Aetna 2013 Annual Report Download - page 61

Annual Report- Page 55
Our litigation and regulatory risk profile is changing as we offer new products and expand in business areas
beyond our historical core business of providing Commercial managed care and health insurance products in
the United States.
Until fairly recently, we focused primarily on providing Commercial managed care and health insurance products in
the United States. In comparison, our Medicare and Medicaid businesses were significantly smaller. Our business is
now changing due to the following:
• Expansion within the health care marketplace: We are expanding our presence in various sectors of the
health care marketplace, including Medicare, Medicaid, dual eligibles, Commercial individual,
international, and certain customers who are not subject to ERISA’s limits on state law remedies.
• Entry into new product lines: Over the last several years we have entered into new product lines, including
support services for ACOs, dual eligible programs and HIT.
• Acquisitions: As a result of the Coventry acquisition we significantly expanded our Medicare, Medicaid,
Commercial individual, network access and Workers Compensation businesses. We expect our proposed
acquisition of the InterGlobal group to expand our international business.
These new products and the increased volume of business in areas beyond our historical core business subject us to
litigation and regulatory risks that are different from the risks of providing Commercial managed care and health
insurance products and significantly increase our exposure to other risks. For example:
• Certain of our HIT products and/or solutions are subject to patent litigation, which is often associated with
significant litigation costs, damages or injunctions.
• Certain of our HIT products and/or solutions may be subject to regulation by the FDA, which does not
regulate any of our other products.
• Our Medicare, Medicaid and dual eligible products are more highly regulated than our Commercial
products, and if we do not comply with program rules or are convicted of fraud or other criminal conduct in
the performance of a health care program or if there is an adverse decision against us under the False
Claims Act, we may be temporarily or permanently suspended from participating in government health care
programs.
• Our international operations face political, legal and compliance, regulatory, and other risks that we do not
face in the U.S. or that are more significant than in our U.S. operations. These risks vary widely by country
and include government intervention and censorship, discriminatory regulation, nationalization or
expropriation of assets and pricing constraints.
• Our products providing PBM and specialty and mail order pharmacy services are subject to:
The risks inherent in the dispensing, packaging and distribution of pharmaceuticals and other health
care products, including claims related to purported dispensing and other operational errors (any
failure by us or one of our PBM services suppliers to adhere to the laws and regulations applicable
to the dispensing of pharmaceuticals could subject our PBM and/or pharmacy subsidiaries to civil
and criminal penalties).
Federal and state anti-kickback and other laws that govern our relationship with pharmaceutical
manufacturers, customers and consumers.
Compliance requirements under ERISA, including fiduciary obligations in connection with the
development and implementation of items such as drug formularies and preferred drug listings.
Federal and state legislative proposals that could adversely affect pharmacy benefit industry
practices, including the receipt or required disclosure of rebates from pharmaceutical
manufacturers, the regulation of the development and use of drug formularies and/or maximum
allowable cost list pricing, legislation imposing additional rights to access to drugs for individuals
enrolled in health care benefit plans, and restrictions on the use of average wholesale prices.
For additional information about these risks, see:
• “Our business activities are highly regulated. Our Medicare, Medicaid, mail order pharmacy and certain
other products are subject to particularly extensive and complex regulations. If we fail to comply with