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As beachgoers soaked up the sun on a balmy August day in Ocean City, Md., single-engine planes circled above trailing banners hawking seafood deals, happy hour specials, and in one case, a plea: “CUT DRUG PRICES NOW,” the sprawling streamer begged in block letters.
Some 450 miles away in Charlotte, N.C., an ominous TV ad proclaimed: “The big drug companies have been price gouging us for years.” A similar message boomed during commercial breaks in Phoenix, Louisville, Ky., and Bangor, Maine, too.
That same week, seniors dressed as pill bottles were gathered outside the Denver office of Republican Sen. Cory Gardner with a clear message: vote to lower the cost of prescription drugs.
It’s all part of a multimillion-dollar campaign against the pharmaceutical industry and its high prices — but it’s not coming from hospitals or Democratic presidential candidates. The push is from AARP, the seniors organization better known for travel deals and discount car insurance.
And it’s a sweeping and aggressive offensive from the group, which until now has been known as cautious, deliberate, and consensus-focused. AARP’s white-haired “strike force,” as the organization calls them, is on the offensive like never before — bashing big business with a righteous indignation that could surprise activists decades younger and positioning AARP as the drug industry’s primary opponent.
“I can’t really think of another time when there’s been this strong a message in opposition to an entire industry,” said John Rother, the group’s former head of policy and the current CEO of the National Coalition on Health Care.
As Max Richtman, head of the National Committee to Preserve Social Security and Medicare, put it, “PhRMA is an 800-pound gorilla. And I think they’re meeting another 800-pound gorilla in AARP.”
Positioning itself as pharma’s main antagonist, however, has opened up the group to a new line of attack from PhRMA, the drug industry’s lobbying arm, which has launched something of a counter-offensive campaign. Its ads zoom in on the roughly $600 million AARP rakes in each year from selling private Medicare Advantage and Medicare supplement insurance plans to its members. That hefty sum, PhRMA says, raises serious questions about the motivation behind AARP’s push.
“In many respects, AARP is an insurance company that is masquerading as a seniors advocacy organization,” said Robert Zirkelbach, executive vice president of public affairs at PhRMA. “AARP has significantly increased their involvement in the drug pricing debate, and we think it’s important to point out what might be motivating their perspective.”
Which campaign will sway voters — or lawmakers — remains an open question. On Capitol Hill, negotiations are ongoing: AARP is providing counsel to lawmakers about how best to tackle issues like rising out-of-pocket drug costs for seniors and increasing transparency in the supply chain, and so too is PhRMA. The battle for public opinion is ongoing, too, even if drug makers seem to have taken more of a hit than the seniors organization.
In statehouses around the country, however, the campaign’s success is much clearer: In the last year, AARP has helped pass more than 35 laws that aim to lower drug prices at the local level.
“When they want to flex their muscles, they can be damn powerful,” said Frederick Lynch, a professor at Claremont McKenna College and the author of a 2011 book on AARP.
“When they want to flex their muscles, they can be damn powerful.”
Frederick Lynch, author of a 2011 book on AARP
AARP officially launched its campaign, dubbed “Stop Rx Greed” in March. And if there was any doubt of its target, the group’s first commercial cleared that up: An ominous voice declared, “The big drug companies don’t see us as people,” as the faces of top executives from Johnson & Johnson, Bristol-Myers Squibb, and AstraZeneca filled the screen.
Since then, the group has stormed lawmakers’ offices on Capitol Hill and around the country and dramatically ratcheted up its spending on ads and its other outreach efforts. As Congress began to legislate in earnest on drug prices in the early summer, the group’s red shirts were a ubiquitous presence at nearly every congressional hearing; at the same time, the group’s members flooded senators’ offices with calls on seemingly obscure issues like capping drug prices to inflation. Come August, as Congress returned home for recess, the group was organizing protests around the country, meeting with more than 100 lawmakers and their staff, blanketing congressional districts around the country with radio and TV ads, and swarming community events from state fairs to dragon boat festivals to collect more than 1 million signatures on petitions urging Congress to act.
“It was basically an all-hands-on-deck effort to raise the profile of the issue and to encourage action,” John Hishta, AARP’s senior vice president of campaigns, told STAT. Hishta declined to say how much the campaign is costing, just that it was “a lot.”
The group has focused in particular on the Senate Finance Committee’s sweeping drug pricing package, a bipartisan effort that some see as the most likely piece of drug pricing legislation to advance to Trump’s desk this year. AARP helped consult on the policies included in the package, as did drug makers.
