After the U.S. Department of Health and Human Services (HHS) recently unveiled its finalized proposal to lower prescription drug costs by passing on rebate discounts directly to Medicare patients, seniors would rightly expect the AARP to be supportive. After all, the organization is supposed to represent seniors and their interests.
But that’s not what happened. Instead, it took AARP mere hours to publicly criticize the proposal, saying in part that, “AARP supports solutions that will lower drug prices for Americans 50+. The rebate rule finalized today isn’t one.” Why would an organization that supposedly advocates for seniors oppose a policy that saves them money at the pharmacy? A look at AARP’s financials reveals the answer.
AARP has become little more than a lobbying and advocacy arm of the nation’s largest health insurance corporation — UnitedHealth Group (UHG) — and its wholly-owned subsidiary OptumRX pharmacy benefits manager (PBM). In fact, amid recent court proceedings, AARP admitted that there’s no requirement for it to “act with the interests of [members] in mind.”
AARP instead has a strong financial incentive to oppose policies that threaten the profit margins of UHG and OptumRX. Between 2010-2017, the organization was paid approximately $4.2 billion from UHG alone, stemming from AARP-branded healthcare policies administered by UHG and OptumRX.
According to researcher Chris Jacobs, “Revenue from UnitedHealth constitutes nearly 40% of AARP’s entire budget—more than double the amount of revenue generated from membership dues.” With this in mind, it’s little surprise that AARP would oppose an effort to provide rebates to consumers instead of PBM middlemen like OptumRX.
According to the HHS, under the current rebate system, “Drug companies pay rebates and other payments to PBMs, but these payments are not reflected in patient out-of-pocket drug costs.” The reforms opposed by AARP would improve this opaque system and implement “point-of-sale discounts [that] will lower out-of-pocket costs for patients using drugs with high prices.”