If you needed further proof on AARP’s advocacy on the IRA, look no further than the misleading report they just rolled out.
AARP is doing everything it can to support the flawed and unconstitutional IRA price setting scheme and protect its financial stake in the Part D program. That includes putting out this flawed report to spin a misleading narrative. It overlooks the role of insurers and pharmacy benefit middlemen who are getting massive rebates and discounts on medicines while forcing seniors to pay more. That’s not surprising given AARP gets more revenue from insurers than it does from its members.
- Net prices for brand medicines remained flat in 2022.
In fact, they have been below or in line with the rate of inflation for the past five years. And net prices for brand medicines are 50% lower than their list prices, on average.
- Part D is not a key driver of spending in Medicare, with majority of prescriptions filled with lower-cost generics.
Part D drug spending, including both brand and generic medicines, made up only 12.1% of total Medicare benefit spending in 2022. According to CBO, the average net price of a medicine in the Medicare Part D program declined by 12% between 2009 and 2018. Today, 90% of all prescriptions in Part D are filled with generics.
- Insurers and their PBMs that administer Part D plans negotiate significant rebates and discounts.
Insurers and their PBMs negotiate rebates and discounts for 99% of the most commonly used brand medicines, and for the top 200 brand medicines. According to MedPAC, manufacturer rebates lowered total gross Part D expenditures by 23% in 2021. MedPAC data also show that total Part D rebates paid by manufacturers increased by nearly 475% between 2010 and 2021.
- Insurers are effectively forcing seniors who rely on medicines to pay more at the pharmacy counter.
Insurers and PBMs increasingly are shifting more and more costs to seniors. Rebates and discounts should be shared with seniors at the pharmacy, but instead 92% of seniors’ out-of-pocket spending on brand medicines is based on the undiscounted list price. And 9 out of 10 seniors taking a brand medicine are exposed to the full price through deductibles and coinsurance.
And let’s not forget, AARP’s revenue from United Healthcare Group, the largest Part D plan sponsor, was more than double the revenue from its members.
According to a 2011 Congressional report, “United is AARP’s largest business partner. As part of the United and AARP business agreement all three of the Medicare insurance product lines are marketed under the AARP brand name.” In 2017, AARP recognized $301 million in membership dues, while reporting $627 million in royalties from United (2017). This continues a growth trend going back as far as 2009. From 2009 to 2017, AARP saw a 47% increase in royalties from UHG, from $427 million to $627 million; while membership dues only increased 22%. But in a likely effort to avoid public scrutiny with their relationship to UHG, AARP stopped disclosing the royalty revenue they received from UHG in 2018.