Funding Implications of New Combination Therapies for Federal and State Programs

HEHS-99-2: Published: Oct 14, 1998. Publicly Released: Oct 14, 1998.

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Bernice Steinhardt
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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.

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