HIV/AIDS Drugs: Funding Implications of New Combination Therapies for
Federal and State Programs (Letter Report, 10/14/98, GAO/HEHS-99-2).

Pursuant to a congressional request, GAO provided information on the
potential implications for federal and state budgets from the increased
use of combination drug therapies for patients with human
immunodeficiency virus (HIV) and acquired immunedeficiency syndrome
(AIDS), focusing on: (1) federal and state spending on HIV and AIDS drug
treatment, by major programs, over the last several years; (2) the
estimated number of people with AIDS and HIV on combination drug therapy
who are covered by Medicaid or other publicly funded programs, and
measures that have been taken to stretch the resources in the Ryan White
Comprehensive AIDS Resources Emergency (CARE) Act; and (3) the potential
impacts of new drug therapies on federal and state government outlays.

GAO noted that: (1) while state governments and private payers share in
the financing of medical care for people with HIV and AIDS, the federal
government currently funds more than half the cost of such care; (2) for
fiscal year (FY) 1998, estimated federal spending on treatment for
individuals with AIDS or HIV is expected to total over $5 billion, an
increase of about 5 percent over FY 1997; (3) GAO estimates that a
substantial portion of federal spending for AIDS or HIV medical care--at
least one-sixth--is for prescription drugs, primarily through Medicaid
and funding under title II of the CARE Act for states' AIDS Drug
Assistance Programs (ADAP); (4) with recent research developments in HIV
and AIDS treatment, the demand for federal and state funding for HIV and
AIDS treatment is expected to increase; (5) more than half of the
240,000 people with AIDS in the United States are estimated to be
receiving combination drug therapies that include a protease inhibitor
and other drugs; (6) of the AIDS patients on Medicaid, GAO estimates
that at least 67,500 are receiving combination drug therapy in 1998; (7)
data on the number of individuals who are HIV positive but do not have
AIDS are insufficient, so it is difficult to develop reliable estimates
of the total number of Medicaid- and ADAP-eligible individuals who would
likely qualify for and seek combination drug therapy; (8) however, some
ADAPs report that a great majority of their clients will receive
combination therapy in 1998; (9) ADAPs have taken several steps to
stretch available funds and thereby maximize the number of clients they
are able to serve; (10) other factors--such as evolving standards of
care, the long-term effectiveness of current therapies, and new research
developments--also influence projections of the impact of new drug
therapies on federal and state government programs; (11) although the
effect of the demand for the new combination therapies is difficult to
estimate, ADAPs will likely experience greater financial pressure than
Medicaid in caring for individuals with AIDS or HIV who seek assistance;
(12) this is in part because Medicaid primarily provides coverage for
those individuals whose HIV infection has progressed to AIDS, and there
are some indications that Medicaid costs for drug therapy might be
offset by reductions in hospitalizations; (13) in contrast, ADAPs cover
drug costs for both AIDS and others who are HIV positive, and who have
fixed incomes; and (14) since ADAPs only cover drugs, cost offsets are
not as likely to occur.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  HEHS-99-2
     TITLE:  HIV/AIDS Drugs: Funding Implications of New Combination 
             Therapies for Federal and State Programs
      DATE:  10/14/98
   SUBJECT:  Acquired immunodeficiency syndrome
             Health care services
             Health insurance
             Health care programs
             Budget outlays
             Federal aid programs
             Projections
             Health care costs
             State programs
             Medical supplies
IDENTIFIER:  AIDS
             AIDS Drug Assistance Program
             Medicaid Program
             
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Cover
================================================================ COVER


Report to the Subcommittee on Labor, Health and Human Services, and
Education, Committee on Appropriations, U.S.  Senate

October 1998

HIV/AIDS DRUGS - FUNDING
IMPLICATIONS OF NEW COMBINATION
THERAPIES FOR FEDERAL AND STATE
PROGRAMS

GAO/HEHS-99-2

HIV/AIDS Drugs

(108305)


Abbreviations
=============================================================== ABBREV

  ADAP - AIDS Drug Assistance Program
  AFDC - Aid to Families With Dependent Children
  AIDS - acquired immunodeficiency syndrome
  CARE - Comprehensive AIDS Resources Emergency
  CDC - Centers for Disease Control and Prevention
  DOD - Department of Defense
  EMA - eligible metropolitan area
  FDA - Food and Drug Administration
  FPL - federal poverty level
  HCFA - Health Care Financing Administration
  HHS - Department of Health and Human Services
  HIV - human immunodeficiency virus
  HMO - health maintenance organization
  HRSA - Health Resources and Services Administration
  HUD - Department of Housing and Urban Development
  NIH - National Institutes of Health
  SSI - Supplemental Security Income
  VA - Department of Veterans Affairs

Letter
=============================================================== LETTER


B-276444

October 14, 1998

The Honorable Arlen Specter
Chairman
The Honorable Tom Harkin
Ranking Minority Member
Subcommittee on Labor, Health and Human
 Services, and Education
Committee on Appropriations
United States Senate

Recent estimates of the prevalence of HIV infection in the United
States range from 650,000 to 900,000 people.\1 Almost 240,000 of
these individuals are living with AIDS, the end stage of HIV and the
leading cause of death among 25- to 44-year-olds.\2 Since 1996, there
have been major breakthroughs in the fight against HIV and AIDS.  New
drug therapies, such as combining protease inhibitors (which inhibit
the replication of the virus) with other drugs, are effective in
reducing the amount of virus in many people with HIV, thereby
delaying the onset of AIDS.  These therapies have also been effective
in reducing some of the severe immune system suppression in people
with AIDS. 

Increased use of combination drug therapies has potential
implications for federal and state budgets, since many HIV and AIDS
patients are entitled to prescription drug assistance under Medicaid
or are served by other joint federal and state programs, such as
those authorized under title II of the Ryan White Comprehensive AIDS
Resources Emergency (CARE) Act.  Therefore, you asked us to describe
(1) federal and state spending on HIV and AIDS drug treatment, by
major programs, over the last several years; (2) the estimated number
of people with AIDS and HIV on combination drug therapy who are
covered by Medicaid or other publicly funded programs, and measures
that have been taken to stretch the resources in the CARE Act
programs; and (3) the potential impacts of new drug therapies on
federal and state government outlays. 

To conduct our work, we interviewed officials at the Department of
Health and Human Services (HHS), including those at the Health
Resources and Services Administration (HRSA) and the Health Care
Financing Administration (HCFA).  We also analyzed budget information
for fiscal years 1995, 1996, 1997, and 1998.  We synthesized data and
documents from a number of sources, including the Centers for Disease
Control and Prevention (CDC) and associations that represent state
and industry providers of HIV and AIDS drugs.  We also interviewed
officials from states' AIDS Drug Assistance Programs (ADAP) and
consulted with HIV and AIDS researchers and with officials from
pharmaceutical companies that manufacture HIV and AIDS drugs. 

Combination drug therapy is new; as a result, our findings are
limited by the many unknown factors regarding the effects of these
drugs.  In addition, federal program eligibility requirements are
subject to change.  We conducted our evaluation between November 1996
and June 1998 in accordance with generally accepted government
auditing standards. 


--------------------
\1 John M.  Karon and others, "Prevalence of HIV:  Infection in the
United States, 1984 to 1992," Journal of the American Medical
Association, July 10, 1996, and interview with Karon, July 15, 1997. 

\2 HIV (human immunodeficiency virus) is characterized by a gradual
deterioration of the immune system.  As HIV progresses, individuals
become particularly vulnerable to illnesses that are typical of AIDS
(acquired immunodeficiency syndrome). 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

While state governments and private payers share in the financing of
medical care for people with HIV and AIDS, the federal government
currently funds more than half the cost of such care.  For fiscal
year 1998, estimated federal spending on treatment for individuals
with AIDS or HIV is expected to total over $5 billion, an increase of
about 5 percent over fiscal year 1997.  We estimate that a
substantial portion of federal spending for AIDS or HIV medical
care--at least one-sixth--is for prescription drugs, primarily
through Medicaid and funding under title II of the CARE Act for
states' ADAPs.\3 With recent research developments in HIV and AIDS
treatment--especially the new combination drug therapies--the demand
for federal and state funding for HIV and AIDS treatment is expected
to increase.  Between 1995 and 1997, the expenditures for HIV- and
AIDS-related drugs more than doubled in the Medicaid and ADAP
programs from $606 million to $1.3 billion--primarily because of the
increase in the percentage of people with HIV and AIDS seeking
combination drug therapy, which costs about $10,000 per patient
annually.  These increases are especially apparent in programs funded
under the CARE Act. 

More than half of the 240,000 people with AIDS in the United States
are estimated to be receiving combination drug therapies that include
a protease inhibitor and other drugs.  Of the AIDS patients on
Medicaid, we estimate that at least 67,500 are receiving combination
drug therapy in 1998.  Data on the number of individuals who are HIV
positive but do not have AIDS are insufficient, so it is difficult to
develop reliable estimates of the total number of Medicaid- and
ADAP-eligible individuals who would likely qualify for and seek
combination drug therapy.  However, some ADAPs report that a great
majority of their clients are receiving combination therapy in 1998. 
ADAPs have taken several steps to stretch available funds and thereby
maximize the number of clients they are able to serve.  For example,
most ADAPs are purchasing drugs at a discount and the ADAP programs
we reviewed have taken steps to ensure that clients who are eligible
for Medicaid coverage are in fact enrolled in Medicaid.  Nonetheless,
some ADAPs have been required to restrict enrollment or limit
benefits for qualifying individuals. 

Other factors--such as evolving standards of care, the long-term
effectiveness of current therapies, and new research
developments--also influence projections of the impact of new drug
therapies on federal and state government programs.  Although the
effect of the demand for the new combination therapies is difficult
to estimate, ADAPs will likely experience greater financial pressure
than Medicaid in caring for individuals with AIDS or HIV who seek
assistance.  This is in part because Medicaid primarily provides
coverage for those individuals whose HIV infection has progressed to
AIDS, and there are some indications that Medicaid costs for drug
therapy might be offset by reductions in hospitalizations.  In
contrast, ADAPs cover drug costs for both AIDS patients and others
who are HIV positive--a rapidly growing candidate population for drug
therapy--and who have fixed incomes.  Since ADAPs only cover drugs,
cost offsets are not likely to occur. 