“We asked for their ideas,” Sen. Ron Wyden of Oregon, the top ranking Democrat on the committee, told STAT. “I said, ‘I’m breaking new ground here … I’m curious what your members’ reaction will be.’”
— AARP Colorado (@AARPCO) August 20, 2019
But AARP’s main contribution has been to build support for the package — and to help boost those who have already backed it. When the bill was nearing a committee vote, AARP ratcheted up the pressure, urging its members to swarm Capitol Hill with calls and in-person visits. The group estimates it directed thousands of calls into Capitol Hill in all.
And then AARP was there to hold up the members who supported the bill.
As Wyden traversed Oregon during the August recess, visiting remote pharmacies to pitch his sweeping drug pricing package, he was met by AARP volunteers at nearly every stop. “They have really mobilized, and I’m very appreciative,” he added.
A handful of senators, too, were greeted with radio ads thanking them for their support.
For those seen as swing votes, AARP went on the attack.
AARP spent $2.4 million running TV ads during the August recess targeting four senators facing tough election fights: Sens. Cory Gardner (R-Colo.), Susan Collins (R-Maine), Martha McSally (R-Ariz.) and Thom Tillis (R-N.C.), according to an analysis of Federal Election Commission data on political spending from Advertising Analytics conducted for STAT. None of those members sit on the Senate Finance Committee, so they haven’t yet voted on the bill, but they would be key to ensuring its passage if the full Senate takes it up later this fall.
AARP also blanketed Senate Majority Leader Mitch McConnell’s home state of Kentucky with local advertising worth more than $400,000, according to Advertising Analytics. McConnell has the power to decide whether or not the bill gets a vote in the Senate.
In all, the group’s volunteers wrote more than 75 op-eds in 32 states, met with more than 100 members of Congress, and delivered an outpouring of petition signatures over the course of a month, AARP told STAT.
“We’ve logged over a million petition signatures, hundreds of thousands of emails, thousands of calls, and numerous office visits from AARP members who want to see Congress act,” Hishta, the AARP official, told STAT. “We’re just getting started.”
“They’ve been in on every major play, and are in on every major play in Congress right now,” said David Mitchell, founder and president of Patients For Affordable Drugs.
For advocates who have been complaining about high drug costs for years, AARP’s action on the issue is a victory in and of itself.
“Members of Congress also know what it takes to get AARP to move on an issue,” said Claire McAndrew, director of campaigns at Families USA. “In the advocacy community, you always hope that AARP will sign your letter, and speak bluntly and directly about your issue.”
The organization moves so slowly and cautiously that Rother, the group’s former head of policy, has taken to calling AARP “the battleship.”
“There’s other groups and other forces that get out there and engage earlier and then AARP comes along when there’s a strong enough membership consensus and really brings the heavy-duty firepower,” Rother explained. “I was waiting for them to do this, and my preference would have been that they would have actually done it earlier.”
Increasingly, Washington’s debate over prescription drug prices has become a fight between AARP and PhRMA.
The two organizations are juggernauts in the D.C. advocacy world, though in different ways. AARP took in a staggering $1.7 billion in revenue in 2017, the latest year for which data is available. PhRMA brought in closer to $455 million. But the lobbying budget for PhRMA in a single year has lately topped $27 million; AARP usually spends about $8 million on federal lobbying in a given year.
PhRMA’s famous for its lobbying prowess — but drug lobbyists say AARP puts up a fight, too. Several who spoke with STAT said AARP was a problem for them long before they launched their very public campaign.
No drug industry lobbyist was willing to go on the record with their criticisms of AARP, because they were not authorized to speak on behalf of their clients. But they railed on the organization privately — labeling it a “charade,” even comparing it to the NRA.
“AARP has been a thorn in our side forever,” said one drug industry lobbyist. “It’s concerning, there’s no question,” the lobbyist said, regarding AARP’s new campaign.
“Their campaigns do matter, and it’s always important to help counter those campaigns,” the lobbyist added. “Let’s say you’ve got a senator and AARP is just spending a sh– ton of money ripping into you, and there’s no one to counteract that, then that member is going to start to worry.”
The pharmaceutical industry has a clear counter message to AARP’s — and has increasingly vocalized the point in conversations with reporters and in advertising. PhRMA dropped its own ad in June with a direct question: “Who is AARP really fighting for?” The group paid for ads across several D.C. media outlets and in some states; it also spent at least $30,000 promoting the message on social media, according to STAT’s analysis of Facebook data.
