Contact lens laboratory files suit against Valeant

January 6, 2016

In a recent filing, Dallas-based gas permeable (GP) contact lens laboratory TruForm Optics has taken legal action against Valeant Pharmaceuticals. The class-action complaint aims to stop competitive behavior, obtain damages for past competitive behavior, and to restore competitive market conditions.

In a recent filing, Dallas-based gas permeable (GP) contact lens laboratory TruForm Optics has taken legal action against Valeant Pharmaceuticals. The class-action complaint aims to stop competitive behavior, obtain damages for past competitive behavior, and to restore competitive market conditions.

Valeant and its subsidiary Bausch + Lomb have shaken up the contact lens industry by quietly purchasing competing GP contact lens manufacturer Paragon Vision Sciences, attempts to purchase independent GP laboratories like TruForm Optics, product price hikes, and monopoly-like control over the orthokeratology (ortho-k) corneal reshaping market.

Related: Valeant shakes up the GP lens market

In related news, today Valeant named Howard Schiller as interim CEOValeant CEO Michael Pearson has been hospitalized since December 25, 2015, with severe pneumonia and will be on a medical leave of absence until further notice. Schiller is a board member and former CFO of the company. 

Jan Svochak, vice president of TruForm Optics, serves as president of industry support group Contact Lens Manufacturers Association (CLMA) and has been vocal about Valeant’s actions. Svochak declined to comment due to the pending legal action.

“It’s a multifaceted approach that Jan has taken,” says Daren Nygren, CLMA vice president and managing partner at Custom Craft Lens Service in Las Vegas. “The CLMA and the Gas Permeable Lens Institute (GPLI) are sending a unified message that we are all standing together and taking it one step further with TruForm and filing this lawsuit. Part of the end game is to raise awareness of this problem and involve the government from a regulatory standpoint.”

GPLI is the educational arm of the CLMA.

“I understand why TruForm is doing it,” says Ed Bennett, OD, MSEd, FAAO, executive director of the GPLI and assistant dean for student services and alumni relations at University of Missouri–St. Louis College of Optometry. “I think TruForm executives feel they need to do it not only on behalf of themselves because of the very significant loss of revenue due to what exists today as a virtual monopoly but also on behalf of all the CLMA member labs, many of whom are in a similar situation.”

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Nygren says that the CLMA member laboratories differ in their opinions on how to address Valeant’s actions.

“If we stay focused on educating the practitioner and on how important the GPLI is to the industry, that will benefit us in the end,” he says. “If you stay on the Valeant bandwagon, some people will get tired of that.”

However, a difference of opinion on how to proceed doesn’t mean that any of the labs plan to opt out of the lawsuit.

“Many of us have said that we want to wait and see how the judge classifies the case,” says Nygren. “No one I’ve spoken to has opted out.”

A spokesperson for Bausch + Lomb declined to comment due to the pending litigation.

Next: TruForm's complaint

 

TruForm’s complaint

TruForm Optical’s case against Valeant is still quite preliminary, according to Stuart M. Paynter, counsel for the plaintiff in Washington, DC. The next step is Valeant’s lawyers filing a motion to dismiss, which is standard. Going to trial in an antitrust case usually takes a minimum of two years.

“From an antitrust perspective, it’s pretty much bread-and-butter antitrust law,” he says. “We think we can win.”

Paynter says that Valeant can restore competitive market conditions by breaking up the previous Paragon transaction. This can happen by spinning off either Paragon or Bausch + Lomb.

Although there has been a report of Valeant looking to sell Paragon, the sale would not affect the lawsuit.

“[A sale] would moot our request for that particular release,” Paynter says, “but there are the past damages. This complaint will make a difference for our client. We’re definitely seeking real money and real relief. They will get damages for the past conduct. If this [complaint] will push Valeant over the edge in spinning off and making the market more competitive, then it will have served its purpose.”

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If TruForm Optics prevails, damages would be awarded for past price increases. Paynter says the case is still too preliminary to calculate damages.

“You get the amount of the overcharge times three,” he says. “That’s the basic structure of how damages are calculated in an antitrust case. And the longer the conduct goes on, the more the damages build up. We want to wait until we have final expert calculations. We think it’s millions.”

Although the complaint was filed as a class action, that’s no guarantee that it will remain a class action. That determination is made by the judge.

“It’s preliminary to be talking about how the case will be certified,” Paynter says. “In general, the idea is that other labs wouldn’t have to do anything to be part of the class and share in the recovery. You don’t have to opt in-you’re automatically in unless you opt out.”

Next: Practitioner perspective

 

Practitioner perspective

Many practitioners are viewing TruForm’s complaint against Valeant as an example of a big corporation against the little guy.

“It’s important people are aware of what’s going on and that it could affect them in everyday practice,” says Roxanna Potter, OD, in private practice in Sylvania, OH, and a member of the GPLI Advisory Panel. “It applies to more people than specialty contact lens fitters. It could be a slippery slope in other aspects of lens care. Valeant owns Bausch + Lomb-there’s nothing to say there couldn’t be changes in the soft lens market. Most ODs may not realize how many patients they have in a Boston lens and how far reaching that could be.”

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Doug Benoit, OD, FAAO, a member of the GPLI Advisory Panel in Manchester, NH, likens the situation to David vs. Goliath.

“This is one of those David vs. Goliath situations, which is not to be tolerated,” he says. “A lot of practitioners like myself really take umbrage with a company trying to pull this type of shenanigan. I think a lot of them have moved away from any Boston product. I think it’s backfired on Valeant because I have instructed the laboratories I use to not use a Boston product for my lenses. I’ve told them no Boston products unless absolutely necessary.”

Dr. Bennett commends TruForm Optics executives on the leadership role they are taking by filing the complaint.

“Jan’s feeling had to be, ‘Am I going to be the last president of the CLMA?’ I’m sure he felt in part that he owed it to the Association by drawing a line in the sand,” he says.

Next: What's next

 

What’s next

Although the legal complaint may take some time to resolve, other changes may happen more quickly, especially if Valeant divests Paragon.

“All indications are that Paragon is going to split off from Valeant,” says Nygren. “I think some lab owners would like to see how that plays out before continuing down the path of attacking Valeant. That’s our biggest concern: the monopoly. Some of us will be less interested in pursing Valeant if our biggest concern is addressed.”

Nygren doesn’t rule out welcoming Paragon back into the CLMA if and when the company no longer part of Valeant.

“I’ve talked to people within the Paragon umbrella,” he says. “People think that it would be beneficial for them to come back into the mix, especially with Paragon’s particular product. It depends on who purchases Paragon. With Valeant’s end game being marketing direct to the consumer and bypassing the traditional lab channel, there aren’t many people with the resources interested in acquiring Paragon.”

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