Dependence on 340B and supplemental rebates rises as government share of aid wanes.
January 13, 2012—State AIDS drug assistance programs (ADAPs) are relying more than ever on the 340B program and voluntary rebates from manufacturers as direct government funding has dried up, the National Alliance of State and Territorial AIDS Directors (NASTAD) says in a new report.
ADAPs, which provide HIV treatments to low-income individuals with little or no prescription drug coverage, are unique among 340B entities in that they can either buy drugs at the discounted 340B price up front or pay full price and receive a 340B rebate later. All ADAPs participate in 340B. Twenty-four use the rebate model exclusively and 16 use a dual model in which they either buy at a discount or buy at full price and seek rebates later. Nine buy directly from wholesalers only and five use a university hospital or other existing 340B provider to buy and distribute ADAP drugs.
Rebates through ADAPs' participation in 340B and additional voluntary rebates that drop drug prices below their 340B ceilings represented 33 percent of ADAP budgets nationally in 2011, up from 15 percent in 2005 and just 6 percent in 1996, NASTAD reported this month in its annual ADAP monitoring study. These rebates accounted for $619 million of the $1.88 billion available to all ADAPs last year from all funding sources. Once received, rebate revenues remain in states' Ryan White Part B programs and enable additional drug purchases.
Although federal Ryan White Part B ADAP funding grew in real terms from $800 million in 2010 to $813 million in 2011, it continues to decline as a share of the overall national ADAP budget. It now accounts for 43 percent of ADAP resources, down from a peak of 68 percent in 2000.
State ADAP funding, which nose-dived along with the nation's economy from $328 million in 2008 to $215 million in 2009, climbed back to $299 million last year. It now accounts for 16 percent of the national ADAP budget, down from a high of 22 percent in 2006.
Waiting lists for AIDS drug assistance reached their highest point in September 2011, NASTAD said, when more than 9,000 persons in 11 states were unable to obtain aid for which they were eligible. Later that month, the Health Resources and Services Administration (HRSA) distributed $40 million in emergency ADAP assistance to 30 states and territories. Today, there are just over 4,600 individuals on waiting lists in 12 states.
With the economic downturn showing no sign of abating and ADAP waiting lists growing, NASTAD's ADAP Crisis Task Force initiated negotiations in mid-2010 with all anti-retroviral manufacturers to obtain additional price concessions beyond those required by 340B and included in previous agreements with the companies. Last month, the task force announced it had reached such agreements with six of the eight main manufacturers: Boehringer Inglheim, Bristol-Myers Squibb, Gilead Sciences, Janssen Therapeutics, Merck and ViiV Healthcare. Many of the pacts included price freezes that have helped reduce ADAP expenditures. Negotiations are continuing with Abbott Laboratories and Genentech. The agreements reached with the first six will save ADAPs $142 million between now and December 2013. Earlier agreements dating back to 2003 have saved ADAPs more than $1.3 billion, NASTAD reported.
One of the reasons why drug manufacturers are shouldering more of the ADAP budget demands is that they are getting paid less for their drugs. ADAP spending on AIDS drugs declined by 8 percent, based on where it stood during June 2010 and a snapshot taken a year later. NASTAD cautioned that the figure might not be reliable because it just compares one month's data with another. It said the apparent decrease is likely due in part to the provision in the Affordable Care Act that raised the Medicaid drug rebate percentage (to which the 340B discount is tied) from 15 percent to 23 percent on brand-name drugs. The decrease is also likely due to price reductions negotiated by the ADAP Crisis Task Force, the group said.
According to Britten Pund, manager of NASTAD's Health Care Access Program and one of the report's authors, while ADAPs appreciate manufacturers' voluntary discounts and rebates, they are just one component of the nation's response to the needs to HIV-positive Americans. "The federal appropriation needs to continue to keep pace with the program's growth," she said, and state legislatures need to increase their current levels of funding.