--------------------
\3 For this report, "state ADAPs" refers to ADAPs in the states, the
District of Columbia, and Puerto Rico. 


   BACKGROUND
------------------------------------------------------------ Letter :2

The results of research on the prevention and treatment of AIDS--a
disease first identified in the United States in 1981--have only
recently begun to accrue.  Over the past 11 years, a number of
therapies have been developed to fight both HIV and its associated
infections and cancers.  The Food and Drug Administration (FDA) has
approved several dozen drugs for treating HIV infection or
AIDS-related conditions, many of which have only been made available
during the last 2 to 3 years. 

In December 1995, FDA approved the first protease inhibitor,
saquinavir (Invirase).\4 Following this, the agency approved three
other protease inhibitors:  ritonavir (Norvir), indinavir (Crixivan),
and nelfinavir (Viracept).  In November 1997, FDA approved a new
formulation of saquinavir, Fortovase.  Most recently, in September
1998, FDA approved efavirenz (Sustiva), a drug that requires less
frequent dosing and has milder side effects than other drugs. 
Because HIV can develop a resistance to these and other AIDS
treatment drugs, several drugs are often combined.  Combination
therapy is likely to include three to five drugs, including reverse
transcriptase inhibitors combined with protease inhibitors.  For many
patients, combining protease inhibitors with other drugs greatly
reduces the amount of HIV. 

Before it was possible to readily measure the amount of virus in
patients, most drug therapies were targeted to patients whose
infection had progressed, as evidenced by a decline in their immune
system function or by the onset of clinical signs and symptoms of
HIV.  Of the 650,000 to 900,000 people with HIV infection in the
United States, the CDC estimates that about 500,000 of those people
know their HIV status; and for almost 240,000 of these individuals,
HIV has progressed to AIDS.  In June 1997, the National Institutes of
Health (NIH) released standards of clinical care for HIV and AIDS
combination drug therapy.\5

The standards recommend that therapy be initiated as early as
possible and that HIV and AIDS drugs be used in combination rather
than individually.  Under the treatment guidelines, all patients with
HIV infection are considered to be candidates for the combination
drug therapy, greatly expanding the group requiring treatment. 

New combination therapy standards also call for continuity of therapy
and optimum dosages to suppress HIV replication.  According to NIH,
underdosing and lapses in a patient's therapy regimen greatly
increases the risk of the patient's developing drug-resistant HIV
variants.  Optimum regimens and dosing are under study and
continually changing.  Combination therapies of as many as five drugs
currently are prescribed.  Aggressive regimens such as these must be
coupled with, and are driven by, results of frequent blood testing to
monitor immune system status and levels of HIV.  This focus on early
and aggressive treatment, coupled with NIH's call for frequent
monitoring of HIV-positive individuals, is expected to result in
greater numbers of people seeking combination drug therapy and
possibly more complex and costly drug treatment regimens, and more
treatment-associated costs such as laboratory testing. 

The cost of combination therapy--taking into account all federal drug
discount pricing--is estimated to be about $10,000 per patient
annually.  While some people with HIV or AIDS are covered by private
medical insurance, many others are either uninsured or have limited
prescription drug coverage and must rely on one or a combination of
federal and state programs and assistance programs offered by
manufacturers of HIV and AIDS treatment drugs. 


--------------------
\4 HIV and AIDS treatment has relied on two classes of antiviral
drugs:  reverse transcriptase inhibitors and protease inhibitors. 
Reverse transcriptase inhibitors affect HIV's ability to combine with
the cells it infects at an early stage of the infection process. 
Protease inhibitors interrupt virus replication at a later stage in
the life cycle, after cells have been infected. 

\5 To date, much of the care of HIV and AIDS has been fairly
decentralized; these guidelines are designed to provide structure to
clinical care.  For more on these guidelines, see HHS, CDC, Report of
the NIH Panel to Define Principles of Therapy of HIV Infection and
Guidelines for the Use of Antiretroviral Agents in HIV-Infected
Adults and Adolescents (Atlanta, Ga.:  Apr.  1998). 


      FEDERAL, STATE, AND PRIVATE
      FUNDING SOURCES FOR HIV AND
      AIDS DRUG THERAPY
---------------------------------------------------------- Letter :2.1

The majority of federal assistance for AIDS patients is provided
through Medicaid and programs funded under the CARE Act, which was
enacted in 1990 to help alleviate the burdens placed on a public
health system generally unprepared for the AIDS epidemic.\6 \7 In
1998, Medicaid is estimated to cover 55 percent of adult AIDS
patients and about 90 percent of pediatric AIDS cases.\8 Applying
those percentages to the current number of AIDS cases, we estimate
that at least 108,000 individuals with AIDS are covered by Medicaid
in 1998.  The CARE Act provides funding for states' ADAPs, which rely
on federal, state, and local partnerships to provide drug therapy on
an outpatient basis.  ADAPs are designed to provide assistance to
those HIV-positive individuals who have no, or limited, private
third-party prescription drug coverage; cannot afford to pay for
drugs themselves; and are ineligible for Medicaid or have limits on
the prescription drug benefit offered by Medicaid.  In calendar year
1996, ADAPs served a total of about 80,000 clients nationwide. 

Funding for HIV and AIDS drug therapy as well as other treatments is
also provided by other federal sources, including the Departments of
Defense (DOD) and Veterans Affairs (VA).  DOD programs currently
treat about 5,000 active duty service personnel with HIV or AIDS.  In
1996, VA treated more than 12,000 eligible veterans.  While the total
number of individuals served in these programs is much smaller than
the number served through Medicaid and programs funded under the CARE
Act, VA is the nation's largest provider of direct care for people
with HIV and AIDS.  In addition, VA clients could be eligible for
care from more than one program. 

The remainder (less than half) of the individuals with AIDS rely on
sources other than ADAPs, VA, DOD, or Medicaid to finance their drug
therapy.  Some have private health insurance and others are uninsured
and rely on personal resources and charitable organizations. 
Uninsured and underinsured individuals with AIDS tend to rely on a
combination of public and private funding sources.  For example,
pharmaceutical companies that manufacture HIV and AIDS drugs have
programs to provide limited temporary assistance to individuals who
are financially disadvantaged and ineligible or waiting for other
sources of prescription coverage.\9


--------------------
\6 Medicaid is a joint federal and state program that pays for health
care services for eligible low-income individuals. 

\7 In addition, the Medicare program covers qualified individuals
with AIDS.  Most who qualify are disabled and meet criteria for the
Social Security Disability Insurance program.  However, since
Medicare does not generally cover prescription drugs except for
patients who are hospitalized, we did not focus on this program in
our analysis. 

\8 Interview with John Klemm, HCFA Office of the Actuary, HHS, Aug. 
27, 1998. 

\9 Assistance is typically limited to 90 days, after which time
patients must reapply for benefits.  Patients may also be required to
make copayments for the drugs. 


      ELIGIBILITY CRITERIA FOR HIV
      AND AIDS DRUGS THROUGH
      PUBLIC PROGRAMS
---------------------------------------------------------- Letter :2.2

Medicaid enrollees have access to the new drug therapies if
prescription drugs are offered by their state Medicaid program and
these drugs are deemed the appropriate therapy.  Medicaid provides
health coverage for certain low-income families, the elderly, and
disabled persons.  States vary in their Medicaid eligibility
requirements (see app.  I).  States have discretion regarding the
quantities and duration of use for prescription drugs, although all
FDA-approved drugs must be offered.  Historically, program
eligibility has been linked to receipt of cash assistance under a
welfare program, such as Aid to Families With Dependent Children
(AFDC) or the Supplemental Security Income (SSI) program.  In recent
years, the program has been expanded to provide health coverage for
low-income children and pregnant women with no ties to welfare.  An
individual with AIDS or HIV infection could qualify for Medicaid on
the basis of eligibility for a cash assistance program or alternative
eligibility criteria.\10 Most adults with AIDS or HIV infection
become eligible for Medicaid by meeting the disability criteria of
the federal SSI program, usually not until they have developed AIDS
and have become too disabled by their disease to work.\11

Patients who do not qualify for Medicaid may seek assistance from
ADAPs, which are primarily designed to fill gaps in prescription drug
coverage.  To qualify for ADAP benefits, they must have a medical
need and an income below a certain amount, which is generally higher
than that permitted for Medicaid.  Unlike Medicaid, ADAPs do not
require disability as a criterion for eligibility of HIV-positive
adults and thus can cover those who have not developed AIDS.  (For
more detail on each state's financial criteria for Medicaid and ADAP
eligibility, see app.  I.)


--------------------
\10 Under rules adopted since welfare reform, the Medicaid population
can be divided into three broad categories:  (1) people whose
Medicaid eligibility is primarily based on receipt of cash
assistance; (2) people who do not receive cash assistance; and (3)
people who receive cash assistance but could qualify for Medicaid
under an alternative eligibility category such as the so-called
Medicaid "expansion" population--pregnant women, infants, and
children born after September 30, 1993.  In addition, states can
extend Medicaid coverage to certain categories of individuals with
too much income to receive cash assistance but who are considered
medically needy because of their high medical costs. 

\11 A disabled adult is one who is unable to engage in any
substantial gainful activity because of a medically determined
physical or mental impairment that is expected to result in death or
that has lasted (or can be expected to last) at least 12 months. 


   RECENT FEDERAL AND STATE
   SPENDING ON HIV AND AIDS DRUGS
   THROUGH MEDICAID AND ADAPS HAS
   INCREASED
------------------------------------------------------------ Letter :3

The care of HIV and AIDS patients for all types of treatment,
including drugs, involves a variety of programs funded by the federal
government, states, and private payers, but the largest share of
federal funding is through the Medicaid program.  Within these
programs, expenditures for drugs have increased rapidly in recent
years and account for most of the growth in the CARE Act programs. 


