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AG Frosh files complaint over Johnson & Johnson price policy

By Taryn Phaneuf | Mar 23, 2016

BALTIMORE (Legal Newsline) — By negotiating a price agreement with distributors, Maryland Attorney General Brian Frosh argues that Johnson & Johnson Vision Care Inc., violates state antitrust law, according to a civil complaint filed by the AG.

The complaint alleges that eye care professionals complained that they were losing business to discount retailers selling the company’s Acuvue contact lenses.

Purchasing contact lenses requires a prescription, provided by an optometrist. Because they’re a disposable product, users have to purchase contacts regularly. Consumers have the option to buy the prescribed lenses at a doctor’s office or take the prescription to another retailer. Eye care professionals allegedly complained that club stores like Costco undercut their prices.

As a result, Johnson & Johnson set a minimum retail price, which raised prices at Costco. The club store complained about the new policy because it prevented the retailer from offering “the discount pricing that its customers expected,” according to the complaint.

To avoid losing Costco’s business, Johnson & Johnson allegedly negotiated revisions to its resale price maintenance policy.

Frosh’s office claims that Johnson & Johnson agreed to provide $50 in-store cash cards to customers who purchased a monthly supply of Acuvue contact lenses. In return, Costco agreed that the cards couldn’t be used to purchase contact lenses, he said.

The price of a 30-day supply of Acuvue Moist lenses at Costco rose from about $22 to $33 in August 2014 after reaching the agreement, the AG claims.

"We live in a world where we expect competition to flourish," Frosh said in a news release. "It is deeply disturbing that so many Marylanders are paying artificially high prices for a product they need for their daily lives."

Frosh's office declined to answer further questions for this story.

Maryland state law requires that a resale price maintenance policy must be decided and enforced unilaterally by a manufacturer, without negotiation. The law was amended in 2009 to expressly prohibit negotiations between manufacturers and distributors following a federal case that changed the interpretation of federal law regarding resale price maintenance agreements.

“In 2007, in Leegin Creative Leather Products, Inc. v. P.SKS, Inc. ... the Supreme Court overturned almost 100 years of precedent when it held that minimum resale price maintenance agreements are no longer per se illegal under federal law,” the complaint states.

The AG complaint aims to stop Johnson & Johnson from setting or enforcing a resale price agreement for the sale of contact lenses in the state of Maryland. It also seeks civil penalties up to $100,000, plus attorneys fees.

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