United States Government Accountability Office

GAO Report to Congressional Requesters

RYAN WHITE CARE 

ACT 

Improved Oversight 

Needed to Ensure 

AIDS Drug Assistance 

Programs Obtain Best 

Prices for Drugs 

April 2006 

 

GAO-06-646 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

April 2006

RYAN WHITE CARE ACT 

Improved Oversight Needed to Ensure 

AIDS Drug Assistance Programs Obtain 

Best Prices for Drugs 

Highlights of GAO-06-646, a report to 

congressional requesters 

The CARE Act authorized grants to 

the states and certain territories for

AIDS Drug Assistance Programs 

(ADAP) to purchase and provide 

HIV/AIDS drugs to eligible 

individuals. An ADAP’s coverage—

who and what is covered—is 

determined by each ADAP’s

eligibility and other program 

criteria, and ADAPs may establish 

waiting lists for eligible individuals. 

ADAPs may purchase their drugs 

through the 340B federal drug 

pricing program, which provides 

discounts on certain drugs to 

covered entities. The Health

Resources and Services 

Administration (HRSA) oversees 

ADAPs and is responsible for 

monitoring the prices they pay. 

GAO was asked to examine 

(1) coverage differences among 

ADAPs, (2) how the prices ADAPs 

reported paying for HIV/AIDS drugs 

compare to 340B prices, (3) how 

HRSA monitors the drug prices 

ADAPs pay, and (4) how the 340B 

prices compare to other selected 

federal drug pricing programs.

What GAO Recommends

GAO recommends that HRSA 

require ADAPs to report the final 

prices they paid for drug 

purchases, net of rebates, and that 

HRSA routinely determine whether 

these prices paid are at or below 

the 340B prices. HRSA stated that

these steps would be labor 

intensive and it lacks capacity to 

carry out such oversight. We

believe there are cost-effective

processes HRSA could use.

Variation in each ADAP’s program design and funding from various sources 

contributes to differences in coverage among the 52 ADAPs GAO reviewed.

Each ADAP has considerable flexibility in designing eligibility and other 

program criteria to determine who will be covered by the program. 

Consequently, an individual eligible for ADAP services in one state may not 

be eligible for services in another. ADAPs varied in the extent to which they 

received funding from sources in addition to the CARE Act ADAP base 

grants, such as state funds or transfers of funds from other CARE Act grants. 

Eligibility and other program design criteria also varied among ADAPs that 

had waiting lists of eligible individuals in fiscal year 2004, as did the amount 

and sources of additional funding for those ADAPs. 

In their quarterly reports to HRSA, some ADAPs reported prices that were 

above the 340B price for some of the 10 drugs GAO compared. These 10

drugs accounted for 73 percent of ADAP drug spending. If ADAPs choose to 

use the 340B program, they may purchase drugs from manufacturers either 

through the direct purchase option, receiving the 340B price up front, or 

through the 340B rebate option, paying full price and receiving a rebate later.

The 340B prices are not disclosed to ADAPs, but participating manufacturers 

agree to sell at the 340B prices. However, all 25 ADAPs that used the 340B 

direct purchase option reported a price that was above the 340B price. All 

but 3 of the 27 ADAPs using the 340B rebate option reported prices higher 

than the 340B price for one or more drugs. These prices may not have been 

the final prices these ADAPs paid, however, because they may not have 

included all rebates eventually received. 

HRSA is responsible for monitoring whether ADAPs obtain the best prices 

available for drugs. HRSA has identified the 340B prices as a measure of an 

ADAP’s economical use of grant funds. However, HRSA does not routinely 

determine whether the prices ADAPs report are no higher than the 340B

prices. Also, quarterly reports do not reflect the rebates eventually received 

by ADAPs using the rebate option to purchase drugs. Without considering 

the final ADAP rebate amount on a drug purchase, HRSA cannot determine 

whether the final drug prices paid were at or below the 340B price. 

ADAPs that purchase drugs at 340B prices paid more for some drugs than 

certain federal agencies did for the same drugs under the federal ceiling

price program. ADAPs do not have access to this program. The 340B prices 

were also higher than some of the prices available through the 340B prime 

vendor program, which negotiates drug prices on behalf of participating 

340B entities including ADAPs. The 340B prices, including the 340B prime 

vendor prices, were lower than the Medicaid rebate program prices available 

to state Medicaid programs, for each of the drugs GAO could compare. www.gao.gov/cgi-bin/getrpt?GAO-06-646.

