Captain AARP's War on Drug Costs

The nation's largest seniors' group had lost its spark. That, at least, was the rap on AARP in Washington circles. But CEO William D. Novelli, an entrepreneur-turned-social advocate who took the helm last year, is betting that he can rejuvenate the AARP, with its 35 million-member grassroots army, bigger than either the National Rifle Assn. or the AFL-CIO. Novelli hopes to expand its ranks even more by appealing to 50-plus baby boomers. He also wants to apply its muscle to a wide range of social and political causes. First up: curbing drug prices by advocating generics over brand-name pills.

To push for cheaper generic drugs, the 62-year-old Novelli, a co-founder of marketing powerhouse Porter Novelli, launched a four-month, $10 million TV ad campaign on Apr. 21 aimed at urging seniors to save money by switching from brand-name drugs. The ads so angered the big drugmakers that the TV networks insisted AARP tone them down (which it did). Then AARP joined the defense of a handful of states being sued by the pharmaceutical industry for trying to apply lower Medicaid drug prices to non-Medicaid patients, as well, including state employees. AARP also joined antitrust cases accusing drugmakers of manipulating the drug-approval process to keep generics off the market.

Novelli's next move: ramping up his political operation. Over Memorial Day, AARP will run ads and host rallies around the country, a prelude to the fall election season, when AARP will mount a multimillion-dollar ad and get-out-the-vote blitz in 70 gubernatorial and congressional races. Volunteers will hand out voter guides and set up phone banks, while AARP airs ads on issues such as Social Security and drug costs. "We've been accused in the past of not taking a sufficient leadership role, but I think we're past that," says Novelli.

The first big test comes over the next few weeks, when House Republicans are expected to introduce a plan to include drug coverage in Medicare. The proposal has come under fire from consumer groups like Families USA, which says it would do little to save seniors money. "The bill is a sham, and many folks will be looking at AARP's position on this to see how direct and forthright they are," says Families USA Executive Director Ron Pollack. So far, Novelli is staying mum while AARP lobbyists negotiate with GOP officials over issues such as drug premium costs.

But if AARP comes out swinging, it would signal a major shift. The group had retreated from the limelight after getting burned in 1988 for supporting a failed plan for catastrophic health-care coverage in Congress. It was stung again in 1993 when it endorsed a measure that ended up taking a bigger tax bite out of Social Security payments. Many AARP members blamed the organization for failing to stop the tax bill, and thousands quit. AARP drew back from politics, and advocacy groups with a more ideological bent moved into the breach, including the liberal Families USA and the conservative United Seniors Assn. "When AARP speaks, Congress listens. But they need to speak with a louder voice," says Representative E. Clay Shaw Jr. (R-Fla.), chairman of the House subcommittee on Social Security.

How far will Novelli go? Washington is watching closely. As president of the Campaign for Tobacco-Free Kids, he waged war on cigarette makers with ads that showed pigtailed adolescents lighting up. It was the first time the public health community used paid ads to promote its agenda, and the campaign earned Novelli a reputation as an attack dog. "I guess I got a little carried away during the tobacco wars, but that was required," he says.

More than policy is at stake. AARP pulls in $431 million a year from brand licensing, magazine advertising, royalties, and health insurance--almost three times as much as its $164 million in dues. Novelli wants to boost that income. Last year, the group launched My Generation, a magazine targeting AARP's 3.9 million aging boomers. This spring, it premiered a Spanish-language quarterly called Segunda Juventud ("Second Youth"), which targets 425,000 Hispanics in four cities and Puerto Rico. Novelli's next stop: Europe, where the population skews older, making it ripe for its own AARP chapter. "AARP is going to be one of the megabrands of the century," predicts Novelli. Maybe so, but first he must sell his message at home.

By Lorraine Woellert in Washington

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