When Americans travel abroad, they are invariably struck with the differences, big and small, with their shopping choices — what they can and cannot buy. Quentin Tarantino encapsulated this in one of the opening scenes of “Pulp Fiction,” in which John Travolta’s “Vincent Vega” explains these “little differences” to Samuel L. Jackon’s “Jules Winfield.”
For Vega, it was things like a McDonald’s Quarter Pounder being known as a “Royale with Cheese” or being able to buy a glass of beer at the movies. For some Americans, it is the wonderment of being able to buy things like contact lenses in vending machines in Europe.
Yes, throughout Europe, consumers wishing to purchase contact lenses don’t need to visit an optometrist, receive a prescription, and then buy the lenses from either a medical provider or major lens provider. They can, in 25 out of 28 European countries, procure contact lenses from a secure, stationary machine in the same way Americans can purchase a Snickers or Diet Coke.
In the United States, on the other hand, those interested in contact lenses must obtain a prescription and then can either buy contact lenses from that care provider or buy them from some outlet with the wherewithal to take the prescription, verify the prescription, and keep the records of that prescription (not to mention complying with the commensurate privacy rules that go with storing medical records).
All of this increases the cost of contact lenses to consumers, but it doesn’t end there. Alcon, one of the largest manufacturers of consumer eyewear (including contact lenses) in the world, instituted a “unilateral pricing policy” in 2013, setting a minimum price for contact lenses at which vendors could offer those lenses to consumers. Three other contact lens makers followed suit and instituted UPPs of their own.
This, of course, meant vendors couldn’t compete with one another on the basis of contact lens price. If that seems to be the definition of anti-competitive, this was the impression of several states that enacted anti-UPP laws, as well as a Utah court that upheld that state’s anti-UPP law. That ruling ultimately caused several contact lens manufacturers (including Alcon) to drop their UPPs altogether.
But ultimately, a principal goal of regulations like these is to change behaviors by raising costs — manipulating a marketplace to satisfy the desires of one constituency over another. This can be done through direct regulation, meaning creating rules or mandates that drive up costs, or it can be done by levying taxes on a good or service, which leads to the same outcome, only much more directly.
Of course, what regulators and regulatory proponents invariably fail to understand are the unintended consequences and workarounds that spring up in the wake of such regulation or taxation. They can create perverse disincentives, like rules in the Endangered Species Act that discourage habitat preservation. Or they can create compliance gymnastics, like rules in North Carolina, where seized assets are supposed to fund local education instead of local law enforcement, but localities can instead kick that money up to federal agencies and get 80 percent of it back to their police.
Regulations may also spark black or even “gray” markets. Essentially, in a bizarre way, that’s precisely what the North Carolina situation has done — created a gray market in seized private assets for the funding of government agencies.
For the unfamiliar, unlike a “black” market, a “gray” market is where the goods being traded are legal goods, and buying and selling those goods is legal, but the process is done to avoid some statutory or regulatory regime. A case-in-point is what has been happening with the global contact lens marketplace.
Because of regulatory requirements and the lock entities like Alcon have on the marketplace, consumers in the United States do not have the same competitive options that consumers in places like Europe do for buying their contact lenses — unless they try to go outside of the American marketplace and buy their lenses from non-American vendors. Adding to this, manufacturers like Alcon don’t like it when non-optometric vendors in the United States buy their stock of contact lenses from de-regulated distributors abroad (at much lower prices).
This is at the heart of a lawsuit brought by Alcon against Lens.com, the nation’s second-largest online seller of contact lenses. Although couched in the language of a trademark dispute, what it really is about is the idea that Lens.com — while simply doing what any rational actor in an artificially restricted marketplace does — should be prevented from delivering to consumers what consumers demand at a price they’re clamoring to pay.
Obviously, the courts should see Alcon’s lawsuit for what it is: yet another attempt to control prices and prevent competition in the marketplace. But the lawsuit underscores the continuing problem with the anti-competitive nature of much of America’s regulatory regimes: that these regulations are enacted, in many cases, not to protect the health or safety of Americans, but to instead protect the market share of America’s largest corporations.
As the current administration continues to march towards the largest regulatory ramp-up in U.S. history, we need to watch very carefully. Contact lenses are only one part of the variety of corporate interests that use the power of regulations to destroy their competitors.