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. 
Contents 

Letter 1

Background 5

Results in Brief 11 

Variation in Program Design and Funding Contributes to Coverage 

Differences among ADAPs 13 

Some ADAPs Reported HIV/AIDS Drug Prices that Were Higher 

than the 340B Prices 31 

HRSA Does Not Routinely Determine Whether Drug Prices ADAPs 

Report Paying Are Higher than the 340B Prices 36 

HIV/AIDS Drug Prices Are Sometimes Higher Under the 340B 

Program than Some Federal Programs 38 

Conclusions 42

Recommendations for Executive Action 43 

Agency Comments and Our Evaluation 43 

Appendix I Prenatal HIV Testing and Perinatal HIV 

Transmission Rates within States 45 

Background 45

Prenatal HIV Testing Encouraged to Reduce HIV Perinatal 

Transmission 46

Appendix II State Approaches to Identifying and Notifying 

Partners of HIV-Infected Individuals of Possible HIV 

Exposure 49 

Background 49

States Use Various Approaches to Elicit Information and Notify 

Partners of Possible HIV Exposure 50 

Appendix III Scope and Methodology 57 

Appendix IV Comments from the Health Resources and Services 

Administration 63 

Appendix V GAO Contact and Staff Acknowledgments 66 

Page i GAO-06-646 AIDS Drug Assistance Programs
Related GAO Products 67 

Tables 

Table 1: Key CARE Act Title II Grants through which ADAPs May 

Receive Funds 6 

Table 2: ADAP Program Eligibility by Income Ceiling, Reported for 

ADAP Grant Year 2004 15 

Table 3: Program Eligibility and Other Criteria, Reported for ADAP 

Grant Year 2004 17 

Table 4: Number of Drugs Included in ADAP Formularies and 

ADAPs that Cover Fuzeon, Reported for ADAP Grant 

Year 2004 20 

Table 5: Additional ADAP Funding Sources and Amounts by ADAP, 

Fiscal Year 2004 22 

Table 6: Total Additional ADAP Funding as a Percentage of the 

CARE Act ADAP Base Grants and Total Additional 

Funding Per ELC by ADAP, Fiscal Year 2004 26 

Table 7: ADAPs with Waiting Lists and Number of Months Each 

Had Waiting Lists, Fiscal Year 2004 29 

Table 8: Ranking of 13 ADAPs with Waiting Lists among the 46 

ADAPs that Received Additional Funding Per ELC; Fiscal 

Year 2004 31 

Table 9: 25 340B Direct Purchase ADAPs that Reported Prices for 

the Top 10 HIV/AIDS Drugs that Were Above 340B Prices; 

2003 33 

Table 10: Ranking of Top 10 HIV/AIDS Drugs from Lowest (1) to 

Highest (5) Unit Price Across Drug Programs; 2003 39 

Table 11: Percentage of Unit Price Increases or Decreases from 

2000 to 2003 for Top 10 HIV/AIDS Drugs 41 

Page ii GAO-06-646 AIDS Drug Assistance Programs
Abbreviations 

ADAP AIDS Drug Assistance Program 

AIDS acquired immunodeficiency syndrome 

AMP average manufacturer price 

CARE Act Ryan White Comprehensive AIDS Resources 

 Emergency Act of 1990

CDC Centers for Disease Control and Prevention 

CMS Centers for Medicare & Medicaid Services 

ELC estimated living AIDS case 

EMA eligible metropolitan area 

FCP federal ceiling price 

FDA Food and Drug Administration 

FSS federal supply schedule 

HAART highly active antiretroviral therapy 

HHS Department of Health and Human Services 

HIV human immunodeficiency virus 

HRSA Health Resources and Services Administration 

IOM Institute of Medicine 

NASTAD National Alliance of State and Territorial AIDS Directors 

NDC national drug code 

OIG Office of Inspector General 

OPA Office of Pharmacy Affairs 

PCRS partner counseling and referral services 

STD sexually transmitted disease 

VA Department of Veterans Affairs 

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Page iii GAO-06-646 AIDS Drug Assistance Programs
United States Government Accountability Office

Washington, DC 20548 

April 26, 2006

The Honorable Michael B. Enzi 

Chairman 

Committee on Health, Education, Labor, and Pensions 

United States Senate 

The Honorable Mark E. Souder 

Chairman 

Subcommittee on Criminal Justice, Drug Policy, and Human Resources 

Committee on Government Reform 

House of Representatives 

The Honorable Tom Coburn, M.D. 