      A VARIETY OF PROGRAMS
      PROVIDE FUNDING FOR HIV AND
      AIDS PATIENTS
---------------------------------------------------------- Letter :3.1

The federal government, states, and private payers all help to
finance the care of HIV and AIDS patients for all types of treatment,
including drugs.  The federal portion of Medicaid is the largest
share of federal funding; however, most states match federal Medicaid
funds on nearly a one-to-one ratio.\12 Other programs also provide
supportive services for low-income individuals with HIV or AIDS.  For
example, in fiscal year 1997, about $133 million was allocated by
formula to 53 metropolitan areas and to 27 states for areas outside
qualifying cities under the Department of Housing and Urban
Development's (HUD) Housing Opportunities for People With AIDS
program.\13

In fiscal year 1997, total federal spending on medical care,
including inpatient and outpatient services and prescription drugs,
for individuals with AIDS or HIV was estimated at $4.8 billion.\14
This amount includes federal matching payments that HCFA estimates at
$1.8 billion for fiscal year 1997.\15 Total federal spending for HIV
and AIDS medical care in fiscal year 1998 is estimated by HHS at $5
billion; the precise amount of Medicaid spending for HIV- and
AIDS-related treatment is not yet known. 


--------------------
\12 In fiscal year 1996, states paid 43 percent--$66 billion--of the
total Medicaid program costs for all programs. 

\13 HUD's Housing Opportunities for People With AIDS program provides
grants, allocated by formula, to states and metropolitan areas with
the largest number of cases and incidence of AIDS.  HUD also selects
grantees through national competition of projects proposed by state
and local governments and nonprofit organizations.  These programs,
however, do not provide funding for HIV and AIDS drugs. 

\14 Federal spending on treatment includes funding through HCFA for
the Medicaid and Medicare programs, the CARE Act, VA, Office of
Personnel Management, DOD, and the Department of Justice. 

\15 The federal government matched an estimated $1.5 billion in state
funds. 


      FEDERAL SPENDING FOR
      HIV/AIDS DRUGS HAS INCREASED
      RAPIDLY
---------------------------------------------------------- Letter :3.2

We estimate that a substantial proportion of federal spending for
AIDS or HIV medical care--at least one-sixth--is for prescription
drugs, primarily through Medicaid and the ADAPs.  Between 1995 and
1997, the combined expenditures in the Medicaid and ADAP programs for
HIV- and AIDS-related drugs more than doubled, rising from $606
million to $1.3 billion.  Spending on drug therapies represented
about one-fourth of federal and state Medicaid spending on HIV- and
AIDS-related drugs and exceeded $950 million in calendar year 1997,
up $449 million (or 90 percent) since 1995.  Similarly, spending
through ADAPs is estimated at $359 million for fiscal year 1997, up
$254 million (or 242 percent) since 1995.  (See table 1.) Much of
this increase can be attributed to an increase in the percentage of
people with HIV and AIDS seeking combination drug therapy and the
increased expense of combining drugs as opposed to a single
medication.\16



                          Table 1
          
             Recent Federal and State Spending
           Estimates for All HIV-and AIDS-Related
              Drugs Through Medicaid and ADAPs

                   (Dollars in millions)

                            Medicaid            ADAP
                        ----------------  ----------------
                        Fede  Stat  Tota  Fede  Stat  Tota
Budget period\a          ral     e     l   ral   e\b     l
----------------------  ----  ----  ----  ----  ----  ----
CY 1995                 $258  $242  $501  $70.  $34.  $105
                          .7    .6    .3     8     3    .1
CY 1996                 329.  308.  637.
                           0     5     5
FY 1996                                   145.  69.6  215.
                                             6           2
CY 1997                 490.  460.  950.
                           0     0     0
FY 1997                                   242.  116.  359.
                                           8\c     2     0
Percentage change,        89    90    90   243   239   242
 1995-97
----------------------------------------------------------
Note:  Estimates are based on preliminary reports, grant
applications, or other estimates. 

\a Medicaid spending is calculated on a calendar-year basis.  After
1995, ADAP spending has been calculated on a fiscal-year basis. 

\b The state share for ADAP takes into account funds generated
through cost-saving efforts by states, including manufacturers'
rebates and strategies that seek reimbursement from third parties. 

\c This number includes $167 million earmarked from title II of the
CARE Act plus discretionary resources committed by grantees and title
I contributions. 

Source:  HCFA. 


--------------------
\16 The increased cost is not likely related to an increase in people
with HIV/AIDS.  The estimated prevalence of HIV in the population has
remained relatively stable in the United States since 1990. 
Statistical models suggest that each year, roughly the same number of
Americans become infected with HIV as die from AIDS-related
illnesses. 


      FEDERAL ADAP FUNDING
      ACCOUNTS FOR MOST CARE ACT
      INCREASES
---------------------------------------------------------- Letter :3.3

Over the past several years, overall federal funding for the CARE Act
has increased more than 50 percent, from about $760 million in 1996
to about $1.2 billion in 1998.  However, in this 3-year period,
increases in funding for CARE Act services other than ADAPs have been
minimal, while ADAP funding has more than quintupled.  (See table 2.)



                          Table 2
          
            CARE Act Federal Funding Levels, by
                           Title

                   (Dollars in millions)

                                      Fiscal year
                              ----------------------------
Title                             1996      1997      1998
----------------------------  --------  --------  --------
I--Assistance to eligible         $392      $450      $465
 metropolitan areas
II--Care services                  209       250       258
II--ADAP                            52       167       285
IIIb--Early intervention            57        70        76
 services
IV--Demonstrations and              29        36        41
 evaluations
V--Special projects and             19        24        25
 evaluations
==========================================================
Total                             $758      $997    $1,150
----------------------------------------------------------
Sources:  HHS budget office, Feb.  10, 1997, and Congressional
Research Service, Nov.  8, 1997. 

States also provide considerable resources to fund ADAPs through the
CARE Act.  The fiscal year 1997 state contributions of $98 million
represented almost a doubling of state dollars from fiscal year 1996. 
However, between fiscal years 1995 and 1997, the portion of ADAP
funding from state dollars dropped from 31 percent to 25 percent
because federal funding grew even more quickly than state funding. 
(See app.  II for state contributions.)

Certain metropolitan areas that are disproportionately affected by
the AIDS epidemic are eligible to receive funding under title I of
the CARE Act for the delivery of comprehensive HIV and AIDS medical
care and support services.  Some of these title I programs make
eligible metropolitan area (EMA) contributions to the state ADAP
programs.  Between 1995 and 1997, when direct federal funding for
ADAPs under title II increased dramatically, title I contributions to
ADAPs remained flat.  EMA contributions totaled $20.8 million in
fiscal year 1995, $25.9 million in fiscal year 1996, and $24.2
million in fiscal year 1997.  There is no requirement that
contributions be made from title I programs to ADAP.  (See app.  III
for a list of title I EMA contributions to ADAPs, by state.)

In addition, title I pays for HIV/AIDS drugs exclusive of the ADAPs. 
In general, EMAs report that these expenditures have risen during
this time frame.  In several cases, the expenditures rose
significantly after 1996, which could reflect the introduction of the
protease inhibitors and other new therapies.  However, detailed
information on these expenditures is not available. 


   CURRENT ESTIMATES SHOW AN
   INCREASE IN PEOPLE SEEKING NEW
   AIDS DRUGS, REQUIRING ADAPS TO
   TAKE STEPS TO STRETCH RESOURCES
------------------------------------------------------------ Letter :4

At least half the people infected with HIV were estimated to have
been on combination therapy in 1997, increasing to over 60 percent of
patients in 1998.  Developing such estimates by insurance coverage or
payer source is difficult.  It is possible to estimate the number of
Medicaid beneficiaries with AIDS who are likely receiving combination
therapy.  However, given the lack of data on the number of Medicaid
beneficiaries with HIV that has not yet progressed to AIDS, it is not
possible to develop estimates of the number of these individuals who
will seek combination therapies.  It likewise is difficult to
estimate the number of individuals who will ultimately seek ADAP
coverage for combination drug therapy because of the lack of good
data on the characteristics of those served.  However, recent
experiences show a steadily increasing demand for ADAP services. 
ADAPs have taken a number of steps to stretch their limited
resources, including cross-checking program enrollment with Medicaid
and obtaining discounts for drug purchases. 


      AN INCREASING NUMBER OF
      MEDICAID BENEFICIARIES WITH
      AIDS WILL LIKELY SEEK
      COMBINATION DRUG THERAPY
---------------------------------------------------------- Letter :4.1

Although there are a number of FDA-approved drugs for the treatment
of HIV, at least half of the people with AIDS in the United States
are estimated to be receiving therapies that combine a protease
inhibitor with other drugs.  These drugs are also available for
individuals who are HIV positive but do not have AIDS, but data on
this population are of insufficient quality to pinpoint the number of
HIV cases receiving combination drug therapy.  Only 30 of the states
report HIV status, and the comprehensiveness of the reporting varies
by state.  Some of the states without HIV reporting have a large
number of AIDS cases, such as New York and California, suggesting
that many HIV cases are not reported. 

On the basis of their clinical experience and research, two AIDS
researchers developed formulas to determine the number of people who
might seek combination drug therapy in 1997 and 1998.\17 They
estimated that of the total number of people in the United States
with AIDS or who are HIV positive, 50 percent would be on combination
therapy in 1997 and 60 to 65 percent in 1998.\18 They assumed that
about 20 percent of people who try combination therapy will not be
able to tolerate the side effects and will therefore discontinue it. 
They also assumed that some patients will choose not to (or cannot
because of their lifestyle) take the medication and that some
HIV-positive individuals will be unaware of the infection and thus
will not seek treatment. 

