Johnson & Johnson to Pay Up to $60 Million, Including Rebates to Consumers, and Change Practices; AOA Also Settles
Attorney General Hardy Myers announced today that buyers of contact lenses would receive cash rebates on future lens purchases and eye exams under a proposed settlement with Johnson & Johnson Vision Care, Inc. (Johnson & Johnson or J&J). Johnson & Johnson was the last defendant to settle an antitrust action brought by Oregon, 31 other states, and a private consumer class against three contact lens manufacturers and the American Optometric Association (AOA). Settlements had previously been reached with Bausch & Lomb, CIBA Vision, and the AOA.
The lawsuit alleged that retail prices of disposable contact lenses were too high because Johnson & Johnson and the other defendant manufacturers agreed with the AOA, in violation of the antitrust laws, that their lenses would be available only from eye care professionals (optometrists, ophthalmologists and opticians), retail optical stores or mass merchandisers. Plaintiffs alleged that because of this agreement consumers had more difficulty buying replacement lenses through the mail or from pharmacies.
All defendants agreed to settlements without admitting any wrongdoing or violations of law. The defendants have denied participating in the alleged agreement and continue to deny that their actions caused retail prices of replacement lenses to be above competitive levels.
Today Oregon and the other plaintiffs moved for preliminary court approval of the Johnson & Johnson settlement agreement. Oregonians who bought replacement contact lenses from Johnson & Johnson, Bausch & Lomb (B&L), or CIBA Vision at any time since January 1, 1988, are eligible to receive rebates under the proposed settlement. Acuvue®, SeeQuence®, Focus®, and NuVues® are among the brands sold by these manufacturers.
Because J&J, B&L, and CIBA make the most widely sold brands, most of the more than ten percent of Americans who wear contact lenses are eligible for benefits under the settlement.
Eligible consumers may receive benefits under both the proposed J&J settlement and a proposed settlement reached with B&L in January and already preliminarily approved by the Court.
Under the proposed settlement, Johnson & Johnson guarantees to distribute at least $30 million in rebates to consumers. Bausch & Lomb guarantees to distribute at least $9.5 million in rebates and coupons. If less than the guaranteed amounts are distributed, each manufacturer will pay into a settlement fund the difference between its guarantee and the amount actually distributed.
Both companies will offer consumers benefits packages that include $50 off the purchase of four six-packs of disposable lenses and $25 off the cost of an eye examination by an eye care professional plus an additional $25 off a future purchase of four or more lens six-packs. Four six-packs of lenses can cost consumers anywhere from about $75 to $100 or more.
In addition to offering consumers the benefits package, J&J also agreed to pay $25 million in cash into a settlement fund, B&L agreed to pay $8 million, the AOA agreed to pay $750,000, and 13 individuals agreed to pay $8,000 each. Plaintiffs plan to seek court approval to recover attorney fees and costs from these funds.
J&J also agreed to pay up to $5 million in cash or coupons to consumers who used to wear J&J contact lenses but no longer do so. Those consumers will receive their choice of either $35 in cash or $50 in coupons upon filing an appropriate claim form, which may include either a copy of a valid prescription, a receipt or credit slip showing a purchase after January 1, 1988, or a signed statement from their eye care professional. Plaintiffs will seek to establish a similar fund for people who have stopped wearing B&L and CIBA lenses.
Both Johnson & Johnson and Bausch & Lomb agreed to change their distribution practices regarding pharmacies, mail order, and other "alternative" channels of trade. The injunctive relief in the Johnson & Johnson settlement provides that for a period of five years from the date the settlement agreement becomes final, the company will sell and distribute its replacement contact lenses to "alternative channels of distribution" in a commercially reasonable and non-discriminatory manner, provided the alternative channel, "like any other authorized account, will sell contact lenses only to consumers based upon a valid prescription and in compliance with all federal and state laws and regulations regarding the sale or dispensing of contact lenses," and agrees not to substitute diagnostic lenses for a revenue-producing product. Bausch and Lomb agreed to substantially similar terms.
The AOA agreed not to ask any contact lens manufacturer to refuse to sell lenses to any type of distributor, or encourage optometrists to refuse to write prescriptions for any manufacturer because its lenses are sold by outlets other than eye care professionals. The AOA also agreed not to make unfounded claims linking eye health problems with the channel of trade from which contact lenses are bought, and not to oppose the release of contact lens prescriptions to consumers on request, except on valid medical grounds and as consistent with state law. The AOA will publish a letter from its president in the AOA News setting forth these agreements.
Trial of the case against Johnson & Johnson and the AOA began March 19, 2001, in Jacksonville, Florida. An agreement in principle was reached after five weeks of trial. News of the agreement was embargoed until the settlement documents were submitted to U.S. District Judge Harvey E. Schlesinger at a 3:00 p.m. hearing today.
"This settlement benefits Oregonians who use contact lenses," Attorney General Myers said. "I am pleased that we were able to resolve this hard-fought litigation with such a positive result."
Consumers can get more information on the lawsuits and the settlements, or register for the Bausch & Lomb benefits package at http://www.freecontactlensrebates.com or by calling1-888-707-5880. The number to call for the Johnson & Johnson benefits package is 1-888-437-1294. Consumers may also register temporarily at http://www.acuvue.com until Johnson & Johnson opens a new Web site for this settlement. The federal court will consider whether to approve the settlements at a hearing in Jacksonville, Florida, today.