Conflict Over Contact Lenses

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."

I should have known! It's all Bush's fault! And it took only three sentences for the NYSlimes to lay the blame at his feet. Wow.

I don't know if glasses work the same way or not, but I've just had a ridiculous situation with my son. He is 6 and last had an eye exam in January. His prescription didn't change so he has kept the same glasses and the rx was written more than a year ago.

He just broke his glasses (beyond repair). I called to get the prescription faxed in to an eye doctor so he could get new glasses made. They won't accept it. He has to have a new eye exam.

I had a go around with my eye doctor about this that ended up with me filing a report on him.

I've had the same prescription for 14 years. I've ordered Acuvue lenses from 1-800 Conctacts for as long as I can remember. The most recent time I made an order, they told me about this law and said I'd have to get an eye exam before I could get my order fulfilled.

I told the doctor that I wanted a copy of my prescription and didn't want to order lenses from his office. He lectured me for five minutes before I finally walked out and told him to fax me my prescription.

Not only did he never fax me my prescription, he ordered contacts for me, up to my insurance limit, without my authorization.

Eye doctors aren't happy about this law. They make a lot of profits from selling contact lenses.

"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)."

If that worked for you, that's great. However, eye exams run solely by people given a six weeks training course will not work for everyone and in fact, it could mean future loss of vision for some.

Both my optometrist and my opthalmologist have techs trained to run the exams. Each time I have sailed through all those machine exams with no problems, and the techs hand over the machine based new prescription information.

On some recent eye exams, after the machine tests, a routine eye exam, and detailed refraction assessment, both my Optometrist and then my Opthalmologist found rather alarming changes in my eyes which the machines had failed to pick up.

Each time the closing speech had just begun "we're done, all's well, you can pick up your prescription on the way out..." routine when I then heard "Uh oh, hang on a second, hmmmm, just a minute, please..."

The prescription results from the machine are intended to just be a beginning point with the final refraction measurements performed by the Optometrist or Opthalmologist. In my case, the machine recommended refractions are usually far off from my final and Optometrist's recommended prescription.

It is time consuming to sit in that chair with someone peering into your eyes saying "okay, is this better or how about this?"

Trained techs assist in the eye exam by lining up your chin and forehead, getting your eyes centered and pushing buttons on a machine but they are not qualified to perform eye exams, give accurate prescriptions nor give medical diagnoses.

I trust my Optometrist solely because he has insisted that I go to an Opthalmologist (and he did not refer me to one, I had one already) after he examined my eyes and found some alarming changes.

Maybe I am lucky to have found a very competent Optometrist. The Optometrist's exam findings have been confirmed by the Opthamologist each time. By the way, neither know each other personally or professionally.

...because it gave optometrists in 42 states the option of refusing to pass along the prescription if it was more than a year old...

My optometrist won't order extra lenses on a prescription that is over a year old.

What is more, some discounters argue that consumers do not necessarily need annual exams - an argument that optometrists reject.

I'm sure the opthalmologists would agree with the optometrists on this point. Even if your prescription doesn't change, it really is important to have your eyes looked at once a year, especially if you're wearing contacts, i.e., putting something directly onto your eye every day.

Not mine. Both my Optometrist and my Opthalmologist continue to wear eyeglasses.

When I asked about laser eye surgery, the Optometrist said he was going to wait until the surgery improved. He also said he would be happy to refer me to some very experienced eye surgeons.

The Opthalmologist's answer was interesting:

"Personally, I do not want that surgery done on my eyes. Errrrh, that's just me... you know we have a nice brochure about it in the lobby..."

Eye doctors aren't happy about this law. They make a lot of profits from selling contact lenses.

I'm sure 1-800 Contacts isn't doing too badly, either. I wouldn't mind getting my contacts from there, but I still think it's important to get an eye exam every year.

I have a family history of Type II diabetes, so I get my eyes examined every year and I pay extra to get my retinas photographed. Many diabetics don't find out they are diabetic until they go to the eye doctor, who will find the eye damage that has already started to occur as a result of the disease.

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