Alcon, J&J Agree to Settle Contact Lens Price

Alcon Vision and Johnson & Johnson have agreed to pay a total of $75 million to settle a class-action lawsuit that accused the companies of price fixing on disposable contact lenses. More than a third of the total settlement amount will go toward plaintiffs’ attorney fees, a federal judge in Florida said Wednesday.

The order from U.S. District Judge Harvey Schlesinger, in the Middle District of Florida, directs Alcon Vision to pay $20 million. Johnson & Johnson Vision Care Inc. must pay $55 million. Two other firms had previously agreed to pay $13 million, bringing the total to $88 million. The settlement was informally agreed to in June but was made official this week. Bausch & Lomb and Cooper Vision Inc. had agreed to a settlement in 2019.

After a hearing Wednesday, the judge also agreed to award $32 million to plaintiffs’ attorneys, which may include lawyers in Florida, California and New York.

The order did not indicate if Alcon, which is part of Novartis, a Swiss pharmaceutical company, and J&J, the personal-care products giant, are fully self-insured, or if insurers may have to cover part of the settlement payments. In recent years, Johnson & Johnson, like other large corporations, has utilized a captive company to handle its liability insurance coverage, according to news reports.

At least 15 plaintiffs were initially listed in the complaint but the final number of class members was not mentioned. The companies and attorneys in the case could not be reached Thursday.

The case began in 2015. The plaintiffs’ attorneys, including Robert Gilbert and Steven Marks of Miami, charged that the manufacturers had conspired with each other and with the wholesaler ABB Concise Optical Group, along with optometrists and the American Optometric Association, to set a floor on prices for the contacts. The agreement deterred competition and prevented Walmart, Costco and other retailers from discounting the products.

"As eye care professionals themselves have acknowledged, this new pricing scheme represents a ‘fundamental shift’ in how contact lenses are sold to consumers," the complaint noted.

The plaintiffs made it clear that they were not alleging that the defendants had conspired to fix prices at the same level, but had worked to eliminate the discounting practices and to establish a minimum price. That is considered a violation of U.S. antitrust laws as established by previous court rulings, they said.

Eye care professionals played a unique role because they both prescribe and sell contact lenses, making them the gatekeepers of the disposable contact lens market, the plaintiffs said. Contact lenses are the only prescription medical device sold in the United States pursuant to what became known as a unilateral pricing policy that set the floor on prices, they charged.

The complaint included charts showing that prices offered by eye care professional companies were significantly higher than online and mass merchandisers in many cases.

Alcon and Johnson & Johnson, which between them controlled more than 65% of the U.S. contact lens market in the mid-2010s, denied most of the allegations and did not admit any wrongdoing in agreeing to the settlement.

The agreement comes amid an era of multiple product liability suits against J&J. The company in September announced it will soon halt sales of its talcum baby powder product after decades of litigation and billions of dollars in verdicts over the alleged presence of asbestos in the powder, which plaintiffs have argued has been linked to cancer.

J&J earned scorn from plaintiffs last year when it created a subsidiary to absorb the talcum powder liabilities, then the subsidiary quickly filed for bankruptcy protection. A challenge to the bankruptcy is now pending before a federal court in Pennsylvania, according to news reports.

Topics Lawsuits

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Rabb is Southeast Editor for Insurance Journal. He is a long-time newspaper man in the Deep South; also covered workers' comp insurance issues for a trade publication for a few years.

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