The Honorable Judd Gregg 

United States Senate 

Since the first cases of acquired immunodeficiency syndrome (AIDS) were 

identified in the United States nearly 25 years ago, advancements in 

prescription drug treatments have significantly reduced AIDS mortality 

and slowed the progression from a human immunodeficiency virus (HIV) 

-positive diagnosis to AIDS.1

 The introduction of combination drug 

treatments—highly active antiretroviral therapy (HAART)—in 1996 was 

followed by a decline in the number of AIDS deaths and new AIDS cases in 

the United States for the first time since the beginning of the epidemic.2

While drug treatments have extended the lifespan of those living with 

HIV/AIDS, the number of new HIV infections has not decreased. The 

Department of Health and Human Services’s (HHS) Centers for Disease 

Control and Prevention (CDC) estimates approximately 40,000 people are

newly infected annually. CDC also estimates that between 1,039,000 and 

1,185,000 people in the United States were living with HIV/AIDS at the end 

of 2003. The number of people with HIV/AIDS is likely to have risen since 

 1

HIV is the virus that causes AIDS. Throughout this report, we use the common term 

HIV/AIDS to refer to HIV disease, inclusive of cases that have progressed to AIDS. When we

use these terms alone, HIV refers to the disease without the presence of AIDS, and AIDS

refers exclusively to HIV disease that has progressed to AIDS. 

2

HAART drug regimens usually combine three or more drugs and are used to suppress the 

progression of the disease HIV/AIDS by reducing the amount of the HIV virus in a person’s

blood. HAART therapy can cost about $12,000 or more per person annually. 

Page 1 GAO-06-646 AIDS Drug Assistance Programs
then, and CDC estimates that, as of December 2004, it included 415,193 

individuals with AIDS. 

The Ryan White Comprehensive AIDS Resources Emergency Act of 1990 

(CARE Act),3

 administered by HHS’s Health Resources and Services 

Administration (HRSA), was enacted to address the needs of jurisdictions, 

health care providers, and people with HIV/AIDS and their family 

members.4 Title II of the CARE Act5 authorizes AIDS Drug Assistance 

Program (ADAP) grants to states, including the District of Columbia, and 

certain territories6

 specifically to operate ADAPs. ADAPs purchase and 

provide HIV/AIDS drugs to infected individuals who meet eligibility 

requirements. Each state and territory is given broad authority under the 

CARE Act to design its own program. The scope of an ADAP’s coverage—

who and what is covered—is determined by each ADAP’s program design, 

which includes criteria for who is eligible to receive drugs, and other 

criteria such as the number and types of drugs it will provide. There are no 

uniform program design criteria across ADAPs. 

ADAPs are a critical source of prescription drugs for low-income people 

with HIV/AIDS who have no or limited prescription drug coverage and are 

the programs of last resort for these individuals.7

 In fiscal year 2005, CARE 

Act funding for ADAP grants was $787.5 million. As the number of people 

who know their HIV-positive status grows, the number of people with 

HIV/AIDS needing to rely on ADAPs will likely increase. Some ADAPs 

have struggled to meet the demand for their services. Limited resources 

 3

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. 

4

See also GAO, HIV/AIDS: Changes Needed to Improve the Distribution of Ryan White 

CARE Act and Housing Funds, GAO-06-332 (Washington, D.C.: Feb. 28, 2006). 

5

The 1990 CARE Act added a new title XXVI to the Public Health Service Act. In general, 

because Part A of that new title, which authorizes grants to metropolitan areas, was 

established by Title I of the CARE Act, it is commonly referred to as Title I, and because 

Part B, which authorizes grants to states and territories, was established by Title II of the

CARE Act, it is commonly referred to as Title II. 

6

In addition to the 50 states, ADAP grants are authorized for the District of Columbia, the 

Commonwealth of Puerto Rico, Guam, and the Virgin Islands. 

7

ADAPs and other programs funded through CARE Act grants serve as the payers of last 

resort for eligible individuals who have no other private or public source available for the 

services they need. HRSA policy provides that ADAPs are to identify and evaluate other 

potential sources of payment for drugs to ensure that the ADAPs are the payers of last

resort. 

Page 2 GAO-06-646 AIDS Drug Assistance Programs
have contributed to ADAPs establishing waiting lists for eligible 

individuals and taking other measures that restrict access. 

Grants under Title II of the CARE Act are subject to conditions set out by 

HRSA in the notice of grant award, including conditions related to ADAP 

drug prices.8

 One of these conditions identifies 340B drug prices as the 

measure of ADAPs’ economical use of grant funds. Under Section 340B of

the Public Health Service Act, drug manufacturers provide discounts on 

certain outpatient drugs to covered entities;9

 a 340B price, sometimes 

referred to as a 340B ceiling price, is established for each covered drug 

that entities purchase. ADAPs are allowed to purchase drugs through the 

Section 340B program and are required to submit quarterly HIV/AIDS drug 

pricing reports to HRSA that indicate what they paid for drugs. Other 

federal drug pricing programs are used by federal agencies to purchase 

HIV/AIDS drugs, including the federal supply schedule (FSS) and federal 

ceiling price (FCP) programs. State Medicaid programs receive rebates 

from drug manufacturers for purchases of certain outpatient drugs 

including HIV/AIDS drugs through the federal Medicaid drug rebate 

program. ADAPs are not authorized by statute to purchase drugs under 

these other drug pricing programs. 

