Costco Accuses Johnson & Johnson of Price Fixing
May 4, 2015
By Mark Terry, BioSpace.com Breaking News Staff
Costco Wholesale Corp. filed a complaint in March against Johnson & Johnson , accusing J&J’s Vision Care Inc. of price fixing related to its contact lenses. The suit was made public on Friday in J&J’s quarterly report to the U.S. Securities and Exchange Commission (SEC).
J&J’s 10-Q filing has a laundry list of updates on various lawsuits, but the Costco lawsuit is new, having been filed in March 2015. The filing states, “In March 2015, Costco Wholesale Corporation (Costco) filed a complaint against Johnson & Johnson Vision Care, Inc. (JJVCI) in the United States District Court of the Northern District of California, alleging antitrust claims of an unlawful vertical price fixing agreement between JJVCI, Costco and unnamed other distributors and retailers. Costco alleges that the alleged agreements harmed competition by causing increases in the price Costco customers pay for JJVCI contact lenses. Costco is seeking an injunction and monetary damages.”
It also goes on to state that “over 30 putative class action complaints” were filed by patients that used the contact lenses in courts around the U.S. It also mentions that JJVCI filed in the District of Utah seeking a judgment regarding a state law that banned unilateral pricing policies for contact lenses. The company alleges that this law violates the Commerce Clause of the United States Constitution.
J&J is not the only company involved in the lawsuit in Utah. Forth Worth, Texas-based Alcon Laboratories, Inc. and Bridgewater, N.J.-based Bausch & Lomb are also filing the suit. The three companies, in 2013 and 2014, tried to implement policies that set a minimum price for contact lens products. If retailers tried to sell below that minimum price, the companies would not distribute the products.
Part of the problem revolves around eye doctors being able to both prescribe contact lenses and sell them to their patients. “Because of this unique situation,” Utah Senator Deidre Henderson said in a statement, “consumers should absolutely be able to take their prescriptions and shop around for the best price.”
The three companies, however, claim it violates the U.S. Constitution’s Commerce Clause, which prevents states from making laws that regulate business activities outside their borders.
“By removing a company’s right to set a unilateral pricing policy, the state of Utah has overstepped its bounds under the Constitution,” said Donna Lorenson, Alcon spokeswoman in a statement. “It has passed a law that controls activity out of state and interferes with programs and practices that benefit patients, eye care professionals and the marketplace for vision care products.”
The Costco lawsuit argues that these alleged agreements are anti-competitive and force its customers to pay more for contact lenses manufactured by J&J.
In 2014 China fined Johnson & Johnson, Bausch & Lomb and other manufacturers of contact lenses and eye glasses, more than $3 million for price fixing. In addition to the fine, the Chinese National Development and Reform Commission (NDRC) forced the companies to jointly promote their products in major Chinese cities in order to stabilize prices.
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