Recommendations to Guide the 2005 Reauthorization of the Ryan White CARE Act

NASTAD's two major recommendations focus on improving HIV care services in the nation by strengthening states' program capacity by: (1) Enhancing the availability of ADAP resources and services for persons living with HIV/AIDS in need in all areas of the nation; (2) Addressing inequities in per-capita CARE Act funding among states. Other recommendations designed to strengthen state program capacity focus on: changes to minimum grant awards; use of HIV cases in Title II funding awards; 340B Program Pricing and coordinated purchasing of medications in ADAP; and expanded authorized funding levels for the title of the CARE Act.

AIDS Drug Assistance Program (ADAP) Funding and Supplemental Grants

ADAPs nationally require significant annual increases in appropriations from the CARE Act to meet increasing expenditures driven by growth in enrollment, utilization, and rising drug prices. Annual appropriations for ADAPs have not kept pace with the rate of expenditure increases during the FY2000 to FY2005 authorization period of the CARE Act, resulting in barriers to accessing essential HIV/AIDS drugs.

Therefore, NASTAD recommends the establishment of a guaranteed minimum level of new funding to ADAP for use in providing access to HIV/AIDS drugs and care, and to direct a portion of this new funding to states with waiting lists, inadequate formularies and restrictive income eligibility criteria. NASTAD recommends that a minimum increase of $60 million be provided annually to support ADAPs. If the annual appropriation increase for the ADAP earmark is less than $60 million, NASTAD recommends that an amount necessary to ensure a minimum increase of $60 million be provided through an equal percentage tap on all other CARE Act titles (excluding ADAP). If the appropriated increase to ADAP is equal to or exceeds $60 million, NASTAD recommends that there be no tap in that year.

Furthermore, NASTAD recommends that 80% of annual ADAP increases be directed to the Title II ADAP earmark to support the provision of treatments under Section 2616. Additionally, NASTAD recommends these funds be distributed through a formula based on each state's proportion of the country's estimated living AIDS cases. NASTAD also recommends incorporating living HIV cases into the distribution formula as detailed below.

NASTAD also recommends that 20% of annual ADAP increases be directed to the Title II ADAP Supplemental Treatment Drug Grants.¹ NASTAD recommends that ADAP supplemental funds no longer be limited to 3% of the ADAP appropriation. Rather, the ADAP supplemental pot would include the amount allocated to this category for FY2005, plus the 20% portion of the guaranteed annual ADAP increase during the five-year CARE Act authorization period. NASTAD also recommends that the state match requirement for the ADAP Supplemental Treatment Drug Grants be eliminated.

NASTAD recommends that eligibility for ADAP supplemental funds be based on a state meeting any one of the following three criteria during the FY2006 to FY2011 five-year authorization period. State eligibility for supplemental funds will continue throughout the CARE Act authorization period after eligibility has been established.

1. Gross income eligibility criteria of less than 300% of FPL.

2. Inadequate formulary -- lack of coverage of any FDA-approved antiretroviral drugs or the PHS-recommended drugs for the treatment and prophylaxis of opportunistic infections for ADAP participants with incomes less than 300% of FPL.

3. Waiting lists of ADAP applicants with incomes less than 300% of FPL.

NASTAD recommends that HRSA, in consultation with Title II and ADAP stakeholders, develop a needs-based distribution methodology for ADAP supplemental funds that may include a competitive process. The distribution process should consider states' ADAP status in each year and the funds necessary to improve the states' status relative to the three criteria listed above.

• RECOMMENDATION # 1 -- (Legislative) Enhance the availability of ADAP resources for persons in need living with HIV/AIDS in all areas of the nation by potentially tapping all titles of the CARE Act and revising the ADAP Supplemental Treatment Drug Grants.

Title II Emerging Communities Supplemental Grants²

While there is a critical need to enhance the availability of ADAP resources in states and territories, there is also a need to provide states with additional Title II base resources for primary care and support services. NASTAD has conducted data analysis to determine the states and territories per AIDS case allocation.³ States without Eligible Metropolitan Areas (EMAs) (19) comprise the vast majority of states with a per AIDS case rate below the national average (30). NASTAD recommends modifying the current Title II Emerging Communities (EC) supplemental grants into grants to states to supplement their Title II base funding. States would use the additional monies for activities allowed under the Title II base authorization and HRSA guidance and direct resources to the communities where cases within their states reside. This proposal maintains the original intent of the Emerging Communities provision from the 2000 reauthorization, directing resources to states with epidemics that are not highly concentrated enough to be eligible for Title I funding.