As Congress prepares for the reauthorization of CARE Act programs, you 

asked us to examine certain aspects of ADAPs. Specifically, we are 

reporting on (1) how each ADAP’s program design and funding sources 

contribute to differences in coverage among ADAPs, including those 

ADAPs with waiting lists, (2) how the prices that ADAPs report to HRSA 

they paid for HIV/AIDS drugs compare to the 340B prices, (3) how HRSA 

monitors the drug prices ADAPs pay, and (4) how the 340B prices for 

HIV/AIDS drugs compare to prices under selected federal drug pricing 

programs. You also asked us to provide information on state prenatal HIV

testing and perinatal HIV transmission rates, and state approaches to 

identifying and notifying partners of HIV-infected individuals; this 

information is provided in appendixes I and II, respectively. 

 8

Under the CARE Act, states and territories determine which drugs approved by the Food

and Drug Administration to include on their ADAP drug formularies. Drug formularies are a 

preferred list of drug products that typically limit the number of drugs available within a 

therapeutic class for purposes of drug purchasing, dispensing, and reimbursement. 

9

42 U.S.C. § 256b (2000). Other entities eligible to purchase drugs through the 340B 

program include, for example, community health centers, hemophilia treatment centers,

and HIV early intervention projects. 

Page 3 GAO-06-646 AIDS Drug Assistance Programs
To report on these issues, we reviewed the 1990 CARE Act, and 

subsequent amendments, HRSA policy manuals, HHS’s Office of Inspector 

General (OIG) reports on the CARE Act and ADAPs, Institute of Medicine 

(IOM) reports on the CARE Act, and other related reports, and documents. 

We interviewed HRSA and HHS OIG officials, as well as officials from the 

National Alliance of State and Territorial AIDS Directors (NASTAD) and 

the Association of State and Territorial Health Officials. 

We reviewed 52 ADAPs to determine what program design elements 

contribute to the coverage differences among ADAPs.10 We analyzed and

compared data ADAPs reported to HRSA for grant year 2004 on program 

design elements such as eligibility income levels for individuals, 

enrollment caps, the number of drugs covered, and funding from various 

sources during fiscal year 2004.11 We also analyzed and compared these 

data among ADAPs with waiting lists of eligible individuals. 

To compare the prices that ADAPs reported paying for HIV/AIDS drugs to 

340B prices for such drugs, we first determined which HIV/AIDS drugs 

were the top ten by ADAP expenditure using 2002 data, the most recently 

available expenditure data at the time of our analysis. These drugs 

accounted for 73 percent of ADAP drug spending. We then compared the 

prices ADAPs reported paying for the top ten HIV/AIDS drugs to the 340B 

program prices for those same drugs. For this comparison, we used the 

2003 340B program prices and the purchase prices that 52 ADAPs provided 

in their quarterly reports submitted to HRSA for 2003. At the time of our 

analysis, 2003 was the most recent full year of ADAP drug price data. 

To determine how HRSA monitors the prices ADAPs pay for HIV/AIDS 

drugs, we interviewed HRSA officials. To determine how the 340B prices 

compare with prices under selected federal drug pricing programs, we 

used the 2003 prices for the 340B drug pricing program from HRSA and 

compared them to FSS and FCP program prices from the Department of 

Veterans Affairs (VA), which administers these pricing programs. To 

determine how the 340B prices compare with the Medicaid prices, we 

calculated prices state Medicaid agencies paid including rebates states 

 10Our analyses of ADAPs throughout this report include the 50 states, the District of 

Columbia, and Puerto Rico. 

11For our analyses, the ADAP grant year 2004 covered the period April 1, 2004, through 

March 31, 2005, and the fiscal year 2004 covered the period October 1, 2003, through 

September 30, 2004. 

Page 4 GAO-06-646 AIDS Drug Assistance Programs
received under HHS’s Centers for Medicare & Medicaid Services’ (CMS) 

Medicaid drug rebate program. We found the data from these sources to 

be sufficient and reliable for our analyses. 

Appendix III provides a more detailed explanation of the scope and 

methodology for this report. We performed our work from July 2004 

through April 2006, in accordance with generally accepted government 

auditing standards. 

