. Mitchell, and Adam D. Thierer, of the Mercatus Center at George Mason University, argue in their paper “The Sharing Economy and Consumer Protection Regulation: The Case for Policy Change,” “[e]ven well-intentioned policies must be judged against real world evidence. … Markets, competition, reputational systems, and ongoing innovation often solve problems better than regulation when we give them a chance to.” In their paper, these economists make a clear argument that regulation is often led by lobbyist groups, like AOA and J&J, in order to create artificial monopolies.

Thankfully, states like South Carolina, New Mexico, and Nevada, have made great steps to protecting the free market in this regard. After vetoing a bill that would prohibit the use of ocular telemedicine, South Carolina governor Nikki Haley said that the bill “uses health practice mandates to stifle competition for the benefit of a single industry … putting us on the leading edge of protectionism, not innovation.”

Similarly, governor of New Mexico, Susana Martinez, explained that HB 364, a bill that would impose jail time on physicians who tried to utilize consumer-based technology, was anti-competitive, and described that “we should explore new technologies and opportunities to expand the availability of services, not prohibit them.”

Even with these successes, governments and policymakers must be adamant in the defense of these fledgling industries. The healthcare lobby will not back down on its fight in Rhode Island, Connecticut, and any other state they may get their hands on. Spending nearly $2 million dollars a year, AOA and J&J have high hopes to control the industry.

Koopman, Mitchell, and Thierer describe this spending as socially costly because it “encourages firms to expend vast amounts of resources — time, money, and effort — to influence regulators…[r]ather than keeping a focus on devising new and innovative ways to create value, entrepreneurs turn their efforts toward devising new ways to acquire these regulatory privileges.” Companies should be focusing on creating good products instead of spending millions to make crony friends.

Legislators need to take note: not only to prevent Big Eye, AOA and J&J from getting their way, but to provide a precedent and standard for future legislation. Feckless legislation prevents innovation. Fearful policymakers feed government-created monopolies. The market has an incredible ability to solve problems, reduce prices, and benefit consumers.

Telehealth is the first step toward a revolutionized future of eye care and health. Big Eye is losing its fight, and will continue to lose its fight as long our representatives stand for the free market and innovation.

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.
Image source: Logan Ingalls www.flickr.com/photos/plutor/
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