-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-06-681T		

TITLE:     Ryan White CARE Act: AIDS Drug Assistance Programs, 
Perinatal HIV Transmission, and Partner Notification

DATE:   04/26/2006 
				                                                                         
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GAO-06-681T

     

     * ADAPs' Program Design and Additional Funding
     * ADAPs' Reported HIV/AIDS Drug Prices
     * HRSA's Monitoring of ADAPs' Reported Drug Prices
     * 340B Prices and Other Federal Drug Pricing Programs
     * Prenatal HIV Testing and Perinatal HIV Transmission Rates
     * Identifying and Notifying Partners of HIV-Infected Individua
     * Contact and Acknowledgments
     * GAO's Mission
     * Obtaining Copies of GAO Reports and Testimony
          * Order by Mail or Phone
     * To Report Fraud, Waste, and Abuse in Federal Programs
     * Congressional Relations
     * Public Affairs

Testimony

Before the Subcommittee on Federal Financial Management, Government
Information, and International Security, Committee on Homeland Security
and Governmental Affairs, U.S. Senate

United States Government Accountability Office

GAO

For Release on Delivery Expected at 2:30 p.m. EDT

Wednesday, April 26, 2006

RYAN WHITE CARE ACT

AIDS Drug Assistance Programs, Perinatal HIV Transmission, and Partner
Notification

Statement of Marcia Crosse

Director, Health Care

GAO-06-681T

Mr. Chairman and Members of the Subcommittee:

I am pleased to be here today to discuss the AIDS Drug Assistance Programs
(ADAP) that receive funds under the Ryan White Comprehensive AIDS
Resources Emergency Act of 1990 (CARE Act)1 and to provide a summary of
our report that we are releasing today entitled Ryan White CARE Act:
Improved Oversight Needed to Ensure AIDS Drug Assistance Programs Obtain
Best Prices for Drugs, which was prepared at your and others' request.2
The report discusses the program design of 52 ADAPs in the 50 states, the
District of Columbia, and Puerto Rico, their funding sources, and drug
purchasing. I will also discuss our examination of state prenatal HIV
testing and perinatal HIV transmission rates, and state approaches to
identifying and notifying partners of HIV-infected individuals.

The CARE Act authorizes ADAP base grants to the states and certain
territories specifically for ADAPs to purchase and provide HIV/AIDS drugs
to eligible individuals. ADAPs serve as the HIV/AIDS drug assistance
program of last resort for individuals who, for example, cannot afford to
pay for drugs, do not have insurance coverage for drugs, or do not qualify
for other federal programs such as Medicaid. As more people with HIV/AIDS
live longer due to improved drug treatments, particularly highly active
antiretroviral therapy, the demand for ADAP services will increase, and
expenditures by ADAPs for HIV/AIDS drugs will also likely increase. It is,
therefore, important that ADAPs achieve the maximum benefit they can with
the funds provided to them for drug purchases. ADAPs may purchase their
drugs through the 340B federal drug pricing program, under which drug
manufacturers provide discounts on certain drugs to covered entities.3
Generally, ADAPs can purchase drugs through either the 340B direct
purchasing option, where ADAPs receive the 340B price discount upfront, or
through the 340B rebate option, where ADAPs later request a 340B rebate
from the drug manufacturers. The Health Resources and Services
Administration (HRSA) administers CARE Act grants and is responsible for
monitoring the prices ADAPs pay for drugs. HRSA has identified prices
under the 340B federal drug pricing program as a measure of an ADAP's
economical use of its grant funds.

1Pub. L. No. 101-381, 104 Stat. 576 (codified as amended at 42 U.S.C. S:S:
300ff-300ff-111 (2000)). Unless otherwise indicated, references to the
CARE Act are to current law.

2 GAO-06-646 (Washington, D.C.: Apr. 26, 2006). We previously reported to
you on Ryan White CARE Act funding; see GAO, HIV/AIDS: Changes Needed to
Improve the Distribution of Ryan White CARE Act and Housing Funds,
GAO-06-332 (Washington, D.C.: Feb. 28, 2006).

