UnitedHealth Partners with AARP on Drug Plan for Seniors Under Medicare Prescription Drug Benefit

UnitedHealth Group on Monday announced that it has agreed to partner with AARP to offer an AARP-branded prescription drug discount benefit when the Medicare prescription drug benefit begins in 2006, the Minneapolis Star Tribune reports. The agreement extends an existing relationship between AARP and Ovations, the division of UnitedHealth that targets older U.S. residents. The drug program agreement also is likely to enhance UnitedHealth's partnership with Walgreen, which was announced in March.

Under that agreement, Ovations and Walgreen will jointly administer Part D prescription benefits. Ovations has a request pending with CMS to provide Medicare Part D services to beneficiaries in all 50 states (Phelps, Minneapolis Star Tribune, 6/7).

Rep. Pete Stark (D-Calif.) on Tuesday criticized AARP's deal with UnitedHealth, the Los Angeles Times reports. Stark said in a statement that AARP's announcement confirms "what we predicted when they first threw their weight behind the Medicare drug bill in 2003. They did so to improve their bottom line, not to help the 35 million seniors they claim to represent" (Alonso-Zaldivar, Los Angeles Times, 6/8). Stark added, "It's one thing to act in self-interest as a profit-making insurer, it's another entirely to leverage a trusting membership of America's seniors to pass legislation that you know will do little more than line your own pocket."

However, AARP spokesperson Lisa Davis said the group supported the Medicare drug bill "for one reason and one reason only -- people are hurting and needed help" (CQ HealthBeat, 6/7). Davis said, "We are going to continue doing what is right for our members and their families. Our policy decisions drive what we do on the product side, and not the other way around" (Los Angeles Times, 6/8).

Several financial services firms believe that UnitedHealth "should get a boost" from the agreement, Dow Jones reports. JP Morgan said in a note, "We view the AARP partnership as representing the 800-pound gorilla of the emerging (Medicare prescription drug) opportunity from a marketing and branding, and thus enrollment-growth, perspective, since many seniors will likely look to AARP's endorsement for guidance when choosing their Medicare drug plan." Prudential Equity Group said the company's affiliation with AARP "practically assures" UnitedHealth a "dominant share of the profits" from the drug benefit business.

Merrill Lynch said the partnership "broadens the company's distribution channels to the Medicare population. Second, it links the company's (prescription drug plan) offerings with a well-recognized name among seniors." SG Cowen called the exclusive AARP partnership "another coup" for UnitedHealth's Medicare drug-benefit offering, adding that the new program is the most visible growth opportunity for HMOs resulting from the new legislation (Wisenberg Brin, Dow Jones, 6/7).

Additional information on the Medicare drug benefit is available online.