Specifically, NASTAD recommends redefining the current provision to target additional funding to states that have a CARE Act per capita funding level below the national average by redirecting funds to states without Title I EMAs that do not receive minimum award funding and to those states with Title I EMAs in which 50% or greater of their state's cases reside outside of their Title I EMA(s). In addition, NASTAD recommends reducing Title I eligibility to 1,500 estimated living AIDS cases during the previous five years.

NASTAD recommends that funding under this provision be authorized at $35 million and allocated by formula among applicant states. For states without Title I EMAs the funding should be allocated based on the number of estimated living AIDS cases in a state. For eligible states with Title I EMAs the funding should be allocated based on the number of estimated living AIDS cases residing outside of the Title I EMA(s). Applicant states and territories would receive an allocation equal to the product of: 1) the number of non-EMA estimated living AIDS cases in a state divided by the total number of cases eligible for the provision and 2) the amount appropriated for the provision.

• RECOMMENDATION #2 -- (Legislative) Address inequities in per-capita CARE Act funding among states by revising the Title II base Emerging Communities Supplemental Grants to provide additional Title II resources to states in need.

• RECOMMENDATION #3 -- (Legislative) Reduce Title I eligibility to 1,500 estimated living AIDS cases during the previous five years.

Minimum Grant Awards⁴

The CARE Act provides minimum Title II base awards to states with either less than 90 estimated living AIDS cases ($200,000) or more than 90 estimated living AIDS cases ($500,000). Territories receive a minimum Title II base award of $50,000.

• RECOMMENDATION #4 -- (Legislative) Increase the minimum Title II award to $500,000 and provide Guam with a minimum award of $200,000 by eliminating the requirement that stipulates a minimum award for states with fewer than 90 estimated living AIDS cases. This will allow North Dakota and Wyoming, as well as Guam, the ability to enhance their system capacity.

Use of HIV Cases in Title II Formula Awards⁵

The November 2003 Institute of Medicine (IOM) report Measuring What Matters: Allocation, Planning, and Quality Assessment for the Ryan White Care Act concluded that the reporting of HIV cases is not yet complete and accurate enough nationwide to be used in CARE Act allocation formulas. Of 56 states, territories and the District of Columbia, all have now implemented some type of HIV reporting.

Forty-three jurisdictions have name-based reporting. The remaining 13 jurisdictions utilize a code or name-to-code system for reporting HIV cases. Several jurisdictions have only recently implemented HIV reporting and therefore their HIV data is not yet considered "mature" enough to be reliable. CDC has not accepted HIV case report data from the 13 jurisdictions that collect and report HIV case data using codes or name-to-code systems, determining that these systems do not meet national performance and evaluative standards.

NASTAD believes the use of HIV cases in addition to AIDS cases in CARE Act allocation formulas is preferable and more closely reflects the epidemic than living AIDS cases. In order to accomplish this, HIV surveillance and reporting systems must be strengthened. The IOM study recommends that HRSA continue to use estimated living AIDS cases for at least the next four years, in order to give states more time to improve HIV reporting or develop alternative strategies to case reporting.

• RECOMMENDATION #5a -- (Legislative) Include living HIV cases, in addition to living AIDS cases, in the Title II base and ADAP earmark formulas, phased-in over a 10-year period.

• RECOMMENDATION #5b -- (Legislative) Include CDC-certified HIV case data from all states, regardless of the type of reporting system, that meet reasonable data quality and completeness standards.

• RECOMMENDATION #5c -- (Legislative) Require CDC to get input from stakeholders, including states, when developing the methodology to estimate HIV cases for states with immature data systems.

• RECOMMENDATION #5d -- (Legislative) Oppose any legislative mandate requiring states to shift from a code-based to a name-base HIV reporting system.