We developed estimates of the number of Medicaid beneficiaries with
AIDS who will likely seek combination drug therapy in 1997 and 1998. 
In 1998, Medicaid covered an estimated 55 percent of all adult AIDS
cases and 90 percent of all pediatric AIDS cases, while in 1997 these
percentages were estimated to be 54 percent for adult cases and 90
percent for pediatric cases.  Medicaid currently covers at least
108,000 AIDS patients and covered at least 104,000 AIDS patients in
1997.  Therefore, using the AIDS researchers' formulas, we estimate
that for the Medicaid beneficiaries with AIDS, at least 52,000 (50
percent of 104,000) would have been on combination therapy in 1997
and at least 67,500 (62.5 percent of 108,000) are on therapy in
1998.\19

Given the lack of data on the number of Medicaid beneficiaries with
HIV that has not yet progressed to AIDS, it is not possible to
develop estimates of the number of these individuals who will seek
combination therapies.  However, the gender and age distribution of
HIV-positive individuals who do not have AIDS will likely differ from
the gender and age distribution of beneficiaries with AIDS who have
qualified for Medicaid on the basis of disability.  This HIV-positive
group includes pregnant women, women and their dependent children,
and children in low-income families who qualified for Medicaid
because they met federal and state income and categorical eligibility
requirements.  Although they may be asymptomatic, they could qualify
for Medicaid--and thus for coverage of their HIV-related care--for an
extended period of time, depending on their income and other
qualifying characteristics.  HCFA has estimated that there may be as
many as 50,000 such HIV-infected individuals covered by Medicaid. 


--------------------
\17 Interview, February 10, 1997, with John Bartlett, Professor of
Medicine, and Richard Moore, Associate Professor, Johns Hopkins
University School of Medicine. 

\18 As of June 1, 1997, 44 percent of participants in HIV
Insight--IMS America's longitudinal database of more than 7,500
individuals with HIV/AIDS--were receiving triple combination therapy. 

\19 These estimates are conservative.  The researchers' percentages
are for all HIV-infected individuals, both those with AIDS and those
whose disease has not yet progressed to AIDS, some of whom may not be
seeking treatment because they are unaware of their infection. 
However, under current treatment guidelines, all AIDS patients are
considered candidates for the combination therapy. 


      INCREASES IN ADAP
      PARTICIPATION ALSO LIKELY AS
      A RESULT OF THOSE SEEKING
      COMBINATION THERAPY
---------------------------------------------------------- Letter :4.2

It is difficult to estimate the number of individuals who will
ultimately seek ADAP coverage for combination drug therapy.  However,
recent experiences show a steadily increasing demand for ADAP
services. 

Unlike estimates of the number of people seeking coverage through
Medicaid, estimates of the number of individuals who qualify for
combination therapy under the ADAPs cannot be made.  This is because,
in addition to AIDS patients, ADAPs' clients include people who are
HIV positive but do not yet have AIDS.  It is this latter group for
whom limitations on data make it impossible to estimate the total
candidate population for the therapy.  In addition, states have
varying financial and medical standards individuals must meet to
qualify for ADAP services, so this subset of candidate patients
cannot be computed.  Furthermore, because these individuals finance
their care through multiple funding sources, some individuals only
qualify for ADAP benefits for part of the year. 

The only information that is available for predicting the likely
future demand for ADAP coverage is the recent experience of the ADAP
programs.  Since 1992, the number of people seeking funding for AIDS
therapies through ADAPs has increased rapidly.  In calendar year
1996, ADAPs served a total of about 80,000 clients nationwide,
compared with about 50,000 in 1994.  Comparing states' ADAP caseloads
for July 1996 and July 1997--the most recent data available--shows
that per-month client use of ADAPs increased 39 percent overall, from
about 31,000 to more than 43,000.  A survey by the National Alliance
of State and Territorial AIDS Directors shows the number of patients
served by ADAPs increasing at a rate of 1,000 per month.\20 Per-month
expenditures increased 78 percent overall, from nearly $15 million to
more than $27 million.  (For a state-by-state profile of ADAPs, see
app.  IV.)

HHS has reported that as early as mid-1996 some ADAPs had 80 percent
or more of their clients receiving combination drug therapy.\21 The
ADAP Working Group has made projections for expected ADAP enrollment
and drug utilization through the year 2000.\22 It projects that the
rate of ADAP clients receiving combination drug therapy over the next
2 years will be 90 percent.  The higher proportion of ADAP clients
receiving combination therapy, compared with expected rates for
Medicaid patients, likely reflects the somewhat different patient
population who may seek coverage by the ADAP precisely because they
have been prescribed high-cost drug treatment. 


--------------------
\20 National Alliance of State and Territorial AIDS Directors and
AIDS Treatment Data Network, National ADAP Monitoring Project: 
Interim Technical Report, prepared for the Henry J.  Kaiser Family
Foundation (Washington, D.C.:  Mar.  1998). 

\21 HHS, Office of the Deputy Secretary, Access to HIV-Related Drug
Therapies (Washington, D.C.:  June 1997). 

\22 The ADAP Working Group is a consortium of AIDS activist
organizations, pharmaceutical companies, and other organizations. 


      INCREASE IN ADAP
      PARTICIPATION HAS PROMPTED
      STATES TO SEEK MEASURES TO
      STRETCH STRAINED ADAP
      RESOURCES
---------------------------------------------------------- Letter :4.3

ADAPs have implemented a number of measures in an effort to stretch
their limited resources.  These measures include cross-checking
program enrollment with Medicaid, discount drug pricing, and
emergency measures such as establishing waiting lists.\23 Yet even
with these cost containment efforts, the National Alliance of State
and Territorial AIDS Directors found that more than one-fifth of the
programs expect budget shortfalls for 1998.\24


--------------------
\23 HRSA officials told us that states may also take other, less
direct measures, that can reduce the need for ADAP services, such as
limiting the caps that insurers can place on prescription drug
benefits or extending health care coverage to the working poor. 

\24 National ADAP Monitoring Project:  Interim Technical Report (Mar. 
1998). 


         ADAPS CHECK CLIENT
         ELIGIBILITY FOR MEDICAID
-------------------------------------------------------- Letter :4.3.1

To ensure that program dollars are spent wisely, a number of ADAPs
have taken steps to help identify the most appropriate source of
assistance for clients and individuals seeking prescription drug
benefits.  Many individuals seeking ADAP coverage may not be aware
that they are eligible for assistance through other sources, such as
Medicaid.  Additionally, some may be eligible for prescription drug
benefits under more than one program. 

In our contacts with officials from the 10 largest ADAPs\25 --which
collectively account for about 70 percent of total federal ADAP
funding--we found that most cross-check Medicaid eligibility and
verification files at initial enrollment and on an ongoing basis,
although the frequency with which they updated Medicaid eligibility
status varied significantly.  For example, New York updates the
information weekly, while others do so monthly or less often.  Most
of these ADAPs are linked to the Medicaid files via computer for both
initial screening and cross-checks.  States also use other means to
verify eligibility.  For example, Virginia requires all ADAP clients
to apply to Medicaid within 90 days of enrollment.  In Puerto Rico,
in lieu of computer linkages to Medicaid, case managers work with
clients to check for Medicaid or ADAP coverage.  (See table 3.)



                          Table 3
          
           Procedures Used by 10 Largest ADAPs to
           Check Client Eligibility for Medicaid

              Procedure(s) for determining Medicaid
State         eligibility
------------  --------------------------------------------
New York      Checks applicants initially for Medicaid
              eligibility and does a weekly computerized
              check against Medicaid rolls.

California    Gives applicants provisional coverage while
              Medicaid application is pending; does
              monthly cross-checks with Medicaid status.

Florida       Initially checks Medicaid eligibility;
              pharmacies also check before dispensing
              drugs. Periodically cross-matches ADAP and
              Medicaid files.

Texas         Uses a computer link to check Medicaid
              status of applicants; 20-25% of ADAP clients
              are on Medicaid. ADAP covers drugs beyond
              the state Medicaid limit of three
              prescriptions per month.

New Jersey    Does an initial check of Medicaid
              eligibility and a monthly check against
              Medicaid file.

Puerto Rico   Checks applicants for eligibility for
              Medicaid and local government health
              insurance programs; reevaluates eligibility
              periodically but does no computerized
              checks.

Georgia       Requires applicants to apply for Medicaid
              and gives them provisional coverage while
              Medicaid application is pending. They are
              accepted into ADAP only if rejected for
              Medicaid. Does no computerized checks
              against Medicaid database.

Illinois      Checks applicants against Medicaid database
              and checks again each time applicant fills a
              prescription.

Virginia      Requires applicants to apply for Medicaid
              and show proof of application within 90
              days, cross-checks them against Medicaid
              database, and reassesses eligibility
              annually.

Pennsylvania  Does an initial check of Medicaid
              eligibility, a periodic reassessment of
              eligibility, and has a direct computer link
              to cross-check against applicant Medicaid
              enrollment.
----------------------------------------------------------
Note:  State ADAPs are listed in decreasing order of size. 

A recent study of all ADAPs similarly found that 39 states require
their ADAPs to cross-check client eligibility for Medicaid, mostly
through direct access to Medicaid data or through screening by case
managers.\26 The study points out that 19 of the 23 states with
limited Medicaid coverage have restricted ADAP access.\27 This
suggests that the expansiveness of a state's Medicaid program may
directly affect the demand for ADAP services.  For example, the
Medicaid programs in Mississippi, Oklahoma, and Texas are among 11
state programs that have placed limits on the number of prescriptions
available each month; at the same time, the ADAPs in these states
have not been able to meet the demand and have had to develop waiting
lists.  Figure 1 shows the restrictiveness of the Medicaid and ADAP
programs in the various states. 

   Figure 1:  Restrictiveness of
   Medicaid and ADAP Coverage in
   States

   (See figure in printed
   edition.)

Source:  National Alliance of State and Territorial AIDS Directors
and the AIDS Treatment Data Network, March 1998. 


--------------------
\25 Size was based on the proportion of federal funding, using the
CARE Act title II base funds and ADAP supplemental funding.  These
programs also serve the most clients, based on recent reports. 

\26 See National ADAP Monitoring Project:  Interim Technical Report. 

\27 The study defines "limited" Medicaid programs by one or more of
the following:  (1) no medically needy eligibility category, (2) low
spend-down income eligibility threshold (less than 50 percent of the
federal poverty level, and (3) monthly prescription limits with no
exceptions for chronic illnesses (for example, HIV/AIDS). 


