Aetna 2009 Annual Report Download - page 45

Annual Report – Page 39
 A number of federal and state legislative proposals are being considered that could adversely affect a variety of
pharmacy benefit industry practices, including without limitation the receipt or required disclosure of rebates from
pharmaceutical manufacturers, the regulation of the development and use of formularies, legislation imposing
additional rights to access to drugs for individuals enrolled in health care benefits plans, and restrictions on the use
of average wholesale prices.
 The application of federal, state and local laws and regulations to the operation of our mail order pharmacy and
mail order specialty pharmacy products.
 The risks inherent in the dispensing, packaging and distribution of pharmaceuticals and other health care products,
including claims related to purported dispensing errors.
The failure to adhere to the laws and regulations that apply to our PBM and/or pharmacies’ products could expose our
PBM and/or pharmacy subsidiaries to civil and criminal penalties and/or have a material adverse effect on our
business, financial condition and operating results.
Our reputation is one of our most important assets; negative public perception of the health benefits industry,
or of the industry’s or our practices, can adversely affect our profitability.
The health benefits industry is subject to negative publicity, which can arise from, among other things, the public
policy debate over health reform and/or from actual or perceived shortfalls regarding the industry’ s or our own
business practices and/or products. The risk of negative publicity is particularly high as a result of current health care
reform efforts being discussed by Congress and President Obama. This risk may be increased as we continue to offer
new products, such as products with limited benefits, targeted at market segments, such as the uninsured, part time and
hourly workers and those eligible for Medicaid, beyond those in which we traditionally have operated. Negative
publicity of the health benefits industry in general or Aetna in particular can further increase our costs of doing
business and adversely affect our profitability and our stock price by:
 Adversely affecting the Aetna brand particularly;
 Adversely affecting our ability to market and sell our products and/or services;
 Requiring us to change our products and/or services; and/or
 Increasing the regulatory and legislative requirements with which we must comply.
We would be adversely affected if we fail to adequately protect member health related and other sensitive
information.
The use and disclosure of personal health and other sensitive information is regulated at the federal, state and
international levels, and we collect, process and maintain large amounts of personal health and financial information
and other sensitive data about our members in the ordinary course of our business. Our business therefore depends
substantially on our members’ and customers’ willingness to entrust us with their health related and other sensitive
information. Events that negatively affect that trust, including failing to keep sensitive information secure, whether as
a result of our action or inaction or that of one of our vendors, could adversely affect our reputation and also expose us
to litigation and other proceedings, fines and/or penalties, any of which could adversely affect our business, operating
results or financial condition.
We would be adversely affected if we do not effectively deploy our capital.
Our operations generate significant capital, and we have the ability to raise additional capital. In deploying our capital
to fund our investments in operations (including information technology and other strategic projects), share
repurchases, potential acquisitions or other capital uses, our financial position and operating results could be adversely
affected if we do not appropriately balance the risks and opportunities that are inherent in each method of deploying
our capital. In addition, our cost of capital could increase if our debt ratings are downgraded.
We must continue to provide quality service to our customers that meets their expectations.
Our ability to attract and retain membership is dependent upon providing quality customer service operations (such as
call center operations, claim processing, mail order pharmacy prescription delivery, specialty pharmacy prescription
delivery and customer case installation) that meet or exceed our customers’ expectations. Failure to provide service
that meets our customers’ expectations, including failures resulting from operational performance issues, can affect our
ability to retain or grow profitable membership which can adversely affect our operating results.