In 1990, Congress passed the CARE Act to address the needs of 

jurisdictions, health care providers, and people with HIV/AIDS and their 

family members. The CARE Act authorizes grants to eligible metropolitan 

areas (EMA) under Title I, and to states and territories under Title II.12 Title 

II of the CARE Act authorizes the grants by which states and certain 

territories receive funds specifically to operate ADAPs. ADAPs purchase 

HIV/AIDS drugs for enrolled low-income people who are uninsured or 

underinsured. Each state and territory is responsible for and has 

significant flexibility in determining its ADAP eligibility criteria for who 

receives services, the services it provides, and which drugs to include in its 

formularies.

Background 

States and certain territories receive ADAP base grants distributed by a 

formula based on each grantee’s proportion of total estimated living AIDS

cases (ELC).13 The ADAP grant program, administered by HRSA’s 

HIV/AIDS Bureau, distributed $787.5 million or 38 percent of the about 

$2.1 billion in CARE Act funding for fiscal year 2005. ADAPs may receive 

funds from various other Title II grants awarded to states and territories, 

including Title II base grants and Severe Need grants. (See table 1.) Severe

Need grants are made to states and certain territories with a need for 

funding to increase access to drugs. 

 12EMAs are metropolitan areas with a population of at least 500,000 and more than 2,000

reported AIDS cases in the last 5 calendar years. 

13HRSA calculates a jurisdiction’s ELCs by using data from the CDC on the reported AIDS

case counts for the last 10 years and weights those numbers to account for the likelihood 

of deaths. See also GAO-06-332 for a discussion of ELCs. 

Page 5 GAO-06-646 AIDS Drug Assistance Programs
Table 1: Key CARE Act Title II Grants through which ADAPs May Receive Funds 

Grant Purpose Eligible grantees Distribution

Base Grant Support primary and home-based 

health care, insurance coverage,

medications, support services, and 

early intervention services, such as 

HIV counseling, testing, and 

referral. 

States and territoriesa

Distributed based 80 percent on 

each grantee’s proportion of all 

ELCs and 20 percent on each

grantee’s proportion of all ELCs 

located outside EMAs.b

 Minimum 

grants of $200,000 are provided for 

states with less than 90 ELCs;

$500,000 for states with 90 or more 

ELCs; and $50,000 for territories.

ADAP Base Grant Provide medications, drug

treatment adherence and support 

efforts,c and health insurance 

coverage with prescription drug 

benefits. 

States and certain territoriesdDistributed based on each grantee’s 

proportion of all ELCs. 

Severe Need Grant Provide increased access to 

HIV/AIDS drugs. 

States and certain territoriesd with 

a severe need for a grant to 

increase access to medications. 

Distributed based on each grantee’s 

proportion of all ELCs; grantees 

must agree to match 25 percent of 

their severe need grant and not to 

impose ADAP eligibility 

requirements stricter than those in 

place on January 1, 2000.e

Source: HRSA. 

a

In addition to the 50 states, base grants are authorized for the District of Columbia, the 

Commonwealth of Puerto Rico, Guam, the Virgin Islands, American Samoa, the Commonwealth of 

the Northern Mariana Islands, the Republic of the Marshall Islands, the Federated States of 

Micronesia, and the Republic of Palau. 

b

Under Title I of the CARE Act, EMAs are metropolitan areas with a population of at least 500,000 

and more than 2,000 reported AIDS cases in the last 5 calendar years. 

c

Drug treatment adherence and support efforts are intended to increase individuals’ ability to comply

with the treatment regimen, for example, by providing care for depression. 

d

In addition to the 50 states, these grants are authorized for the District of Columbia, the 

Commonwealth of Puerto Rico, Guam, and the Virgin Islands. 

e

To be eligible for a Severe Need grant, a jurisdiction must have met one of four eligibility criteria as of

January 1, 2000. It must have limited (1) the eligibility of ADAP enrollees to those with incomes at or 

below 200 percent of the federal poverty level, (2) the number of ADAP enrollees by using medical 

eligibility restrictions, (3) the number of antiretroviral drugs covered in its drug formulary, or (4) the 

number of opportunistic infection medications to less than 10 in its drug formulary. (Opportunistic 

infections are illnesses such as parasitic, viral, and fungal infections, and some types of cancer, some

of which usually do not cause disease in people with normal immune systems.) In addition, a 

jurisdiction must also have agreed to provide a 25 percent match and not impose eligibility

requirements more restrictive than those in place on January 1, 2000. According to HRSA, grantees

can provide funds or in-kind services to meet the matching requirements. 