         DISCOUNT PRICING REDUCES
         ADAP EXPENDITURES
-------------------------------------------------------- Letter :4.3.2

Most ADAPs have reduced their expenditures on HIV and AIDS drugs
through several discount pricing methods.  For example, under the
Veterans' Health Care Act of 1992 (which enacted section 340B of the
Public Health Service Act), ADAPs--as well as state Medicaid
programs--can obtain drugs at a minimum 15.1-percent discount below
the average manufacturer price.  ADAPs that cannot obtain up-front
drug discounts may negotiate voluntary manufacturer rebates of
certain drugs.  Some ADAPs seek discounts from retail pharmacies,
receive third-party partial insurance reimbursements (when
available), collect copayments for drugs from clients, or obtain
reimbursement coverage from Medicaid if a client becomes eligible for
that program. 

However, not all ADAPs have obtained the lowest prices available in
purchasing drugs.  According to a recent HHS Inspector General's
report, only 19 of the 53 ADAPs participated in the 340B drug pricing
program in fiscal year 1996.\28 Many of the nonparticipating programs
cited the list of administrative burdens as a disincentive.  However,
a recent HHS policy change will allow ADAPs to participate more
readily in this program by the use of a rebate mechanism.  For the
sample of nonparticipating ADAPs that it examined, the Inspector
General estimated that they could have purchased an additional 8
percent of drug therapies if they had participated in the 340B
program. 


--------------------
\28 HHS, Office of Inspector General, Audit of State AIDS Drug
Assistance Programs' Use of Drug Price Discounts, No.  A-01-97-01501
(Washington, D.C.:  Jan.  1998). 


         EMERGENCY MEASURES TAKEN
         BY SOME ADAPS
-------------------------------------------------------- Letter :4.3.3

Regardless of these efforts, with the increase in the number of
people seeking assistance, many states have found it difficult to
adequately fund their ADAPs.  Some states have cut costs by
restricting patient access to ADAPs and implementing other emergency
measures. 

According to a study published by the National Alliance of State and
Territorial AIDS Directors, in fiscal year 1997, 22 states
implemented emergency measures to contain costs.\29 These problems
have occurred most frequently near the end of the time period for
which the title II funding grant is provided.  Twelve states moved
funds from other CARE Act budget categories, such as home health
care, and other sources; 10 states capped program enrollment; and 9
states restricted access to protease inhibitors.  Thirteen states
noted that they would likely exhaust their funds before more funding
would be made available.  Nine states reported that they maintained
waiting lists for ADAP enrollment, while seven states maintained
waiting lists for current clients to obtain protease inhibitors.\30

As of July 1998, 19 ADAPs had some type of restrictions on their
services.  As shown in table 4, these limitations included capping
enrollment and expenditures and maintaining waiting lists. 



                          Table 4
          
          Summary of Program Limitations Reported
          by Grantees for ADAP Services, July 1998

                   Number of
Type of                ADAPs
program            reporting  Grantees reporting
limitation        limitation  limitation
--------------  ------------  ----------------------------
All ADAP services
----------------------------------------------------------
Capped                    11  Alabama, Alaska, Florida,
 enrollment                    Georgia, Idaho, Indiana,
                               Montana, Nevada, North
                               Carolina, Oklahoma, and
                               South Dakota
Waiting list               9  Florida, Georgia, Idaho,
                               Indiana, Montana, Nevada,
                               North Carolina, Oklahoma,
                               and South Carolina
Capped                     5  Illinois, Missouri,
 expenditures                  Oklahoma, South Dakota, and
                               Wyoming

Protease inhibitors
----------------------------------------------------------
Capped                     7  Idaho, Kentucky, Maine,
 enrollment                    Mississippi, Missouri,
                               Nevada, and Oklahoma
Waiting list               6  Arkansas, Idaho, Maine,
                               Mississippi, Nevada, and
                               South Carolina
Other limits               3  Arkansas and South Dakota
                               (not dispensing protease
                               inhibitors) and Mississippi
                               (medical criteria vary by
                               medication)
----------------------------------------------------------
Source:  HHS. 


--------------------
\29 See National ADAP Monitoring Project:  Interim Technical Report. 

\30 ADAP programs in 22 states have transferred funds from other
health programs, capped program enrollment, or capped or restricted
access to protease inhibitors:  Alabama, District of Columbia,
Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Maine,
Mississippi, Missouri, Montana, Nebraska, Nevada, New Mexico, North
Carolina, Oklahoma, South Carolina, South Dakota, West Virginia, and
Wyoming. 


   IMPACT OF NEW THERAPIES ON
   PUBLIC PROGRAMS IS DIFFICULT TO
   ASSESS, BUT EFFECTS ON PROGRAMS
   WOULD LIKELY VARY
------------------------------------------------------------ Letter :5

As discussed, it is not possible to accurately project the number of
patients who will be on combination drug therapy in the future.  It
is therefore difficult to assess the likely impact of the new
therapies on public programs.  Many factors--such as the long-term
effectiveness of current therapies, evolving standards of care, and
new research developments--influence future demand and cost. 
Regardless of the overall effect of the new therapies on public
programs, the impacts are likely to be different for the Medicaid
program and for health care funded through the CARE Act. 


      LONG-TERM IMPACT OF DRUG
      THERAPIES WOULD INFLUENCE
      DEMAND AND ASSOCIATED COSTS
---------------------------------------------------------- Letter :5.1

Rapid advances in HIV and AIDS treatment have occurred in the last 2
years.  Researchers are identifying optimal standards of care, which
are now a part of federal treatment guidelines.  Such information--as
well as ongoing research and discoveries--will likely influence the
demand for these new drugs and therapies and their effect on public
programs. 

The long-term effectiveness of protease inhibitors and combination
drug therapies is largely unknown.  Patient outcomes will likely
influence the number of individuals who seek combination therapy in
the future.  For example, patients responding well to drug therapy
may be removed from the therapy after a few years to determine
whether the virus has been eliminated.  Patients whose conditions
cannot be stabilized may also be removed from the therapy or they may
continue to receive therapy because they still benefit from the
drugs.  Other patients may over time develop a resistance to drugs
that initially succeeded in stabilizing or reducing their viral load. 
Some patients may not be able to tolerate the drugs because of side
effects and would thus be removed from the therapy after a brief
period. 

Standards of care will also likely influence the demand for
combination drug therapy treatment and the associated costs.  Just as
the recently released NIH standards of clinical care for HIV and AIDS
have greatly expanded the candidate population who qualify for
treatment, changes in these standards could alter the number of
individuals seeking the therapy. 

Other new drugs and therapies would also likely have an effect on
demand and cost.  The National Institute of Allergy and Infectious
Diseases is currently supporting research on the development of HIV
vaccines, and a number of new drugs for HIV infection and
AIDS-associated opportunistic infections are either being developed
or tested.  At the same time, investigations into exactly how HIV
damages the immune system is suggesting new and more effective
methods of treatment. 

Researchers do not yet know how many years people with HIV or AIDS
might maintain a combination therapy regimen or how long their lives
might be extended.  If the new drugs and therapies slow or halt HIV's
progression to AIDS, other costs associated with the care of people
with AIDS--such as hospitalizations, support services, and long-term
care--may be effectively delayed. 

Some evidence already suggests that the new combination therapies
have noticeably lowered the current utilization of inpatient hospital
services.  For example, at the 4th Conference on Retroviruses and
Opportunistic Infections held in January 1997, state and hospital
officials demonstrated reduced hospitalization rates, suggesting new
HIV and AIDS drugs as a possible cause.\31

A recent study by VA attributes a 37-percent decrease in the number
of hospitalizations and a 41-percent decrease in the number of
hospital days at 173 VA medical centers to the combination therapies. 
This study cites an $18 million net cost savings in 1997 in contrast
with 1996.\32 Public health officials in New York City also announced
a 50-percent drop in AIDS deaths from the last quarter of 1995 to the
same quarter in 1996, citing as a partial reason the new HIV and AIDS
drugs.  Researchers at Johns Hopkins University pointed out that if a
person with AIDS avoided a single hospitalization--which averages
$7,000 per stay--in 1 year, the costs associated with combination
drug therapy for the same individual could be completely offset. 
However, if the drugs extended the life of a person with HIV or AIDS,
it is possible that at some point the cost of the drugs would exceed
the amount that would have been spent on hospitalizations and other
treatments.  Finally, hospitalization costs might simply be delayed. 

Another analysis by the Johns Hopkins University AIDS researchers
sought to examine the cost-effectiveness of combination therapy.\33
The model used in this study projected an incremental
cost-effectiveness for triple therapy of $10,000 to $18,000 per
life-year gained.  They compared the cost per life-year saved of
triple-drug therapy with the cost per life-year saved for accepted
treatments for other medical conditions and found that it is within
the range of other treatments for other diseases and conditions. 
(See table 5.)



                          Table 5
          
            Cost per Life-Year Saved of Protease
           Inhibitor Regimens Compared With Other
                Selected Medical Treatments

                                            Cost per life-
Medical treatment                               year saved
--------------------------------------  ------------------
Triple-drug therapy for HIV                $10,000-$18,000
Enalapril for congestive heart failure               9,700
Lovastatin to prevent coronary disease              21,000
Renal hemodialysis                                  50,000
Warfarin for nonvascular atrial                    110,000
 fibrillation, patients aged 75 years
 or older
Coronary bypass surgery, 50-year-old               113,000
 men with triple-vessel disease
----------------------------------------------------------
Source:  Moore and Bartlett, PharmacoEconomics, p.  111. 


--------------------
\31 Ramon Torres, Medical Director of the AIDS Center at St. 
Vincent's Hospital and Medical Center in New York, showed that the
new HIV and AIDS drugs have significantly reduced hospitalizations,
many of which were for patients who were more likely to receive
assistance from Medicaid and the ADAPs than from private insurance
companies. 

\32 R.D.  Moore, The Hopkins HIV Report (Baltimore, Md.:  Johns
Hopkins AIDS Services, Sept.  1998). 

\33 R.D.  Moore and J.G.  Bartlett, "Combination Antiretroviral
Therapy in HIV Infection:  An Economic Perspective,"
PharmacoEconomics, Vol.  2, No.  10 (1996), pp.  109-13. 


      DIFFERENT IMPACTS OF DRUG
      THERAPIES ANTICIPATED FOR
      MEDICAID AND ADAPS
---------------------------------------------------------- Letter :5.2

Although drug treatment costs per person would essentially be the
same for individuals receiving assistance from Medicaid and from
ADAPs, the effect on these two programs would likely be different. 
For Medicaid, reductions in hospitalizations could, in the
short-term, offset the costs associated with HIV and AIDS combination
drug therapy.  However, in the longer term, program costs may not be
offset if hospitalizations are merely delayed. 

