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United States Government Accountability Office:

GAO:

Testimony:

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

Ryan White Care Act;

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

Statement of Marcia Crosse: 
Director, Health Care:

GAO-06-681T:

April 26, 2006:

GAO Highlights:

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

Why GAO Did This Study:

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

What GAO Found:

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

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

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

What GAO Recommends:

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

[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-681T].

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Marcia Crosse at (202) 
512-7119 or crossem@gao.gov. 

[End of Section]

Mr. Chairman and Members of the Subcommittee:

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

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

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

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

ADAPs' Program Design and Additional Funding: 

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

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

ADAPs' Reported HIV/AIDS Drug Prices: 

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

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

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

HRSA's Monitoring of ADAP's Reported Drug Prices:

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

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

340B Prices and Other Federal Drug Pricing Programs:

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

Prenatal HIV Testing and Perinatal HIV Transmission Rates:

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

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

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

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

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

Contact and Acknowledgments:

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

(9290544):

Footnotes: 

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

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

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

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

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

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

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

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

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

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

[End of Section]

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