Ryan White CARE Act:

Improved Oversight Needed to Ensure AIDS Drug Assistance Programs Obtain Best Prices for Drugs

GAO-06-646: Published: Apr 26, 2006. Publicly Released: Apr 26, 2006.

Additional Materials:

Contact:

Marcia G. Crosse
(202) 512-3407
contact@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

The CARE Act authorized grants to the states and certain territories for AIDS Drug Assistance Programs (ADAP) to purchase and provide HIV/AIDS drugs to eligible individuals. An ADAP's coverage--who and what is covered--is determined by each ADAP's eligibility and other program criteria, and ADAPs may establish waiting lists for eligible individuals. ADAPs may purchase their drugs through the 340B federal drug pricing program, which provides discounts on certain drugs to covered entities. The Health Resources and Services Administration (HRSA) oversees ADAPs and is responsible for monitoring the prices they pay. GAO was asked to examine (1) coverage differences among ADAPs, (2) how the prices ADAPs reported paying for HIV/AIDS drugs compare to 340B prices, (3) how HRSA monitors the drug prices ADAPs pay, and (4) how the 340B prices compare to other selected federal drug pricing programs.

Variation in each ADAP's program design and funding from various sources contributes to differences in coverage among the 52 ADAPs GAO reviewed. Each ADAP has considerable flexibility in designing eligibility and other program criteria to determine who will be covered by the program. Consequently, an individual eligible for ADAP services in one state may not be eligible for services in another. ADAPs varied in the extent to which they received funding from sources in addition to the CARE Act ADAP base grants, such as state funds or transfers of funds from other CARE Act grants. Eligibility and other program design criteria also varied among ADAPs that had waiting lists of eligible individuals in fiscal year 2004, as did the amount and sources of additional funding for those ADAPs. In their quarterly reports to HRSA, some ADAPs reported prices that were above the 340B price for some of the 10 drugs GAO compared. These 10 drugs accounted for 73 percent of ADAP drug spending. If ADAPs choose to use the 340B program, they may purchase drugs from manufacturers either through the direct purchase option, receiving the 340B price up front, or through the 340B rebate option, paying full price and receiving a rebate later. The 340B prices are not disclosed to ADAPs, but participating manufacturers agree to sell at the 340B prices. However, all 25 ADAPs that used the 340B direct purchase option reported a price that was above the 340B price. All but 3 of the 27 ADAPs using the 340B rebate option reported prices higher than the 340B price for one or more drugs. These prices may not have been the final prices these ADAPs paid, however, because they may not have included all rebates eventually received. HRSA is responsible for monitoring whether ADAPs obtain the best prices available for drugs. HRSA has identified the 340B prices as a measure of an ADAP's economical use of grant funds. However, HRSA does not routinely determine whether the prices ADAPs report are no higher than the 340B prices. Also, quarterly reports do not reflect the rebates eventually received by ADAPs using the rebate option to purchase drugs. Without considering the final ADAP rebate amount on a drug purchase, HRSA cannot determine whether the final drug prices paid were at or below the 340B price. ADAPs that purchase drugs at 340B prices paid more for some drugs than certain federal agencies did for the same drugs under the federal ceiling price program. ADAPs do not have access to this program. The 340B prices were also higher than some of the prices available through the 340B prime vendor program, which negotiates drug prices on behalf of participating 340B entities including ADAPs. The 340B prices, including the 340B prime vendor prices, were lower than the Medicaid rebate program prices available to state Medicaid programs, for each of the drugs GAO could compare.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: In commenting on the report, the Health Resources and Services Administration (HRSA) has continually raised concerns about its ability to implement this recommendation. HRSA stated that it would like to verify final drug prices but this would be labor intensive because reports AIDS Drug Assistance Programs (ADAPs) currently provide do not contain the needed information. Specifically, HRSA noted that ADAPs may receive rebate checks many months after the drugs were purchased, which complicates the task of comparing prices. HRSA further stated that it is taking steps to develop the information it will require to determine whether the prices ADAPs paid for the drugs they purchased are at or below the 340B prices, but that it lacks the resources to conduct manual cost comparisons on a large scale. HRSA noted that it is making efforts to develop systems to allow ADAPs to check drug prices and that the agency has requested that drug manufacturers who participate in the 340B program voluntarily submit quarterly 340B prices on covered drugs to HRSA for comparison with the government computed 340B ceiling prices. HRSA has made improvements to its process, but has not implemented improvements that would meet our recommendation. In more recent work done by GAO, we identified a number of issues with HRSA's compliance with 340B requirements overall, indicating that HRSA has not implemented this recommendation.

    Recommendation: To ensure that ADAPs are obtaining the best prices for drugs they provide, the Administrator of the Health Resources and Services Administration should require that all ADAPs report final prices they paid for drugs, and that those final prices reflect any discounts or rebates received.

    Agency Affected: Department of Health and Human Services: Public Health Service: Health Resources and Services Administration

  2. Status: Closed - Not Implemented

    Comments: In commenting on the report, the Health Resources and Services Administration (HRSA) raised concerns about its ability to implement this recommendation. HRSA stated that it would like to verify final drug prices but this would be labor intensive because reports AIDS Drug Assistance Programs (ADAPs) currently provide do not contain the needed information. Specifically, HRSA noted that ADAPs may receive rebate checks many months after the drugs were purchased, which complicates the task of comparing prices. HRSA further stated that it is taking steps to develop the information it will require to determine whether the prices ADAPs paid for the drugs they purchased are at or below the 340B prices, but that it lacks the resources to conduct manual cost comparisons on a large scale. HRSA has made improvements to its process, but has not implemented improvements that would meet our recommendation. In more recent work done by GAO, we identified a number of issues with HRSA's compliance with 340B requirements overall, indicating that HRSA has not implemented this recommendation.

    Recommendation: To ensure that ADAPs are obtaining the best prices for drugs they provide, the Administrator of the Health Resources and Services Administration should routinely determine whether the prices ADAPs paid for the drugs they purchased were at or below the 340B prices.

    Agency Affected: Department of Health and Human Services: Public Health Service: Health Resources and Services Administration

 

Explore the full database of GAO's Open Recommendations »

Sep 16, 2014

Sep 8, 2014

Sep 2, 2014

Aug 22, 2014

Aug 13, 2014

Aug 11, 2014

Jul 30, 2014

Jul 29, 2014

Looking for more? Browse all our products here