BY RICHARD CHAVEZ
COSTCO MEMBERS KNOW they can
expect quality and value when they shop at
Costco. This extends to every product and
service the company offers, including contact lenses.
Over the past two years, Costco Optical
has conducted a vigorous campaign against
contact lens manufacturers to protect Costco’s
rights to sell lenses to our members at the
lens prices at
lowest prices. The major manufacturers instituted programs that required retailers to sell
at prices dictated by the manufacturers.
Costco strongly objected to these policies and
took the position that Costco alone should
decide the prices it charges.
The fight over pricing started in 2013
after one company, Alcon—maker of Dailies,
Air Optix and FreshLook lenses—required
that retailers that wanted to sell a newly introduced lens had to charge the price dictated by
Alcon. This policy would have required
Costco to sell the product for a higher price
than Costco would have otherwise charged.
Costco refused to sell the item, responding to
Alcon that the establishment of an artificially
high price was illegal and harmful to Costco
members and consumers in general.
Another manufacturer, Bausch & Lomb
(owned by Valeant Pharmaceuticals
International Inc.), followed with a mandated
retail price on a new item. Costco again
refused to carry the item.
In August 2014, Johnson & Johnson
Vision Care (a subsidiary of Johnson &
Johnson), maker of Acuvue and Oasys con-
tact lenses and the dominant contact lens
manufacturer, announced its own pricing
requirement, forcing Costco to raise prices on
many products an average of 26 percent. If
Costco refused, Johnson & Johnson Vision
Care would have cut off all sales to Costco.
“Since that would not have been in the
best interest of our members, who have to
purchase from us the product prescribed by
their eye care provider, we had to carry the
products at the mandated prices. After considerable discussion with Johnson & Johnson
Vision Care, Costco gained some pricing
relief that allowed an additional 10 percent
warehouse club discount,” says Art Salas,
assistant vice president, Costco Optical.
Costco registered strong objection to
Johnson & Johnson Vision Care concerning
its pricing requirements, as Costco believes it
is critical that it be able to determine prices
and value for its members, and backed this
objection with a lawsuit, alleging violation of
unfair-competition and other laws. In May,
Johnson & Johnson Vision Care announced
that it was ceasing the practice, and Costco
withdrew the lawsuit.
This change is great news for Costco members and users of Johnson & Johnson Vision
Care products. They will now see savings of up
to 33 percent on these products compared with
traditional optical outlets. Costco is now also
able to offer the newest Johnson & Johnson
Vision Care products. C
Richard Chavez is senior vice president of
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