3Under Section 340B of the Public Health Service Act, a 340B price,
sometimes referred to as a 340B ceiling price, is established for each
covered drug that entities purchase. 42 U.S.C. S: 256b (2000). Covered
entities include, for example, community health centers and hemophilia
treatment centers.

In carrying out this work for our report, we interviewed HRSA and other
officials, analyzed and compared data ADAPs reported on program design,
funding, and drug prices paid, compared 340B drug prices to prices
available under other federal drug pricing programs, and interviewed
officials from selected states about prenatal HIV testing and partner
notification. We performed our work in accordance with generally accepted
government auditing standards. The report's appendix III provides a more
detailed explanation of our scope and methodology.

In summary, we report that variation in ADAPs' program design and funding
amounts contributed to differences in who and what was covered by each
program, that some ADAPs reported prices that were higher than the 340B
prices for selected HIV/AIDS drugs, that HRSA is not routinely comparing
the drug prices ADAPs pay to 340B prices, and that 340B prices were higher
for some selected drugs than the prices available under other federal drug
pricing programs. However, these latter prices are not available to ADAPs,
except for prices under one program to the District of Columbia ADAP. We
also report that the majority of states have adopted a policy of voluntary
prenatal HIV testing of pregnant women that is consistent with guidelines
issued by the Centers for Disease Control and Prevention (CDC) for
reducing perinatal transmission of HIV, and most of the 8 states we
contacted reported that the number of HIV-positive newborns has declined.
Further, among efforts to reduce the transmission of HIV, the 12 states we
contacted used various approaches to conduct HIV partner notification
activities as part of their partner counseling and referral programs, but
cooperation of infected individuals varies.

ADAPs' Program Design and Additional Funding

Variation in ADAPs' program design and funding amounts from the CARE Act
grants and other funding sources contributes to differences in
coverage-who and what is covered by an ADAP. Because of the variation in
program criteria, an individual eligible for ADAP services in one state
may not be eligible for or receive the same ADAP services in another. ADAP
income ceilings for individuals, program enrollment caps, and drug
formularies vary considerably among ADAPs. For example, each ADAP
determines a maximum income level, or income ceiling, as a criterion for
an individual's eligibility for enrollment. ADAPs reported income ceilings
for the 2004 grant year that ranged from 125 percent of the federal
poverty level in North Carolina to 556 percent in Massachusetts. Sixteen
ADAPs reported that they had limits on the assets that individuals
enrolled in the program are allowed to have. Twelve ADAPs reported having
caps on program enrollment or on amounts expended per individual for
HIV/AIDS drugs. The total number of drugs ADAPs included on their
formularies ranged from 20 in Colorado to 1,000 in Massachusetts, New
Hampshire, and New Jersey.

The additional funding that some ADAPs reported receiving from sources
other than the ADAP base grant, such as transfers from other CARE Act
grants, and states' or other governmental entities' funds, also varied
among ADAPs for fiscal year 2004. Funding from these various sources
significantly increased funds available to cover individuals for some
ADAPs. For example, in addition to receiving funds from the ADAP base
grant of about $89.6 million, the California ADAP received about $123.5
million from other sources.

ADAPs' Reported HIV/AIDS Drug Prices

ADAPs are expected to use every means at their disposal to secure the best
price available for the drugs on their formularies. ADAPs are eligible, if
they so choose, to participate in the federal 340B drug pricing program.
Generally, ADAPs can purchase drugs through either the 340B direct
purchasing option or through the 340B rebate option. Drug manufacturers
that participate in the 340B drug pricing program agree to sell drugs to
340B entities, including ADAPs that participate in the program, at prices
no higher than 340B prices.

HRSA has identified the 340B prices as a measure of ADAPs' economical use
of grant funds, whether ADAPs use the 340B program, including the 340B
prime vendor-which negotiates prices directly with drug manufacturers for
ADAPs using the 340B direct purchase option-or negotiate drug prices on
their own with drug manufacturers. However, the Department of Health and
Human Services does not disclose to the ADAPs or the 340B prime vendor
what the 340B prices are that should not be exceeded-a situation which
disadvantages both the prime vendor's and the ADAPs' negotiating
positions.

