On March 4, 2016, the Maryland Attorney General announced a civil suit for alleged unlawful resale price maintenance against Johnson & Johnson Vision Care Inc. (“J&J”) in connection with its sale of contact lenses. The Maryland AG alleges that J&J’s resale price maintenance imposed on club membership discount stores has inflated the cost of “Acuvue” lenses by 35%.
According to the AG:
Optometrists complained to Johnson & Johnson that discount stores such as Costco were undercutting their prices. The company responded in 2014 by establishing a Resale Price Maintenance Policy, which set minimum prices for all sellers, including discounters.
Costco objected, and said they would stop selling Acuvue lenses. Johnson & Johnson tried to keep Costco as a seller, but also threatened to pull Acuvue products from the stores and not allow them to be sold unless Costco agreed to the minimum price.
According to documents obtained by the Office of the Attorney General during an investigation, Johnson & Johnson struck a deal with Costco: The club store agreed to abide by the minimum price, but the manufacturer agreed that Costco could provide a $50 in-store cash card – to be used only on other products but not contact lenses – to customers who purchased a monthly supply.
The Maryland AG is seeking to halt implementation of any resale price agreement as well as civil penalties.
The suit illustrates that although RPM is usually lawful under federal law, some states still view it as problematic – at least in certain instances. It’s the last paragraph of the AG’s press release (quoted above) that is the heart of the case — the AG’s allegation that J&J did more than unilaterally impose an RPM policy, but reached an agreement on resale prices.