Page 6 GAO-06-646 AIDS Drug Assistance Programs
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 that provide HIV/AIDS services to eligible individuals. 

Medicaid is the largest source of federal funding for HIV/AIDS health care 

services. In fiscal year 2005, Medicaid provided an estimated $5.7 billion in 

HIV/AIDS health care assistance.14 Because Medicaid funds HIV/AIDS 

health care services, including drugs, to eligible individuals, state eligibility 

determinations for Medicaid are important in determining eligibility for 

ADAPs that provide HIV/AIDS services as a last resort.15 Individuals who 

have received HIV/AIDS drugs through their state Medicaid programs and 

who are dual eligibles—eligible for both Medicaid and Medicare—will be 

affected by the Medicare Part D prescription drug benefit implemented in

January 2006. Rather than receiving their drug coverage under Medicaid,

dual eligibles will be covered by private insurance plans provided through 

Part D. Since Medicaid drug benefits vary from state to state, and Medicare 

Part D plans vary, which dual eligibles, if any, will be able to receive ADAP 

drug coverage as a last resort will also vary. 

Unlike Medicaid, under which states receive more federal funds when 

their expenditures increase, due, for example, to greater enrollment, 

ADAPs do not receive additional federal funds when they have more 

eligible individuals than funds to provide services. When an ADAP cannot 

cover everyone it determines is eligible for its services, it may, but is not 

required to, establish a waiting list. ADAPs may establish waiting lists 

anytime that they determine it is necessary and the number of ADAPs with 

waiting lists is not constant. Since ADAPs may also cap the number of 

individuals they are willing to enroll for services, the ADAPs with waiting 

lists may not represent all eligible individuals who are not being served. 

 14Medicaid is a jointly funded federal-state health care program that covers certain lowincome families, and certain individuals who are aged or disabled. By statutory formula, 

the federal government matches from 50 to 83 percent of each state’s reported Medicaid 

expenditures for medical assistance. 

15Eligibility criteria for Medicaid programs vary among the states. States have latitude 

within federal guidelines to design their individual Medicaid programs with respect to

eligibility, services, payment, and whether to include prescription drug coverage. Although

all state Medicaid programs have drug coverage, the HIV/AIDS drug coverage provided

varies among states. 

Page 7 GAO-06-646 AIDS Drug Assistance Programs
During fiscal year 2004, there were 14 ADAPs that reported having waiting 

lists for at least part of the year.16

When eligible individuals are on ADAP waiting lists, there are limited drug 

assistance options available to help those who qualify until they can be 

served by the ADAP. If they do not qualify for these options, the result can 

be an interruption of needed drug treatment. According to HHS’s HIV 

treatment guidelines, if an individual’s HAART regimen is interrupted, the 

individual can develop drug resistance upon resuming treatment.17

Individuals who develop drug resistance can transmit drug-resistant 

strains of the HIV virus. Among the drug assistance options are 

pharmaceutical manufacturers’ patient assistance programs that provide 

free or cost-reduced drugs, non-ADAP pharmacy assistance programs 

using Title I funds,18 and state-sponsored pharmacy assistance programs. 

An ADAP-eligible individual’s ability to use these options may be limited 

by factors such as availability in a particular state, financial and medical 

eligibility criteria for the individual, and coverage duration. 

Section 340B of the Public Health Service Act requires drug 

manufacturers, as a condition of their payment under Medicaid, to sign a 

pharmaceutical pricing agreement with the Secretary of Health and 

Human Services. Drug manufacturers agree to charge covered entities, 

including ADAPs, that participate in the 340B drug pricing program prices 

for certain outpatient drugs that do not exceed an amount determined by 

statutory formula—the 340B price.19 HRSA’s Office of Pharmacy Affairs 

(OPA), within the Healthcare Systems Bureau, administers the 340B 

ADAPs and the 340B Drug 

Pricing Program 

 16Reliable data were not available to determine the number of unduplicated individuals on 

waiting lists during a year or the length of time an individual was on a waiting list before

being served by the ADAP. 

17HHS’s Guidelines for the Use of Antiretroviral Agents in HIV-1-Infected Adults and 

Adolescents generally recommend the HAART drug treatment, which includes combination 

regimens of three drugs, and does not recommend one-drug regimens. The guidelines are 

updated regularly. 

18Under Title I of the CARE Act, HRSA provides grants to EMAs; some EMAs use Title I 

grants to provide HIV/AIDS pharmaceutical assistance. 

19If a drug manufacturer fails to sell drugs at or below the 340B prices, it can be dropped as

a participating drug provider in the 340B and Medicaid programs. 

