Posted on 06/21/2004 1:34:20 PM PDT by Buford T. Justice
An argument over eye exams is simmering between optometrists and contact lens sellers. And Internet shoppers and investors do not like what they see.
In December, President Bush signed the Fairness to Contact Lens Consumers Act, which, among other things, required eye doctors to give prescription information to their patients. Many optometrists had previously refused to do this, to prevent their customers from fleeing to discount contact lens sellers, many of them online.
By itself, the provision would have been a boon to discount contact lens sellers like Drugstore.com's Vision Direct and 1-800 Contacts, which lost huge numbers of customers in five states that required retailers to verify prescriptions before shipping. But Congress, in designing the law, saved a slice of pain for the discounters, because it gave optometrists in 42 states the option of refusing to pass along the prescription if it was more than a year old. (The law exempts eight states that had already set a two-year threshold.)
Since the law went into effect in early February, thousands of orders that would have sailed through the discounters' systems last year have been snagged on the one-year provision, forcing the sellers to call the customers and explain that they have to return to their optometrist's office for an eye exam before they can order.
When patients are there, discounters argue, they are being subjected to the hard sell by doctors who profit on what they prescribe. What is more, some discounters argue that consumers do not necessarily need annual exams - an argument that optometrists reject.
Since February, optometrists' eye-exam revenues have climbed, industry officials say. Meanwhile, the growth in sales has slowed for contact lens discounters. Last year, sales at 1-800 Contacts, which is publicly held and which takes roughly half of its orders over the Internet, increased 11 percent. The company will not say what its growth rate has been since Feb. 2, when the law took effect, but its first-quarter earnings were up 9 percent, to $49 million from $45 million, compared with the same period last year.
Kevin McCallum, a spokesman for 1-800 Contacts, would not disclose the rate at which the company canceled orders in the past, but he said the cancellation rate since February, at 20 percent, was an increase.
At Drugstore.com, which purchased the online lens seller Vision Direct when the legislation was in the final stages of being passed, the effect has been more pronounced. According to Bob Barton, Drugstore.com's acting chief executive, Vision Direct's sales grew 50 percent last year, and are now growing at an annual rate of 20 percent. Cancellations have increased, to "just below" 20 percent.
Last week, Drugstore.com reduced its sales outlook for the year to a range of $355 million to $370 million from $360 million to $390 million, a decline the company ascribes in part to the new bill. Drugstore.com's stock has dropped nearly 50 percent from its high this year to close at $3.55 on Friday, and the company says that it has experienced a jump in the number of angry customers calling the site.
Mr. Barton, who also holds the title of chief financial officer for Drugstore.com, said he had expected sales growth to slow as a result of the new legislation, "but unfortunately, it's taking customers longer to understand the process than we'd anticipated."
The company had hoped to break even for the year or earn as much as $4 million, before accounting for taxes, depreciation and amortization expenses. Now it expects to lose $2 million to $4 million under the same accounting terms.
Still, Mr. Barton said he was optimistic about the $3.8 billion market for contact lenses, roughly 15 percent of which are sold online. Nearly two-thirds - 64 percent - of contact lens wearers are women, he said, and the majority of Drugstore.com's customers are women. The average order size for contact lenses is "fairly sizable," he added, and profit margins are 25 to 30 percent.
But those orders now come at a higher cost. Mr. Barton said he has had to add customer service representatives to handle the increase in calls to and from customers whose orders have been derailed.
Mr. Barton said he hoped the pace of sales would pick up as the year went on. Customers who have been forced to get new prescriptions will again need to replace their lenses, he said, and this time their prescription will be new enough for the online sellers to fill. "And we'll continue to market to them and let them know the value they can see from us, and we'll get these guys next year."
Representative Richard Burr, a North Carolina Republican, who was the primary sponsor of the Fairness to Contact Lens Consumers Act, said in a telephone interview that he also thought the sales slump would be temporary, although "the jury's still out on the long-term effects of the federal legislation." The federal law was based on California legislation enacted in 2002, he said, and when that state law was enacted "there was a decline in online sales for three, four months, then sales picked back up."
Mr. McCallum, of 1-800 Contacts, disagreed, saying the company had seen "no real rebound" in California. He also questioned the one-year threshold for new prescriptions, contending it was established without scientific evidence supporting the need for annual eye exams.
The United States has 36 million contact lens wearers, and the average eye exam costs $100, Mr. McCallum said, meaning that optometrists are "guaranteed $3.6 billion in exam revenue."