For ADAPs, increases in the number of people who seek assistance for
combination drug therapies would not be offset by fewer
hospitalizations, because ADAPs only cover the cost of prescription
drugs, not hospitalizations.  However, delaying the onset of AIDS,
its symptoms, and associated diseases and conditions could, in the
short term, reduce the need for other services funded under the CARE
Act.  For example, under title I, the CARE Act provides 49
metropolitan areas disproportionately affected by the AIDS epidemic
with funding for mental health treatment, case management, support
services, and substance abuse programs for HIV and AIDS patients. 
Arguably, if the new HIV and AIDS drugs successfully delayed the
onset of AIDS, the demand for a number of these services might be
postponed, at least for the period of time the drugs are effective. 
On the other hand, the success of drug therapies might increase the
amount of time that clients are enrolled and the use of related
support and diagnostic services.  Moreover, it is not clear that
clients served under other titles of the CARE Act are the same as
those served under ADAP. 

In light of NIH's recently published standards of care, people with
HIV who are asymptomatic may seek combination therapies in greater
numbers.  The development of new drugs and therapies, such as
quadruple therapy, would likely add to the prescription drug demand. 
Although insurance coverage for the estimated 410,000 to 660,000
individuals who are HIV positive but have not developed AIDS is
unknown, ADAPs are the most likely to see increases in the number of
individuals who are uninsured or underinsured and seeking funding for
combination drug therapy in 1998.  HHS officials anticipate that
welfare reform efforts will likely cause ADAP enrollment to increase. 
As individuals transition from Medicaid and obtain employment, they
will more likely become qualified for ADAP benefits.  And if
treatment fails, individuals will still need care provided through
other services funded through CARE Act programs. 


   AGENCY COMMENTS
------------------------------------------------------------ Letter :6

We obtained comments on a draft of this report from HHS and from two
expert reviewers.  HHS and the expert reviewers made technical
comments, which we incorporated where appropriate.  In particular,
HHS was concerned that we had not accounted for the different
characteristics and service needs of clients served by the ADAPs and
other programs funded by the CARE Act.  We added information to the
report to take these complexities into account.  In addition, HHS
provided projections of the number of people with AIDS covered by
Medicaid in 1998 that HCFA actuaries believed were more precise than
those in our draft.  We modified our report to reflect the HCFA
estimate. 


---------------------------------------------------------- Letter :6.1

We will make copies of this report available to interested parties
upon request. 

Please call me at (202) 512-7119 or Marcia Crosse, Assistant
Director, at (202) 512-3407 if you have any questions about this
report.  Other contributors to this report include Lawrence S. 
Solomon, Project Manager; Nila Garces-Osorio, Social Science Analyst;
and Karen Sloan, Communications Analyst. 

Marsha Lillie-Blanton
Associate Director, Health Services Quality
 and Public Health Issues


FINANCIAL CRITERIA FOR MEDICAID
AND ADAP ELIGIBILITY
=========================================================== Appendix I

Within broad federal guidelines, states have flexibility in
developing their Medicaid programs, including requirements for
eligibility and prescription drug benefits.  Medicaid covers all
prescribed HIV and AIDS drugs approved by the Food and Drug
Administration (FDA) consistent with the requirements of 1927(d) of
the Social Security Act.  The Health Care Financing Administration
(HCFA) surveyed state Medicaid programs and found that all states
were covering protease inhibitors, as required.  Because of
prescription limits, however, combination therapy, with its
dependence on multiple drugs, can rapidly exceed these limits (for
example, 11 states limit the number of allowable drugs to as few as
three per month).\34 Thirty-one programs require nominal copayments
for the drugs. 

Generally, state AIDS Drug Assistance Programs (ADAP) cover many
FDA-approved HIV and AIDS drugs, but not all drugs are covered by
each program.  To assess financial eligibility for ADAP enrollment,
most states use federal poverty guidelines; income limits are often
expressed as a percentage of the federal poverty level (FPL).  The
financial requirements range from 100 percent of FPL in one state to
558 percent of FPL in another state.  Some states list the
requirement in terms of absolute income levels:  for example, as long
as liquid assets total less than $25,000, New York requires a
household of one to earn no more than $44,000; a household of two,
less than $59,200; and three or more, less than $74,400.  Other
states also use specific income levels unrelated to the federal
poverty guidelines.  Some programs consider out-of-pocket medical
expenses when determining income.  Ten of the programs restrict
financial assets.  (See table I.1.)

States have both financial and medical requirements for ADAP
enrollment.  For example, a person must have an income or assets
below a certain dollar amount or demonstrate financial hardship.  At
a minimum, a person must be diagnosed as having HIV infection. 
Almost half of the states have only these basic requirements.  Other
states also require that a client have CD4 counts less than a certain
level (CD4 is a measure of the immune system level).  For example,
six states require a CD4 level of less than 500.  Twelve states
require a doctor's prescription for the HIV and AIDS drugs.  Some
states also test the HIV viral load in order to determine medical
eligibility.\35



                                        Table I.1
                         
                         Medicaid and State ADAP Financial-Based
                             Criteria for Program Eligibility

              Medicaid criteria as
              of 1997:\a\,b
              applicant qualified
              for AFDC as of July
              1996 or SSI, or had
State         income . . .            ADAP criteria
------------  ----------------------  ---------------------------------------------------
Alabama       at or below 133% of     Income at or below 250% of FPL; no third-party
              FPL for pregnant women  insurance that pays for more than 50% of the cost
              and infants             of covered medications

Alaska        at or below 133% of     Income at or below 300% of federal poverty
              FPL for pregnant women  guidelines for Alaska
              and infants

Arizona       at or below 140% of     Income at or below 200% of FPL
              FPL for pregnant women
              and infants

Arkansas      at or below 133%-200%   Income at or below 100% of FPL less medical
              of FPL for pregnant     expenses; usually covers any uninsured person until
              women and infants\c     insurance begins

California    at or below 200% of     Income at or below 400% of FPL; if income is above
              FPL for pregnant women  limit, sliding-scale copayment is based on annual
              and infants             state income tax liability and family size, up to
                                      annual earnings of $50,000; applicant's health
                                      insurance does not provide drugs as a benefit, or
                                      the copayment plan is causing financial hardship,
                                      or applicant is not enrolled in a health
                                      maintenance organization (HMO), health insurance
                                      program, or public program

Colorado      at or below 133% of     Income at or below 185% of FPL
              FPL for pregnant women
              and infants

Connecticut   at or below 185% of     Income at or below 300% of FPL; no asset
              FPL for pregnant women  limitations
              and infants\d

Delaware      at or below 185% of     Income at or below 230% of FPL, no copayment;
              FPL for pregnant women  sliding-scale copayments for cost of service, and
              and infants             total allowable annual charges cannot exceed either
                                      7% or 10% of gross income, depending on the
                                      copayment

District of   at or below 185% of     Income at or below 300% of FPL
Columbia      FPL for pregnant women
              and infants

Florida       at or below 185% of     Income at or below 200% of FPL; enrollees with
              FPL for pregnant women  incomes 100%-200% of FPL are assessed for sliding-
              and infants             scale copayments

Georgia       at or below 185% of     Income at or below 125% of FPL
              FPL for pregnant women
              and infants

Hawaii        at or below 300% of     Income at or below 400% of FPL set for Hawaii;
              FPL for pregnant women  assets less than $10,000, excluding home and car
              and infants\d,\e

Idaho         at or below 133% of     Income at or below 400% of FPL
              FPL for pregnant women
              and infants

Illinois      at or below 133% of     Income at or below 200% of FPL; insurance provides
              FPL for pregnant women  less than 80% of cost of prescription medication
              and infants\d

Indiana       at or below 150% of     Indiana residency requirement and income at or
              FPL for pregnant women  below 300% of FPL
              and infants\d

Iowa          at or below 185% of     Income at or below 200% of FPL
              FPL for pregnant women
              and infants

Kansas        at or below 150% of     Income at or below 300% of FPL; will assist with
              FPL for pregnant women  spend-down
              and infants

Kentucky      at or below 185% of     Income at or below 300% of FPL, adjusted for family
              FPL for pregnant women  size; cash assets less than $10,000; access to
              and infants             protease inhibitors requires income at or below
                                      200% of FPL, adjusted for family size

Louisiana     at or below 133% of     Income at or below 200% of FPL; assets less than
              FPL for pregnant women  $4,000, excluding home and car; not qualified for
              and infants             Medicaid or private insurance

Maine         at or below 185% of     Income at or below 200% of FPL
              FPL for pregnant women
              and infants

Maryland      at or below 185% of     Income equal to or less than $29,400, adjusted for
              FPL for pregnant women  household size; sliding-scale copayments for
              and infants\e           incomes over $26,000

Massachusett  at or below 185% of     Income at or below $27,000; limit raised by $2,200
s             FPL for pregnant women  for each dependent
              and infants

Michigan      at or below 185% of     Income at or below 362% of FPL; must have applied
              FPL for pregnant women  for Medicaid within the past 60 days and have
              and infants             pending or denial status; not eligible for VA
                                      benefits

Minnesota     at or below 275% of     Income at or below 300% of FPL; liquid assets less
              FPL for pregnant women  than $25,000, excluding home and car; uninsured or
              and infants\d,e         responsible for 20% or more of prescription cost or
                                      $15 or more per prescription; cannot be in state
                                      Medical Assistance or General Assistance Medical
                                      Care programs

Mississippi   at or below 185% of     Household income below 200% of FPL
              FPL for pregnant women
              and infants

Missouri      at or below 185% of     Income at or below 185% of FPL
              FPL for pregnant women
              and infants\d

Montana       at or below 133% of     Applicant must provide evidence that the cost of
              FPL for pregnant women  the covered medications will create a severe
              and infants             household financial burden

Nebraska      at or below 150% of     Income at or below 200% of FPL
              FPL for pregnant women
              and infants

Nevada        at or below 133% of     Income at or below 200% of FPL; less than $4,000 in
              FPL for pregnant women  assets, excluding home and car
              and infants