Page 8 GAO-06-646 AIDS Drug Assistance Programs
program and calculates the 340B prices on a quarterly basis,20 which are 

below the average manufacturer price (AMP).21 ADAPs are eligible to 

participate in the 340B drug pricing program and receive 340B drug prices

for the HIV/AIDS drugs they cover.22 Like the other covered entities, an 

ADAP’s participation in the 340B program is voluntary—they may choose,

for example, to negotiate drug prices themselves with drug companies. For 

an ADAP to purchase drugs through the 340B program, it must inform 

both OPA and the HIV/AIDS Bureau’s Division of Service Systems to 

activate its status as a 340B covered entity. 

ADAPs participating in the 340B program have options for how they 

purchase drugs. Generally, ADAPs can purchase drugs through either the 

340B direct purchasing option (sometimes referred to as point-ofpurchase) or through the 340B rebate option. ADAPs choose one of these 

options when they activate their status as a 340B entity. Under the direct 

purchase option, ADAPs purchase drugs from drug manufacturers or 

through a third-party such as a drug purchasing agent. Using the 340B 

direct purchase option, ADAPs receive the 340B price discount up front. 

Under the rebate option, ADAPs typically contract with entities such as a 

pharmacy network or pharmacy benefits management company for the 

purchase of covered drugs. ADAPs later request a 340B rebate from the 

drug manufacturers. ADAPs that have activated their 340B status and are

using the 340B direct purchase option can also use the 340B prime vendor 

to negotiate for them.23 The prime vendor assists covered entities by 

negotiating drug prices at or below the 340B drug prices. Participation in 

this program is voluntary, but ADAPs that utilize the 340B rebate option or 

those that negotiate prices themselves and do not participate in the 340B 

drug pricing program are not eligible to participate in the prime vendor 

program. 

 20Prior to October 1, 2005, CMS calculated the 340B prices quarterly. 

2142 U.S.C. § 256b(a)(1) (2000). AMP is the average price paid to the manufacturer for a 

drug by wholesalers for drugs distributed to the retail pharmacy class of trade. 42 U.S.C. § 

1396r-8(k)(1) (2000). AMP is used to calculate the 340B price and by CMS to calculate the

Medicaid rebate—the amount state Medicaid programs receive from drug manufacturers

for covered drugs through the federal Medicaid rebate program. 

2242 U.S.C. § 256b(a)(4)(E) (2000). 

23Section 340B of the Public Health Service Act requires the Secretary of Health and Human 

Services to establish a prime vendor program for 340B covered entities. 42 U.S.C. §

256b(a)(8) (2000). 

Page 9 GAO-06-646 AIDS Drug Assistance Programs
Grants under Title II of the CARE Act are subject to conditions set out in 

the notice of grant award, including conditions related to ADAP drug 

prices. One of these conditions identifies 340B prices as the measure of 

ADAPs’ economical use of grant funds. Specifically, the notice states that 

“HHS and Congress expect that states will use every means at their 

disposal to secure the best price available for all products on their ADAP 

formularies in order to achieve maximum results with these funds.” 

Further, the notice requires grantees to “adopt at least one defined costsaving practice for their ADAP program that is equal to or more 

economical than the 340B Drug Pricing Program and its Prime Vendor 

Program.”24 For example, ADAPs may negotiate prices with drug 

manufacturers that are at or below the 340B prices for the same drugs. 

However, HHS does not disclose to ADAPs or the prime vendor what the 

340B prices are for the drugs they purchase because of statutory 

provisions relating to the confidentiality of certain drug pricing 

information.25 All ADAPs submit quarterly HIV/AIDS drug pricing reports 

to the HIV/AIDS Bureau that indicate what they paid. The Bureau can 

request that OPA compare the ADAP price reports to the 340B prices, but 

OPA does not share its price comparisons with the Bureau due to the 

confidentiality of the 340B prices. If a state or territory does not comply 

with the grant conditions, HRSA can either restrict the use of its current 

grant funds or deny the state or territory future grant funds. 

Other Federal Drug Pricing 

Programs 

Federal agencies and state Medicaid programs purchase drugs subject to

other statutory provisions regarding prices. The FSS has prices available 

to all federal government purchasers for the drugs listed on the schedule.

Another program, FCP, is the maximum price that drug manufacturers can 

charge four agencies—the Department of Defense, the VA, the Public 

Health Service, and the Coast Guard—for brand-name drugs listed on the 

 24Citing HHS policy that grantees must expend funds used for drug purchases in the most

economical manner feasible, HRSA requested comments on a proposed requirement that 

all covered entities receiving grants participate in, or demonstrate good cause for not

participating in, the 340B program. 63 Fed. Reg. 56,656, 56,657 (Oct. 22, 1998). HRSA later 

announced instead that, to increase participation in the 340B program, it would add a

statement in its notice of grant award on the need for grantees to determine if their drug

purchasing practices meet federal requirements for reasonable and cost effective 

purchasing. 65 Fed. Reg. 6,383 (Feb. 9, 2000). 