The drug industry lobby was harkening back to long-standing allegations that AARP’s policy positions are influenced more by its insurance business than its members’ own interests.
AARP has partnered with UnitedHealthcare to sell private Medicare plans since 1998. And the royalties from those plans, and other AARP-branded products, have rapidly become more and more important to the group’s bottom line. Royalties from sales of all AARP-branded products increased by more than $600 million since 2002 and now make up more than 55% of AARP’s annual revenue, according to the group’s 2017 financial disclosures, the latest year publicly available. It’s tough to break out exactly how much the group made from its insurance plans alone, but its 2017 disclosure suggests it bought in $627 million that year.
The insurance business — indeed, all of the organization’s branded products and services — are run through AARP Services Inc., which the organization describes as a “wholly-owned, taxable subsidiary.” It focuses on quality control and oversight for any products that bear the AARP name or logo.
Despite that separation, some say the business relationship creates an insurmountable conflict of interest.
“What they should be is honest to their membership that they’ve got a conflict of interest,” said Dr. Gerard Gianoli, an otolaryngologist who recently lambasted the group in a Wall Street Journal op-ed.
Gianoli also serves as a volunteer policy advisor at the libertarian think tank the Heartland Institute, which has received drug industry funding. He told STAT the Heartland Institute had no involvement in his op-ed, and that he receives no funding from the drug industry.
AARP’s business relationships have given the group a headache before. In 1995, former Sen. Alan Simpson (R-Wyo.) launched an investigation of the group’s finances. In 2009, Republicans on the Ways and Means Committee picked up where Simpson left off, launching a three-year probe into the group’s support of the Affordable Care Act that eventually resulted in a report assailing the group for having dual missions that “appear in direct conflict with one another.”
The group has gotten heat from liberal groups, too. Public Citizen released its own report in 2014 claiming AARP did not support single-payer health care because it benefits from the current system of private insurance.
AARP does directly coordinate with the insurance industry trade group, America’s Health Insurance Plans. It gave AHIP $40,000 in 2017 and 2016 and $50,000 in 2015 to support the Campaign For Sustainable Rx Pricing, an anti-pharma coalition made up of insurers, middlemen, hospitals, and doctors groups, according to public disclosures.
The seniors group also hired the head of that organization, lobbyist Lauren Aronson, earlier this year to lobby on Medicare drug issues. AARP has paid her firm, Mehlman Castagnetti Rosen & Thomas, $30,000 so far this year. (The firm also lobbies on behalf of AHIP and a number of other insurers.)
AARP, however, has vociferously denied allegations that its insurance business has influenced its public policy positions. It says the membership organization doesn’t supervise or control AARP Services Inc., the subsidiary that oversees the insurance plans.
In conversations with former employees too, all denied any allegations that AARP’s advocacy was motivated by its financial entanglements.
“There was never a point where I was ashamed to work at AARP because they were putting their business interests first, nothing even close to it,” one former senior official at AARP told STAT. (The official requested anonymity because they were not authorized by their current employer to speak to the media.)
Outside experts, too, have doubted these claims.
“I really didn’t see much of the money moving the politics,” said Lynch, the Claremont McKenna professor, who was given open access to AARP as part of his research on the organization. “At least when I was there and studying the organization, the policy shop [was] operating kind of independently of what might be good for AARP financially.”
“I was an expert witness on behalf of AARP maybe 20 years ago. … I looked at what they were doing very closely and legitimately could argue they had independence from insurance bias,” said Gerard Anderson, a professor at Johns Hopkins University.
Those controversies, nonetheless, have prompted the group to be more forthcoming about how it reaches policy decisions. The group’s website includes a detailed outline explaining how the group decides on policies. The process, the website explains, includes member surveys, presentation of ideas to the group’s volunteer expert advisers, known as it’s national policy council, and then a vote of the group’s board.
After the scathing report in 2011 on AARP’s support of the Affordable Care Act, for example, the group released reams of responses, held an online chat between the group’s CEO and members, and a press call, all to defend their decision to support the bill.
This time around, however, AARP insisted the reason it launched its drug pricing campaign was “patently obvious.”
