Brand Credibility: Bausch & Lomb & greed gone wrong

Bausch & Lomb was the first company to receive FDA approval to market soft lenses and introduced the product in 1971. The popularity of its soft contacts soared after the launch of multiple regimens: “planned replacement,” “frequent replacement,” or “daily wear, two-week replacement lenses." As the market grew & became increasingly competitive, the production costs plummeted but Bausch and Lomb struggled to make profits: end-user prices also dropped and growth in the total number of lens wearers remained stagnant.

In late 1989, Bausch & Lomb repackaged its existing traditional daily-use "OptimaFW" lens as a "Medalist" extended-wear lens; later, it repackaged the same lens again as a "SeeQuence2" disposable. OptimaFW line was the most expensive at $70 per pair (with an expected life of a year or longer); Medalist occupied the middle price range at $15 a pair (with a planned replacement period of one to three months) and SeeQuence2 line was relatively inexpensive at $8 (labeled as either a single-use disposable lens). Bausch & Lomb had thus used three different brand names for one identical product! By 1993, the strategy seemed to have worked and Bausch & Lomb’s annual report announced that “SeeQuence and Medalist lenses continued to post excellent results, with sales rising over 60%.” While in the market, 65% of lens wearers continued to purchase the most expensive variety.

Curiously, the contact lens providers, however, needed to carry only a single supply of trial contacts for all three lens brands. One of such eye care professionals, Dr. Robert Pazen, chose to vent his frustrations with the company. Surprisingly, he received a personal phone call from the SVP of Bausch & Lomb’s Contact Lens Division, Harold O. Johnson. Johnson while confirming that the lenses were identical argued that the difference in pricing was due to what he termed “simple economic theory.” Johnson gave the example of a 10-pound box of soap powder being cheaper per pound than a one-pound box.

In July 1993, a sidebar article in Business Week broke the story for the first time on a national level. News began to spread about the allegations. The next thing counsel at Bausch & Lomb heard was that it had been sued in Alabama. In 1996, an settlement was finally signed with Bausch and Lomb agreeing to a compensation estimated to total at least $33.5 million. In early 1997, the SeeQuence2 and Medalist labels were discontinued in the United States. By August 1997, Johnson & Johnson controlled 40 percent of the $1 billion U.S. contact-lens market while Bausch & Lomb’s share had dropped to 15 percent. 

Source: Class Action Dilemmas: Pursuing Public Goals for Private Gains By Deborah R. Hensler and Other


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