In our analysis using the top 10 HIV/AIDS drugs by ADAP expenditures, we
found that in 2003 all of the 25 ADAPs that used the 340B direct purchase
option reported prices to HRSA that were higher than the 340B price for at
least 1 of the top 10 drugs. For example, 7 of the 25 ADAPs reported
purchasing the drug Viramune at prices higher than the 340B price. Of the
27 ADAPs that used the 340B rebate option to purchase drugs in 2003, all
except 3 ADAPs reported paying drug prices that were higher than the 340B
prices for many of the top 10 drugs. However, the prices that ADAPs using
the rebate option report to HRSA for each drug they purchase may not
reflect the rebates that they eventually receive and therefore may not be
the final prices these ADAPs pay for the drugs.

HRSA's Monitoring of ADAPs' Reported Drug Prices

Although HRSA is responsible for monitoring whether ADAPs obtain the best
prices available for drugs, it does not routinely compare the drug prices
ADAPs report to 340B prices. Further, the ADAP drug price information that
HRSA currently uses to make its comparisons is not complete. The reported
prices do not reflect the rebates eventually received by ADAPs using the
340B rebate option to purchase drugs. Without 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.

In the report we are releasing today, we are recommending that HRSA, to
ensure that ADAPs are obtaining the best prices for the drugs they
provide, require ADAPs to report the final prices they paid for drug
purchases, net of rebates, and that HRSA routinely determine whether these
prices are at or below the 340B prices. In commenting on these
recommendations, HRSA stated that it would like to verify final drug
prices but this would be labor intensive because reports ADAPs currently
provide do not contain the needed information. HRSA further stated that it
lacks the resources to conduct a comprehensive price comparison, but is
making efforts to develop systems to allow ADAPs to check drug prices. As
we stated in our report, however, while monitoring the prices paid for all
the drugs on each ADAP's formulary might be challenging, HRSA could
compare ADAP reported prices to 340B prices for selected drugs and could
modify its schedule of ADAP reports to allow for rebate reconciliation.

340B Prices and Other Federal Drug Pricing Programs

We found that the 340B program prices were higher for some of the top 10
drugs than the 340B prime vendor prices and the prices federal agencies
paid for the same drugs under the federal supply schedule (FSS) and
federal ceiling price (FCP) drug pricing programs.4 Using the top 10
HIV/AIDS drugs by ADAP expenditures, we compared 2003 drug prices under
the 340B prime vendor, FSS, FCP, and Medicaid programs to the 340B prices.
We found that the FCP and 340B prime vendor prices were lower than the
340B prices for 6 of the 7 drugs that had prices available under all five
programs. The 6 HIV/AIDS drugs were Combivir, Epivir, Sustiva, Trizivir,
Zerit, and Ziagen. The Medicaid prices,5 available to state Medicaid
programs, were consistently higher than the 340B program prices and were
the highest of all the drug pricing programs for 3 of the 7 drugs for
which we had prices from all programs. The 3 drugs were Norvir, Sustiva,
and Trizivir.

Prenatal HIV Testing and Perinatal HIV Transmission Rates

When pregnant women are infected with HIV, they can transmit the virus to
their infants during pregnancy, during labor and delivery, or after
delivery through breast-feeding. Antiretroviral therapy can reduce the
risk of HIV transmission from mother to child. According to CDC, the
prevention of perinatal HIV transmission depends on routine testing of
pregnant women for HIV and the use of antiretroviral drug treatment and
obstetrical interventions. All 50 states, the District of Columbia, and
Puerto Rico have policies or have enacted laws regarding HIV testing of
pregnant women to help reduce perinatal HIV transmission. The majority of
states have adopted a policy of voluntary testing of pregnant women that
is consistent with CDC's guidelines. We contacted eight states to discuss
the approach they use to test pregnant women for HIV. The eight states we
contacted-California, Connecticut, Illinois, Louisiana, Michigan, New
Jersey, New York, and North Carolina-use two approaches. Consistent with
additional CDC recommendations on testing, three states routinely include
HIV tests in a standard battery of prenatal testing, but a woman can
refuse to be tested for HIV. In the other five states, a woman is
counseled during prenatal care and must consent to an HIV test, usually in
writing, before a test can be performed. Of the eight states that we
contacted, three-Connecticut, New Jersey, and New York-collect the data
needed to determine statewide perinatal HIV transmission rates. Six of the
eight states we contacted reported that the number of HIV-positive
newborns declined in their state from 1997 to 2002.