340B Program Pricing and Coordinated Purchasing of Medications in ADAP

The 340B Drug Discount Program is authorized under Section 602 of the Veterans' Health Care Act of 1992. This federal program allows specific Public Health Service (PHS) grantees, referred to as "covered entities," to access the same discounts as Medicaid programs, not to exceed a statutorily set ceiling price. Participation in the 340B Program is not mandatory, but rather is strongly encouraged by HRSA. In August 2003, HRSA reported that 50 of the 57 ADAPs that received funding in FY2003 participate in the 340B program. If ADAPs do not purchase under the 340B program, they are required to demonstrate that they are receiving the lowest possible prices on medications (examples of other purchasing arrangements include coordinated purchasing with a university or hospital-based pharmacy program or through the state's Medicaid program).

A March 2003 Office of the Inspector General report (A-06-01-00060) revealed that five manufacturers overcharged 340B covered entities $6.1 million for sales occurring during the one-year period ending September 1999. The overcharge occurred because of miscalculation of Best Price, which in turn affected the Medicaid Rebate calculation and ultimately the 340B ceiling price. Because the Medicaid Rebate and 340B discount price are so interrelated and the data used to calculate these prices are not available to the public, it is critical that the oversight by both CMS and HRSA's Office of Pharmacy Affairs (OPA) is as efficient and effective as possible. Both agencies are responsible for administering programs that provide life-saving care and treatment to our country's most vulnerable individuals.

In order to expand access to medications in states with limited eligibility or formulary coverage and to fill gaps that exist in ADAP coverage (e.g., waiting times between enrollment into ADAP and actual approval and subsequent obtaining of medications), some CARE Act grantees under Titles I and III of the CARE Act have established and now administer local Pharmacy Assistance Programs (PAPs). HRSA requires these grantees administering PAPs to demonstrate in their annual applications that they are purchasing medications at the lowest possible price. While participation in the 340B program among ADAPs is documented, data are not available concerning the number of other CARE Act grantees with established local PAPs that participate in the 340B program.

• RECOMMENDATION #6 -- Revise the drug purchasing options available to CARE Act drug purchasing entities.

• RECOMMENDATION #6a -- (Legislative) Extend the Federal Ceiling Price (FCP)⁶ to all CARE Act funded medication programs, including ADAPs. By doing so, annually appropriated federal and state funds for drug purchasing can be maximized, therefore expanding access and improving program efficiency.

• RECOMMENDATION #6b -- (Legislative) Share the Unit Rebate Amount (URA) generated by CMS on a quarterly basis with ADAPs utilizing the 340B rebate option in the same manner as it is shared with state Medicaid programs. This will ensure adequate accountability for accurate reconciliation of rebates.

• RECOMMENDATION #6c -- (Legislative) Require all CARE Act grantees with PAPs to coordinate purchasing efforts within states. If the FCP is not extended to all CARE Act funded medication programs, NASTAD recommends that all CARE Act grantees be required to coordinate purchasing efforts with their respective state's ADAP in order to maximize purchasing power and extend the lowest possible price to all grantees. Coordination should occur unless the grantee is able to demonstrate that it can otherwise obtain lower prices for medications than those available through the state's ADAP.

• RECOMMENDATION #6d -- (Administrative) Establish a CMS/HRSA Work Group to oversee and implement policies that affect both the Medicaid Rebate and the 340B programs. NASTAD believes there needs to be better communication and coordination between CMS and HRSA. A CMS/HRSA Work Group would serve as the repository for statutorily defined discounts like the Medicaid Rebate and the 340B ceiling price. In addition, this Work Group could coordinate current and future efforts to recover overcharges by pharmaceutical manufacturers who fail to give Best Price and AMP to the administrators of the Medicaid and 340B programs as required by law.

Authorized Funding Levels

The IOM Report, Public Financing and Delivery of HIV/AIDS: Securing the Legacy of Ryan White, estimates that 233,000 HIV positive Americans do not have consistent access to Highly Active Antiretroviral Therapy (HAART). Low-income persons living with HIV/AIDS continue to be unable to access Title II services due to funding limitations of the program. NASTAD supports full funding for the CARE Act to ensure that the needs of all low-income HIV-positive individuals have access to primary care, life-saving therapy, and support services that are essential to keeping persons in care and adherent to their treatment regimen. NASTAD supports the inclusion of an authorizing level for Title II⁷ that addresses these unmet needs, at a minimum of $1.4 billion in FY2006, with increasing amounts through FY2011.

• RECOMMENDATION #7 -- (Legislative) Increase authorizing levels for all components of the CARE Act, including the Title II base and ADAP earmark.