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Shakedown: Federal Budget Shutdown
and Flood of New Approvals
Combine to Threaten Access
to FDA-Approved AIDS Drugs
Bankrupt ADAPs

Feb 1996

In the fall of 1995, the U.S. Food and Drug Administration (FDA) approved several expensive new AIDS drugs, including oral ganciclovir for cytomegalovirus (CMV) prophylaxis, 3TC (Epivir) in combination with AZT for HIV infection and the protease inhibitor saquinavir (Invirase) in combination with nucleoside analogues for HIV infection. Abbott Labs filed a new drug application (NDA) with the FDA in December for its protease inhibitor, ritonavir (Norvir); and Merck is not far behind with its indinavir sulfate (Crixivan).

While on the face of it, FDA approval should lead immediately to widespread access to these new compounds, the fact that several of these new agents (3TC, saquinavir) were approved with the labeling recommendation that they be used in combination with other antiretrovirals will lead to a significant increase in the cost of "state-of-the-art" HIV treatment over the coming year -- with little proof of increased benefit. 3TC retails for over $2,000 per year, and in combination with AZT will cost around $5,000 retail per year. Saquinavir alone will retail for over $6,000 a year, but is recommended to be used along with nucleoside analogues, bringing the total cost of SQV/ddN therapy to around $10,000 per annum -- a price which, when originally charged for AZT in 1987, led to years of demonstrations.

Health care restructuring and the on-going budget crisis in Washington, D.C. are together threatening the access of people with HIV to FDA-approved therapies on an unprecedented scale. There is a very real danger that FDA approval will no longer automatically lead to reimbursement by third-party payors. Among New York state residents living with HIV, 50% receive their medical care through Medicaid at any given time. Ninety percent of children with AIDS are dependent on Medicaid. Over the course of HIV disease, 80% of people with HIV depend on Medicaid at one time or another. State AIDS Drug Assistance Programs (ADAPs), which are subsidized by funds from the Ryan White CARE Act, provide a vital "bridge" into Medicaid by covering the cost of treatment and drugs before a person's Medicaid eligibility is processed. While Federal law requires that Medicaid reimburse for all FDA-approved drugs, there are no Federal guidelines for state ADAP programs.

Federal Medicaid guarantees of AIDS drug reimbursement will end abruptly if Congressional plans to turn Medicaid into a block grant program with state oversight become law. In the meantime, the current budgetary impasse has created major distortions and anticipatory cutbacks in reimbursement for AIDS drugs. In New York, for example, the state ADAP program, long considered a national model, has cut 129 drugs from its ADAP formulary, eliminated coverage for nutritional supplements, counseling and vitamins, and capped the amount of home care any individual may receive. Crucial drugs which are too expensive will no longer be covered.

In New York, ADAP provides free drugs and medical services to over 10,000 people with HIV. The state can no longer provide such comprehensive services with its $44 million annual budget. ADAP is paid for by Titles I and II of the Ryan White CARE Act Program. 1996 funds for Ryan White are being held hostage (along with Medicaid and Medicare) to the continuing Federal budget impasse. Now, New York State, anticipating Medicaid cutbacks, is keeping people in ADAP longer, delaying their "entitlement" status. In effect, ADAP is becoming a waiting room to Medicaid which impairs its ability to provide comprehensive coverage for AIDS drugs. Among the AIDS drugs which the January 1996 New York ADAP formulary will no longer cover are: alpha interferon, erythropoietin, G-CSF, GM-CSF, IVIG (for adults), dronabinol, megestrol acetate, sandostatin, perlactin, a number of broad-spectrum antibiotics (amoxicillin, ampilillin, bacitracin, cephalosporins, dicloxacillin, doxycycline, erythromycin, penicillin and vancomycin) and analgesics, vitamins and minerals and nutritional supplements (Enrich, Ensure, Sustecal). New York State ADAP officials explain that some of these drugs which were formerly covered by the State reimbursement program were removed to make room for newly approved anti-HIV therapies such as 3TC (Epivir) and saquinavir (Invirase), but as of TAGline's press time, New York State has not yet agreed to pick up the cost of saquinavir. The New York State ADAP estimates that the cost of covering saquinavir -- and, in the coming months, ritonavir and indinavir -- will run some $6-10 million a year; so, barring major funding increases, ADAP may refuse to cover all three protease inhibitors.

Very few states so far have agreed to cover even 3TC, while fewer still have embraced saquinavir. Maryland's ADAP program has already said it will refuse to pay for both new drugs, while Colorado and Missouri's ADAP programs are bankrupt, forcing patients onto drug company assistance programs. In addition to the cutbacks in state ADAPs, restructuring across the health care system will increasingly threaten PWAs' access to FDA-approved therapies. Many Health Maintenance Organizations (HMOs) will increasingly come to deny coverage for expensive treatments, especially when there is a lack of clear clinical evidence of efficacy (information we still lack for d4T, 3TC, saquinavir and oral ganciclovir, among others).

Thus, while fighting to preserve Ryan White funding and state AIDS Drug Assistance Program (ADAP) coverage, AIDS advocates will also have to vigilantly monitor the health insurance industry, HMOs, drug formularies (especially if Medicaid is block-granted), and drug company "patient assistance programs" (many of which are simply public relations gestures rather than meaningful assistance programs) to ensure that they continue to cover drugs which are needed for the treatment of HIV infection and AIDS. Moreover, we will have to redouble our efforts to force drug companies to carry out studies which clearly define the clinical usefulness of their drugs, for without evidence from such studies, third party payors will have ready-made excuses to avoid reimbursing for them.

AIDS advocates will have to continually monitor different drug company pricing strategies, for in some cases there may be valid questions about whether the putative benefits of the treatment outweigh its risks and its expense to the individuals and to the health care system as a whole. Finally, in an era of massive health care restructuring and cost-saving, the importance of developing a scientifically-grounded, clearly demonstrated standard-of-care for the entire spectrum of HIV disease remains an urgent unmet priority.


This report was prepared by TAG's Mark Harrington with the assistance of Ken Fornataro and Richard Jeffreys of the AIDS Treatment Data Network (ATDN) and Christopher Murray of the GMHC Policy Department.




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