4The FSS has prices available to all federal government purchasers for the
drugs listed on the schedule. The FCP is the maximum price that drug
manufacturers can charge four agencies-the Department of Defense, the
Department of Veterans Affairs, the Public Health Service, and the Coast
Guard-for the brand-name drugs listed on the FSS, even if the FSS prices
are higher. The District of Columbia ADAP has access to the FCP.

5The Medicaid price is the average amount state Medicaid programs paid net
of the basic rebate provided under the Medicaid Drug Rebate Program.

Identifying and Notifying Partners of HIV-Infected Individuals of Possible HIV
Exposure

Research suggests that most new HIV infections originate from HIV-infected
persons not yet aware of their infection.6 This emphasizes the need to
identify HIV-infected persons and link them with appropriate services as
soon as possible. The Ryan White CARE Act Amendments of 1996 provided for
states to take action to require a good faith effort be made to notify
spouses who may have been exposed to HIV. Partner counseling and referral
services (PCRS) assist HIV-infected persons with notifying their partners,
including spouses, of their exposure to HIV.7 We contacted 12 states to
determine what approaches they use to identify and notify partners of
HIV-infected individuals.8 These states use various approaches in
conducting HIV partner notification activities as part of their PCRS
programs. These activities include eliciting partner information from
known HIV-infected individuals-referred to as index cases9-and notifying
the partners of their possible exposure to the virus. The states use a
variety of entities and individuals trained to conduct these activities.
Of the 12 states we contacted, 10 have statutory or regulatory provisions
that require or permit certain health care entities or workers to notify
partners, including spouses,10 without the consent of the index case. In
the remaining two states, public health officials or the health department
may notify partners only with the consent of the HIV-infected individual.
The participation of HIV index cases in PCRS program activities varies.
Not all HIV-infected individuals are willing to share the names of their
partners and not all partners can be reached to be notified.

6G. Marks, N. Crepaz, J. W. Senterfitt, and R. S. Janssen, "United States:
Meta-Analysis of High-Risk Sexual Behavior in Persons Aware and Unaware
They Are Infected with HIV in the United States," Journal of Acquired
Immune Deficiency Syndromes, vol. 39, no. 4 (2005).

7CDC's PCRS guidance for HIV defines PCRS as a prevention activity with
the goals of (1) providing services to HIV-infected persons and their sex
and needle-sharing partners so they can avoid infection or prevent
transmission to others, and (2) helping partners gain earlier access to
individualized counseling, HIV testing, medical evaluation, treatment, and
other prevention services.

8The 12 states we contacted were California, Connecticut, Florida,
Kentucky, Massachusetts, Minnesota, Missouri, New York, North Carolina,
Pennsylvania, Texas, and Washington.

9Index case is a generic term for a person who has tested positive for HIV
and is asked to name spouses and partners at the start of the notification
process.

10The North Carolina provision applies only to notification of spouses;
state officials told us that they generally notify partners with the
consent of the index case.

Some states reported integrating their HIV partner notification activities
with established programs that are focused on syphilis and other sexually
transmitted diseases, or STDs.

Mr. Chairman, this concludes my prepared remarks. I would be happy to
answer any questions that you or other Members of the Subcommittee may
have.

                          Contact and Acknowledgments

For future contacts regarding this testimony, please contact Marcia Crosse
at (202) 512-7119 or at [email protected] . Contact points for our Offices
of Congressional Relations and Public Affairs may be found on the last
page of this testimony. James McClyde, Assistant Director; Robert
Copeland; Helen Desaulniers; Cathy Hamann; Martha Kelly; Daniel Ries; Opal
Winebrenner; Craig Winslow; and Suzanne Worth made key contributions to
this statement.