“We saw alignment in four key areas: families in great need, policymakers on both sides looking for solutions, a workable legislative calendar, and an out-of-touch industry that can’t even admit there’s a problem,” Nancy LeaMond, AARP’s executive vice president and chief advocacy and engagement officer, told STAT. “It’s in our DNA to fight for consumers, and every jab we take is worth it to bring families relief.”
If AARP is throwing haymakers on Capitol Hill, lending its support to sweeping drug pricing packages that could rework the entire industry, it’s working the speed bag in the statehouses: rapidly notching win after win on everything from middlemen transparency to drug importation.
AARP has supported 36 new state drug pricing laws, including everything from a suite of bills cracking down on drug makers and middlemen in Maine to new laws in Florida and Colorado that could make them the first states in the nation to import drugs from Canada.
“We’re lending our voices like never before to these bills,” Elaine Ryan, AARP’s vice president of state advocacy, told STAT. “The collateral AARP can bring to campaigns are really unlike other organizations.”
There’s perhaps no better example of that than in Florida, where AARP’s support helped pass into law a controversial piece of legislation that was fiercely opposed by the pharmaceutical industry.
Almost immediately after Florida Gov. Ron DeSantis unveiled a plan in February to allow the state to import drugs from Canada, the pharmaceutical industry launched an aggressive campaign to kill the plan. In the months following, more than 50 drug industry lobbyists swarmed Tallahassee and blanketed the state with TV and print ads brandishing the proposal as unsafe.
“I was under fire,” state Rep. Tom Leek, the lead sponsor of the bill, told STAT. “We’re citizen legislators, we actually have day jobs and those things, and you’re stepping into a fight with people who are focused on this 100% of the time and who are the best organized, and most well-funded group that there is in politics.”
But AARP fought back. The group’s Florida affiliate ran a whirlwind campaign to support DeSantis, Leek, and the bill’s sponsor in the Florida Senate, Republican Aaron Bean, Leek told STAT.
AARP paid for full-page ads countering ads from the drug industry, organizing call-ins to counter robocalls being organized by opponents, and set up speaking engagements around the state for Leek and the governor to pitch their idea, Leek told STAT.
“Having someone there to give you some cover, and to help you in the fight, goes a long way … and AARP did that,” said Leek. “They were one of the first, if not the first, supporters of our efforts.”
In Maine, the group’s state chapter mobilized to help pass into law a package of four bills passed by that state in June. The new law will ultimately establish a price review board for pricey prescription drugs, allow people to import drugs from Canada, force drug companies to justify large price increases, and require middlemen to pass on drug rebates to consumers.
AARP’s Maine chapter so diligently watched what was happening in Augusta that it began organizing weekly lobby days, which the group dubbed “Tuesdays at the state house.”
And for state lawmakers still trying to get their ideas off the ground, AARP has lent its support too.
For Democratic state Rep. Will Guzzardi of Illinois, AARP’s support has helped garner his sweeping ideas — like regulating drug prices like utilities — some credibility.
“We’ve been able to get in the door with legislators who would otherwise have shut the door right away in our face, because of my politics and because of the nature of the issue and because of their connections with pharma,” Guzzardi said.
If you want to understand why AARP cares about prescription drugs, its allies say — and why it works so closely with insurance companies — you have to understand the story of its founder, Ethel Percy Andrus.
Andrus was a retired teacher who founded the organization in 1958, at least in part to create a health insurance plan that would cover seniors.
Like her contemporaries, she, too, railed against the high cost of prescription drugs, decades before multimillion-dollar drugs were even in the realm of possibility.
“It has long been recognized that one of the greatest expenses for retired persons living on restricted budgets is the high cost of drugs and prescriptions,” Andrus is quoted as saying on AARP’s website.
More recently, AARP was a driving force behind the 2003 creation of Medicare’s prescription drug benefit. And in 2004, the group’s then-CEO Bill Novelli wrote to 16 drug industry CEOs requesting that companies not hike their prices larger than inflation. That year the group also began calling out the prescription drug industry directly, with the inaugural release of an annual report tracking drug price hikes.
But this time around, the campaign feels a bit more bellicose.
On July 22, a lobbyist for AARP sat behind a desk in Washington to record a video plea to the group’s millions of members: call the U.S. senate and demand lawmakers vote for a piece of legislation that would cap drug price increase at inflation.
“You could imagine how the drug companies feel about this,” the lobbyist, Fred Griesbach, barked with a heavy New York accent. “They’re going to try to shut this down.”
On his desk rested a baseball bat, emblazoned with a clear message: “AARP is watching.”