New           at or below 185% of     Income at or below 300% of FPL (income limit may be
Hampshire     FPL for pregnant women  adjusted on basis of medical expenses incurred)
              and infants\d

New Jersey    at or below 185% of     Income equal to or less than $30,000 for one
              FPL for pregnant women  person; limit increased by $10,000 for each member
              and infants             of household, up to $70,000 per year

New Mexico    at or below 185% of     Income at or below 300% of FPL, adjusted for family
              FPL for pregnant women  size; liquid assets of less than $10,000
              and infants

New York      at or below 185% of     Income at or below $44,000 for a household of one,
              FPL for pregnant women  less than $59,200 for two, less than $74,400 for
              and infants             three or more; liquid assets less than $25,000

North         at or below 185% of     Income at or below 125% of FPL
Carolina      FPL for pregnant women
              and infants

North Dakota  at or below 133% of     Income at or below 150% of FPL; sliding-scale
              FPL for pregnant women  coverage above 150% of FPL
              and infants\d

Ohio          at or below 133% of     Income at or below 281% of FPL, currently less than
              FPL for pregnant women  $1,410 per month after taxes (additional allowance
              and infants\d           for dependents)

Oklahoma      at or below 150% of     Income at or below 150% of FPL (out-of-pocket drug
              FPL for pregnant women  costs can spend-down)
              and infants\d

Oregon        at or below 133% of     Income at or below 250% of FPL
              FPL for pregnant women
              and infants

Pennsylvania  at or below 185% of     Gross income less than $30,000, with an allowance
              FPL for pregnant women  of $2,480 for each additional family member
              and infants

Puerto Rico   Not available           Certified medically indigent by Medicaid or limited
                                      or no coverage by a drug prescription plan, as
                                      documented by the state, health insurance plan,
                                      consortia, or community-based organization;
                                      guidelines for income start at between $400 and
                                      $800 per month for one person

Rhode Island  at or below 250% of     Income at or below 400% of FPL
              FPL for pregnant women
              and infants\e

South         at or below 185% of     Income at or below 300% of FPL for free
Carolina      FPL for pregnant women  medications; a sliding fee scale determines
              and infants             applicant's payment above this threshold

South Dakota  at or below 133% of     Income at or below 300% of FPL
              FPL for pregnant women
              and infants

Tennessee     at or below 400% of     Income at or below 300% of FPL; liquid asset limit
              FPL for pregnant women  of $8,000
              and infants\e

Texas         at or below 185% of     Income at or below 200% of FPL (if married,
              FPL for pregnant women  spouse's income is counted); not eligible for
              and infants             Medicaid or used up the month's Medicaid pharmacy
                                      benefit; copayment of $5 per prescription may be
                                      required for clients not eligible for Medicaid;
                                      income guidelines for households of 1 person, less
                                      than $15,480, 2 people, less than $20,720, 3
                                      people, less than $25,960, 4 people, less than
                                      $31,200, 5 people, less than $36,440

Utah          at or below 133% of     Full coverage at or below 100% of FPL; sliding
              FPL for pregnant women  scale and copayment for incomes over 100% of FPL
              and infants

Vermont       at or below 200%-225%   Income at or below 200% of FPL; sliding scale and
              of FPL for pregnant     copayments for incomes over 200% of FPL
              women and infants\f

Virginia      at or below 133% of     Income at or below 200% of FPL (residents of
              FPL for pregnant women  northern Virginia may have incomes up to $17,428)
              and infants\d

Washington    at or below 185%-200%   Income at or below 370% of FPL; assets less than
              of FPL for pregnant     $10,000, excluding home and car
              women and infants\f

West          at or below 150% of     Income at or below 300% of FPL
Virginia      FPL for pregnant women
              and infants

Wisconsin     at or below 185% of     Income at or below 200% of FPL; must have applied
              FPL for pregnant women  for coverage under, and have been denied
              and infants             eligibility for, medical assistance within 12
                                      months of application

Wyoming       at or below 133% of     Income at or below 300% of FPL
              FPL for pregnant women
              and infants
-----------------------------------------------------------------------------------------
\a States are required to provide Medicaid coverage to children aged
6 and older born after September 30, 1983, living in families with
incomes below 100 percent of the federal poverty level.  Since 1989,
states have been required to cover all pregnant women as well as
children below age 6 living in families with incomes at or below 133
percent of the federal poverty level. 

\b Welfare reform generally severed the link between cash assistance
programs and Medicaid eligibility.  Under the Temporary Assistance
for Needy Families block grant, the open-ended entitlement to cash
assistance for eligible families was eliminated.  To ensure continued
Medicaid coverage for low-income families, the law generally set
Medicaid eligibility standards at AFDC levels in effect on July 16,
1996. 

\c In Arkansas, pregnant women are covered at 133 percent of FPL and
infants are covered up to 200 percent of FPL. 

\d Eleven states elected to retain the more restrictive Medicaid
eligibility criteria that were in place for blind, disabled, and
elderly beneficiaries before SSI was established in 1972.  These
states may use more restrictive definitions of disability or more
restrictive financial eligibility criteria than SSI. 

\e Hawaii, Maryland, Minnesota, Rhode Island, and Tennessee operate
programs under Section 1115 waivers.  Some populations receive fully
subsidized Medicaid services.  Other populations are required to pay
a portion of the premium and may have a different benefit package. 

\f In Vermont, pregnant women are covered at 200 percent of FPL and
infants are covered up to 225 percent of FPL.  In Washington, the
income eligibility criterion for pregnant women is 185 percent of
FPL; the income eligibility criterion for infants is 200 percent of
FPL. 

Sources:  National Governors' Association, Medicaid Eligibility of
Pregnant Women, Infants, and Children, Effective October 1997
(Washington, D.C.:  Oct.  1997); National Alliance of State and
Territorial AIDS Directors and AIDS Treatment Data Network, National
ADAP Monitoring Project:  Interim Technical Report (Washington, D.C.: 
Mar.  1998) and State AIDS Drug Assistance Programs:  A National
Status Report on Access (Washington, D.C.:  July 1997). 


--------------------
\34 Arkansas, California, Florida, Georgia, Mississippi, Nevada,
North Carolina, Oklahoma, South Carolina, Texas, and Wyoming all
impose limits on the number of prescriptions.  However, some states
allow exceptions for chronic illnesses. 

\35 Tests of the viral load assess the level of HIV RNA, a genetic
material, in the blood. 


STATE ADAP FUNDING
========================================================== Appendix II

In fiscal year 1997, a total of 34 states (plus the District of
Columbia and Puerto Rico) provided funds to their ADAPs in addition
to the funds provided by the federal government.  The state
contributions have increased from a total of $28.7 million in 1995 to
$98.1 million in 1997 (see table II.1). 



                                        Table II.1
                         
                         State Funding Contributions for ADAP and
                          Percentage Change, Fiscal Years 1995,
                                      1996, and 1997

                         State funding amounts               State % of total funding
                 --------------------------------------  --------------------------------
                                               Percenta                          Percenta
                                                     ge                                ge
                                                change,      FY      FY      FY   change,
State             FY 1995   FY 1996   FY 1997   1995-97    1995    1996    1997   1995-97
---------------  --------  --------  --------  --------  ------  ------  ------  --------
Alabama                \a  $150,000  $150,604        \b      \a      6%      5%        \b
Alaska                 \c         0         0        \b      \c       0       0        \b
Arizona                 0         0   600,000        \b       0       0      18        \b
Arkansas            9,657         0         0    (-100)       2       0       0    (-100)
California       9,100,00  15,600,0  40,200,0       342      52      41      51      (-4)
                        0        00        00
Colorado          150,000   301,000   301,000       101      27      24      11     (-59)
Connecticut       592,000   592,000   592,000         0      43      24      14     (-67)
Delaware                0    35,000         0         0       0       8       0         0
District of             0   147,000   800,000        \b       0       6      15        \b
 Columbia
Florida            42,000         0  1,500,00     3,471       1       0       5       400
                                            0
Georgia           324,000   324,450   324,450         0      19       7       4     (-79)
Hawaii            265,000   300,000   291,000        10      66      42      26     (-61)
Idaho                   0         0         0         0       0       0       0         0
Illinois         2,197,49  5,200,00  8,325,00       279      63      58      58     (-10)
                        3         0         0
Indiana                 0    75,000   442,000        \b       0       5      17        \b
Iowa                    0         0         0         0       0       0       0         0
Kansas                  0         0         0         0       0       0       0         0
Kentucky           99,970   110,000   127,944        28      23      13      11     (-52)
Louisiana\d             0         0        0\         0       0       0       0         0
Maine              60,040    60,040    60,000         0      67      25      15     (-78)
Maryland           85,688  1,100,00   600,000       600      11      24      10      (-9)
                                  0
Massachusetts    1,290,00  1,100,00  6,800,00       427      71      34      60     (-15)
                        0         0         0
Michigan                0         0         0         0       0       0       0         0
Minnesota               0   150,000   150,000        \b       0      26      15        \b
Mississippi             0         0         0         0       0       0       0         0
Missouri                0   600,000   600,000        \b       0      37      11        \b
Montana                \a    95,000         0        \b      \a      42       0        \b
Nebraska                0         0         0         0       0       0       0         0
Nevada                  0         0  1,300,00        \b       0       0      46        \b
                                            0
New Hampshire     100,000    73,833         0    (-100)      48      17       0    (-100)
New Jersey              0   875,000   700,000        \b       0       9       4        \b
New Mexico        650,000   740,000   740,000        14     100      64      38     (-62)
New York          495,120  8,400,00  9,900,00     1,900       2      15      14       600
                                  0         0
North Carolina    450,000   750,000   750,000        67     100      35      20     (-80)
North Dakota            0         0         0         0       0       0       0         0
Ohio              200,500   200,000  3,124,50     1,458      19      10      48       153
                                            0
Oklahoma          206,000   206,000   431,000       109      37      20      21     (-43)
Oregon                  0         0         0         0       0       0       0         0
Pennsylvania     4,703,00  5,200,00  6,659,34        42     100      76      56     (-44)
                        0         0         7
Puerto Rico      3,406,65  3,406,65  4,168,03        22      49      42      32     (-35)
                        1         1         6
Rhode Island            0         0         0         0       0       0       0         0
South Carolina     50,000   350,000   500,000       900      11      21      14        27
South Dakota            0         0         0         0       0       0       0         0
Tennessee               0         0   610,050        \b       0       0      25        \b
Texas            2,708,83  2,697,37  2,697,73         0      65      32      14     (-80)
                        8         6         6
Utah              114,000   114,800   114,800         0      54      17      15     (-72)
Vermont                \a         0   150,000        \b      \a       0      38        \b
Virginia          786,800   687,200   687,200     (-13)      56      18      11     (-80)
Washington        240,000   417,500  3,263,00     1,260      50      26      53         6
                                            0
West Virginia           0    25,000    74,833        \b       0      11       9        \b
Wisconsin         393,700   295,800   373,500      (-5)      93      35      25     (-73)
Wyoming                 0         0         0         0       0       0       0         0
=========================================================================================
Total            $28,720,  $50,378,  $98,108,       242      31      24      25     (-19)
                      457       650       000
-----------------------------------------------------------------------------------------
\a Not available. 