(290544)

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Highlights of GAO-06-681T , a testimony before the Subcommittee on Federal
Financial Management, Government Information, and International Security,
Committee on Homeland Security and Governmental Affairs, U.S. Senate

April 26, 2006

RYAN WHITE CARE ACT

AIDS Drug Assistance Programs, Perinatal HIV Transmission, and Partner
Notification

Despite progress in HIV/AIDS drug treatments and the reduction of AIDS
mortality in the United States, challenges remain concerning the
availability of these drugs for individuals with HIV/AIDS and the
prevention of new cases. The CARE Act authorizes grants to the states and
certain territories specifically for AIDS Drug Assistance Programs (ADAP)
to purchase and provide HIV/AIDS drugs to eligible individuals. In its
report issued today, Ryan White CARE Act: Improved Oversight Needed to
Ensure AIDS Drug Assistance Programs Obtain Best Prices for Drugs
(GAO-06-646), GAO examines the program design of ADAPs in the 50 states,
the District of Columbia, and Puerto Rico, their funding sources, and drug
purchasing. GAO also reports on state approaches to reducing perinatal HIV
transmissions and identifying and notifying partners of HIV-infected
individuals.

What GAO Recommends

In its report, GAO recommends that HRSA require ADAPs to report the final
prices they paid for drugs, net of any rebates, and that HRSA routinely
determine whether these prices are at or below the 340B prices. In
commenting on these recommendations, HRSA stated that these steps would be
labor intensive and it lacks capacity to carry out such oversight.

Variation in ADAPs' program design and funding amounts from CARE Act
grants and other funding sources contribute to differences in coverage-who
is eligible and what drugs are covered by an ADAP-among the 52 ADAPs GAO
reviewed. In order to make maximum use of the funding they receive, ADAPs
are expected to secure the best price available for the drugs on their
formularies. ADAPs may, but are not required to, purchase their drugs
through the 340B federal drug pricing program, under which drug
manufacturers provide discounts on certain drugs to covered entities. The
Health Resources and Services Administration (HRSA) has identified the
340B prices as a measure of ADAPs' economical use of grant funds, but the
Department of Health and Human Services does not disclose 340B prices to
the ADAPs. GAO found that some ADAPs reported prices that were higher than
the 340B prices for selected HIV/AIDS drugs. However, these reported
prices may not have reflected any rebates ADAPs eventually received. While
HRSA is responsible for monitoring whether ADAPs obtain the best prices
available for drugs, it does not routinely compare the drug prices ADAPs
report to 340B prices.

All 50 states, the District of Columbia, and Puerto Rico have policies or
have enacted laws regarding HIV testing of pregnant women to help reduce
perinatal HIV transmission. The majority of states have adopted a policy
of voluntary prenatal HIV testing of pregnant women that is consistent
with guidelines issued by the Centers for Disease Control and Prevention
(CDC). GAO contacted 8 states to discuss the approach they use to test
pregnant women for HIV, and these states use one of two approaches.
Consistent with additional CDC recommendations on testing, three states
routinely include HIV tests in standard prenatal testing, but a woman can
refuse to be tested for HIV. In the other 5 states, a woman must consent
to an HIV test, usually in writing, before the test can be performed. Six
of the 8 states GAO contacted report that the number of HIV-positive
newborns has declined. However, only 3 states GAO contacted collect the
data needed to determine statewide perinatal HIV transmission rates.

GAO contacted 12 states regarding their approaches to identifying partners
of HIV-infected individuals and notifying them of their possible exposure
to the virus. These states used various approaches in conducting HIV
partner notification activities as part of their partner counseling and
referral services. These activities include eliciting partner information
from HIV-infected individuals, but the participation of these individuals
varies and not all partners can be reached to be notified. Of the 12
states contacted, 10 have statutory or regulatory provisions that require
or permit certain health care entities or workers to notify partners,
including spouses, without the consent of the known HIV-infected
individual. In the remaining two states, public health officials or the
health department may notify partners only with the consent of the
HIV-infected individual.
*** End of document. ***