"But the question is what benefit does that provide?" he said. "The optometric community has never done that study."
Dr. Victor Connors, president of the American Optometric Association, a trade group, said the organization lobbied Congress for the one-year threshold because it reflected the standard of care. "I haven't seen any health care studies on that, but I'm sure they've done them," he said.
Jeffrey S. Eisenberg, managing editor of the trade publication Review of Optometry, said he was unaware of any such studies.
Dr. Connors said the one-year standard was nonetheless the safest approach. "People's perception is that as long as there's no pain and they're seeing well, everything's O.K.," he said. "That may not be true."
Robert Atkinson, a vice president of the Progressive Policy Institute, a Democratic policy research group, who specializes in e-commerce research, said the federal legislation was "far from perfect."
In many instances, Mr. Atkinson said, smaller e-commerce start-ups have had to fight laws that were set up to protect entrenched industries from online competitors. Nearly a dozen states, for example, have laws forbidding anyone without a funeral director's license from selling a coffin, hampering some online competitors. "The contest is completely tilted in favor of incumbents, and the fact that anything gets passed at all is a miracle," Mr. Atkinson said.
In the meantime, many online customers are getting an abrupt introduction to the new federal law. Last week, 1-800 Contacts rejected a contact lens order from Rob Utz, a sales manager for an equipment company in Valencia, Calif., because his prescription was nine days older than the one-year limit.
Mr. Utz, who had ordered eight boxes of contact lenses for $120 (after a $30 rebate), had been paying $65 for two boxes at his optometrist's office. After being notified of the cancellation, he called his optometrist "with a few choice words."
The ordeal has left Mr. Utz considering other options. "I'll tell you what," he said. "Lasik is looking better every day."
Use an opthomologist, not an optomotrist. The former is an MD, the latter is not. Our opthomologists even post our contact prescriptions directly to 1-800 Contacts for us.
Ping
Semper Fi
When I got my first pair of glasses in Japan, I was utterly shocked to be escorted upstairs for a FREE eye examination that determined my prescription thus thus allowing me to walk out of the shop with my new glasses perched on my nose the same day.
Was the exam conducted by a "fully-trained, highly-skilled, professional eye doctor"? Obviously not. But you obviously don't need to be one to operate one of those lens-shifting gizmos. It's just a matter of a few weeks training (if that).
And, I am sure that the training was sufficient to teach the operator to recognize the symptoms of any eye problems requiring actual medical care.
Looks to me that the eye doctors in the states have a good racket going -- and want to keep it.
If you can afford it, do it sooner rather than later, because every day you get out of bed in the morning able to SEE is a wonderful gift. It's not something I'll ever take for granted, wish this could have been available years ago when I was young.
LASIK absolutely rocks!
I had it done at age 35, and I wish I could have had it done it aty 25, when I was more active and in the Army. Haven't regretted a minute of it.
The site I order my lenses from lets you fill in your own prescription. I don't need anything from my doctor.
Hub and I both had radial keratotomies 7 years ago. Best decision we ever made. The eye surgeon (MD) was extremely skilled, no starring or smearing at all. Just perfect vision.
Waking up in the middle of the night is when I appreciate it most.
Not having to feel around looking for your glasses first thing in the morning is great too.
New software called Wave Front eliminates the night visions issues. Everyone that I talk to about Lasik (family included) raves about it. I'm going for mine next week and I can't wait.
I finally wangled my Rx from my opthalmologist - well, actually I got it from a new nurse who didn't know she wasn't "supposed" to give it out. She actually called me to ask if I'd bring it back to her. I said (politely) no freakin' way, and laughed after we hung up.
2 1/2 years of better than 20/20. That after glasses since third grade. My favorite view post Lasik....the ocean horizon. It turns out that it isn't just a straight line. Cool. Enjoy your new life.
I was 20/900 in my "good" eye, 20/950 in the "bad" one. I know what you mean about the microscopic vision, my eye surgeon even commented on it. He said, "You're going to miss that..." but I was at the point where I was wearing contacts AND glasses, best correction I could get for either one alone was just enough to pass the vision exam on my driver's license...
I don't remember a childhood without glasses...I'm still at risk, like many high myopes are, of sudden retinal detachment, but being able to SEE--the tiny little leaf buds at the tops of the trees in spring--the expression in my husband's eyes across the room--not to mention in the dark I was actually blind with or without glasses/contacts--all in all it's a near-miraculous improvement.
But you're right. If I were an artist, I wouldn't have had it done.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.