\b Percentage change cannot be calculated. 

\c State had no ADAP that year. 

\d Louisiana does not fund its ADAP directly.  The state operates an
independent system that provides outpatient HIV/AIDS drugs through
hospitals to those in need.  This system was funded at $2 million in
fiscal year 1995, $3.3 million in fiscal year 1996, and $20 million
in fiscal year 1997. 

Sources:  National Alliance of State and Territorial AIDS Directors,
The Fiscal Status of State AIDS Drug Assistance Programs:  Findings
From a January 1996 National Survey of State AIDS Directors
(Washington, D.C.:  Apr.  1996); National Alliance of State and
Territorial AIDS Directors and the AIDS Treatment Data Network, State
AIDS Drug Assistance Programs:  A National Status Report on Access
(Washington, D.C.:  July 1997).  and National ADAP Monitoring
Project:  Interim Technical Report (Washington, D.C.:  Mar.  1998). 


EMA CONTRIBUTIONS TO ADAPS
========================================================= Appendix III

Currently, 49 communities in 21 states, the District of Columbia, and
Puerto Rico have been designated under title I of the CARE Act as
EMAS disproportionately affected by the AIDS epidemic.  In 1997,
these EMAs contributed some $24 million to the ADAP programs.  The
level of these contributions has been generally flat over the past
few years, increasing from 1995 to 1996, and then declining slightly
in 1997 (see table III.1). 



                                       Table III.1
                         
                          Title I EMA Contributions to ADAPs and
                          Percentage Change, Fiscal Years 1995,
                                      1996, and 1997

                               Contribution amount                 Change, FY 1995-97
                     ----------------------------------------  --------------------------
States with EMAs          FY 1995       FY 1996       FY 1997        Amount    Percentage
-------------------  ------------  ------------  ------------  ------------  ------------
Arizona                         0             0      $407,000      $407,000            \a
California                      0             0             0             0             0
Colorado                 $350,000      $261,000       774,749       424,749           121
Connecticut               209,500       421,500       443,892       234,392           112
District of                74,801       800,000     1,150,873     1,076,072         1,439
 Columbia
Florida                         0             0             0             0             0
Georgia                   365,420     1,064,645     1,000,000       634,580           174
Illinois                        0       825,000             0             0             0
Louisiana                       0             0             0             0             0
Maryland                  123,581       453,963       330,394       206,813           167
Massachusetts             300,000       350,000     1,177,465       877,465           293
Michigan                  187,500       400,000       300,000       112,500            60
Minnesota                       0             0             0             0             0
Missouri                   36,675             0             0     (-36,675)        (-100)
New Hampshire                   0        72,308       102,388       102,388            \a
New Jersey                516,250       792,024     1,410,738       894,488           173
New York               17,591,280    19,858,730    16,043,941            (-         (-9%)
                                                                 1,547,339)
Ohio                            0             0             0             0             0
Oregon                          0             0       537,000      $537,000            \a
Pennsylvania                    0             0             0             0             0
Puerto Rico             1,013,827             0             0            (-        (-100)
                                                                 1,013,827)
Texas                           0       217,000             0             0             0
Washington                 58,654       342,500       575,000       516,346           880
Total                 $20,827,488   $25,858,670   $24,253,440    $3,425,952            16
-----------------------------------------------------------------------------------------
\a Percentage change cannot be calculated. 


STATE-BY-STATE PROFILE OF ADAPS
========================================================== Appendix IV

From January 1997 to July 1997, 39 states' ADAPs experienced growth
in the number of clients served; 42 experienced increases in monthly
expenditures for the same period.  Six states experienced a
50-percent or greater increase in clients served.  For example,
clients served through Delaware's ADAP increased 327 percent--the
greatest increase experienced by a state; conversely, Mississippi saw
a 56-percent decrease in clients served.  Only five states
experienced minimal change (a less than 5-percent increase or
decrease).  (See table IV.1.)



                                    Table IV.1
                     
                      Number of Clients Served by ADAPs and
                      ADAP Expenditures, July 1996, January
                               1997, and July 1997

                 Clients served                        Expenditures
        --------------------------------  --------------------------------------
                                Percenta                                Percenta
                                      ge                                      ge
                                 change,                                 change,
          July    Jan.    July  July 96-                                July 96-
State       96      97      97   July 97   July 96   Jan. 97   July 97   July 97
------  ------  ------  ------  --------  --------  --------  --------  --------
Alabam     500     454     486     (-3%)  $167,000  $222,779  $316,359        89
 a
Alaska      \a       5      11        \b        \a     3,319     7,614        \b
Arizon     335     435     448        34   116,761   226,611   287,075       146
 a
Arkans     259     351     426        64    45,260    85,536   119,713       165
 as
Califo   6,258   7,431   8,539        36  3,557,21  4,487,07  5,914,04        66
 rnia                                            8         5         1
Colora     379      \a     534        41   161,598        \a   296,516        83
 do
Connec     334     634     519        55   188,563   385,320   367,286        95
 ticut
Delawa      55      11      47     (-15)    29,900     4,243    20,240     (-32)
 re
Distri   543\c      \a     312     (-43)  299,497\        \a        \a        \b
 ct of                                           c
 Colum
 bia
Florid   4,322   4,565   4,868        13  1,748,67  1,576,63  2,590,82        48
 a                                               9         1         6
Georgi     922     662   1,041        13   308,400   274,126   307,949         0
 a
Hawaii      60      84     104        73    45,730    55,642    67,680        48
Idaho       30      50      48        60     7,215    23,179    29,410       308
Illino   1,303   1,203   1,319         1   769,232   733,251   763,364      (-1)
 is
Indian     217     252     280        29    88,738   107,287   185,903       109
 a
Iowa        43      35      45         5     8,630    21,656    38,519       346
Kansas      86      90     110        28    40,524    60,192    75,560        87
Kentuc     113     161     191        69    45,071    89,979   101,519       125
 ky
Louisi      \a      87     175        \b        \a    32,910    64,872        \b
 ana
Maine       65      45      52     (-20)    24,145    23,600    34,404        42
Maryla     243     409     493       103   130,234   285,859   402,426       209
 nd
Massac     792     860     858         8   309,851   494,361   607,585        96
 huset
 ts
Michig     177     212     259        46   124,568   166,109   206,785        66
 an
Minnes     203    198\     201      (-1)    36,258    58,019    50,039        38
 ota
Missis     301     427     188     (-38)    26,174   157,642   100,809       285
 sippi
Missou      \a     294     371        \b        \a   128,761   215,180        \b
 ri
Montan      23      18      18     (-22)    17,600    18,000    19,500        11
 a
Nebras      57      62      85        47    17,054    26,773    46,081       170
 ka
Nevada     217     281     336        55    81,900    62,556    64,428     (-21)
New         45      43      57        27    21,745    22,582    40,828        88
 Hamps
 hire
New        994   1,700   1,960        97   380,000   900,000  1,200,00       216
 Jersey                                                              0
New        330     421     465        41   125,094   213,546   218,175        74
 Mexico
New      4,859   6,422   7,595        56  3,313,51  5,199,83  6,838,89       106
 York                                            9         8         5
North      268     342     470        75   161,861   205,320   415,241       157
 Carol
 ina
North       15      15      12     (-20)     4,417        \a        \a        \b
 Dakota
Ohio       323     449     596        85   136,220   207,286   430,264       216
Oklaho     139     242     293       111    61,686   115,430   165,507       168
 ma
Oregon      90     103      91         1    46,100    56,000    27,104     (-41)
Pennsy   1,060     997   1,268        20   467,808   656,745   908,362        94
 lvania
Puerto   1,920   1,980   2,320        21   750,000        \a        \a        \b
 Rico
Rhode       69      89     140       103    16,216    30,170    60,000       270
 Island
South      149     198     310       108    68,220   127,113   215,606       216
 Carol
 ina
South       25      19      17     (-32)     6,800    10,047     6,499      (-4)
 Dakota
Tennes     113     155     145        28    43,694    60,042    64,502        48
 see
Texas    1,910   2,727   3,215        68   587,289  1,188,79  1,571,34       168
                                                           0         0
Utah        47      79      95       102    24,736    52,718    68,089       175
Vermon      37      32      41        11    20,053    14,115    22,526        12
 t
Virgin     583   1,437   1,189       104    45,424   369,310   545,000      1100
 ia
Washin     338     492     543        61   147,342   210,451   313,782       113
 gton
West        31      39      43        39    15,206    29,176    29,554        94
 Virgi
 nia
Wiscon     133     156     202        52    66,966    87,074   150,576       125
 sin
Wyomin      56      53      63        12     1,500        \a        \a        \b
 g
================================================================================
Total   31,371  37,506  43,494        39  $14,907,  $19,568,  $26,593,        78
                                               699       167       535
--------------------------------------------------------------------------------
Note:  Expenditure totals may not add because of rounding. 

\a Not available. 

\b Percentage change cannot be calculated. 

\c August 1996 data.

Source:  National Alliance of State and Territorial AIDS Directors,
March 1998 and July 1997. 


*** End of document. ***