The biggest developments in contact lenses also tend to be the least well known and least understood. A simple three-letter acronym could create a renaissance in contact lenses—and it’s unrelated to clinical advances, polymers, dk/T or expanded parameters.

The acronym I’m referring to is UPP, or “unilateral pricing policy.” For those doctors who understand and embrace the philosophy of UPP, it has the ability to  fundamentally change how they manage their contact lens practices—for the better.

Balancing the Competition
This unilateral pricing policy—employed by some manufacturers—dictates the minimum price you can charge for contact lenses. Doctors are allowed to charge more than the mandated price, but not less. Because this policy is “unilateral,” the manufacturers enact it without agreement from the reseller. To enforce this, manufacturers can cut off practices they catch selling lenses for less than the mandated price.

The policy applies to anyone selling the lenses, regardless of mode of practice or amount of lenses they buy from the manufacturer. For example, Dr. Small, who buys three boxes per year from Company X, and Dr. Large, who buys 1,000 boxes per year from the same company, are both required to sell the lenses for the same minimum price.  

One of the biggest benefits to practitioners of UPP is that it instantly creates a perfectly level playing field; volume discounts for large practices and online retailers go away. While this may create friction with buying groups, the benefits outweigh any ancillary issues. More importantly, however, it forces practices to focus on something other than price to keep prescriptions in their office—if all “retailers” sell the lenses for the same price, the method and environment under which they are sold will be the factors that determine where a patient decides to purchase their lenses.

For example, if a practice prices lenses at the required minimum UPP, and a patient buys their lenses elsewhere, the practitioner need only look in the mirror to determine why the patient did not buy the lenses in their office. Once they can pinpoint why (e.g., poor service, unfriendly staff, etc.), they can get busy addressing those issues. With pricing nearly neutralized (but not completely neutralized, as a practice can charge more than the required UPP) across all practices, the loss of a contact lens order can no longer be attributed to price competition.

Manufacturers also benefit from UPP because retail price erosion can be stopped. With a “race to the bottom” from aggressive price cutting eliminated, motivations to fit a particular lens increase; this has the ability to support and protect brand equity. Outside of the contact lens industry, companies such as Apple and Bose have used UPP for a long time.
Because practitioners can no longer set their own fees for lenses, some will point to the perceived loss of entrepreneurial independence. While this is true, it’s my opinion that the benefits listed above far outweigh this one possible negative.

UPP, Up and Away
Manufacturers employing UPP have the ability to “cut off” a doctor who does not abide by their pricing policy. Some practitioners question the ability and willingness of manufacturers to enforce these rules. To date, I’m aware of several instances where a manufacturer with a UPP has prohibited an online vendor from selling below the UPP. The hope is that all manufacturers with UPP lenses will follow suit, should other resellers not play by the rules.

Finally, the actual price mandated by UPP has so far been higher than lenses that do not have a UPP. This has afforded higher profit margins and created a new sense of excitement surrounding contact lenses.

All things being clinically equal (which of course they rarely are), savvy practitioners will give serious thought to prescribing UPP lenses. For example, if you have a patient with astigmatism and they can wear a UPP lens, and a non-UPP lens is clinically equivalent, a smart doctor will choose the UPP option.

It’s great for your practice and the industry. And ultimately, if the industry continues to thrive, it’s also great for patients. Yes, they may pay more as a result, but UPP has the potential to put the brakes on significantly declining profit margins that were already anemic to begin with. Doctors who say, “contact lenses aren’t profitable” may need to reexamine that statement in the context of newer UPP lenses.