2542 U.S.C. § 1396r-8(b)(3)(D) (2000). 

Page 10 GAO-06-646 AIDS Drug Assistance Programs
FSS, even if the FSS prices are higher.

26 State Medicaid programs receive 

rebates on their covered drugs, including HIV/AIDS drugs, through the 

federal Medicaid drug rebate program. The minimum Medicaid rebate 

amount is 15.1 percent of AMP. ADAPs are not authorized to purchase 

drugs under these drug pricing programs, except for the District of 

Columbia ADAP, which purchases drugs using the FCP. 

Variation in ADAPs’ program design and funding amounts from the CARE 

Act and other sources contributes to differences in coverage among the 52

ADAPs we reviewed. ADAP program eligibility and other design criteria, 

including income ceilings, program enrollment caps, and drug formularies,

that states and territories establish vary considerably. 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. 

Also, of the 52 ADAPs, 16 reported that they have 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. Because of the variation in program 

criteria, an individual eligible for ADAP services in one state may not be 

eligible for services in another. The funding that some ADAPs reported 

receiving from sources other than the ADAP base grant, such as transfers 

from Title II base 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, the California ADAP, which had an ADAP base 

grant of about $89.6 million, received about $123.5 million in total 

additional funding. Eligibility and other program design criteria also varied 

among ADAPs that had waiting lists of eligible individuals in fiscal year 

2004, as did the amount and sources of additional funding for those 

ADAPs. 

Results in Brief 

 26Drug manufacturers that do not make drugs available through the FSS and FCP programs 

may not receive payments for drugs from Medicaid, certain federal agencies, or any 

covered entity receiving funds under the Public Health Service Act. 38 U.S.C. § 8126(a)(4) 

(2000). 

Page 11 GAO-06-646 AIDS Drug Assistance Programs
Some ADAPS reported prices to HRSA for some of the top 10 HIV/AIDS 

drugs that were higher than the 340B program prices. Drug manufacturers 

that agree to participate in the 340B drug pricing program agree to sell 

HIV/AIDS drugs to 340B entities, including ADAPs that participate in the 

program, at prices no higher than 340B prices. ADAPs are expected to 

secure the best price available for drugs on their formularies whether they 

use the 340B program, including the 340B prime vendor, or negotiate drug 

prices on their own with drug manufacturers. In our analysis using the top 

10 HIV/AIDS drugs by ADAP expenditures, we found that in calendar year

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 

one 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. 

Although HRSA is responsible for monitoring whether ADAPs are 

complying with grant conditions, it does not routinely compare the drug 

prices ADAPs pay to 340B prices. A HRSA HIV/AIDS Bureau official said 

that the Bureau has occasionally asked OPA to compare the prices ADAPs 

report they paid for drugs to the 340B prices and provide the results. 

Bureau and OPA officials also said that they are discussing plans for OPA 

to begin making routine comparisons of drug prices. However, the ADAP 

drug price information that OPA currently uses to make its comparisons is 

not complete. The prices ADAPs report paying do not include all rebates 

they receive under the 340B rebate option. Also, OPA does not 

systematically check whether the prices obtained by the 340B prime 

vendor program are at or below the 340B prices. 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. 

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 FSS and 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 rebate drug pricing 

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 

Page 12 GAO-06-646 AIDS Drug Assistance Programs
Combivir, Epivir, Sustiva, Trizivir, Zerit, and Ziagen. The Medicaid rebate

program prices, available to state Medicaid programs, 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. 

We are making recommendations to the Administrator of the Health 

Resources and Services Administration to require that all ADAPs report 

final prices they paid for drugs that reflect any discounts or rebates 

received, and to routinely determine whether the prices ADAPs paid for 

the drugs they purchased were 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. We believe that, while monitoring the prices paid for all 

the drugs on each ADAP’s formulary might be challenging, HRSA could 

use a cost-effective, automated process to compare ADAP reported prices 

to 340B prices for selected drugs and could modify its schedule of ADAP 

reports to allow for rebate reconciliation. 

The program eligibility and other criteria that ADAPs establish and 

additional funding that some ADAPs receive vary and contribute to 

coverage differences among the 52 ADAPs we reviewed. As a result, an 

individual eligible for ADAP services in one state may not be eligible in

another state. Also, some of the ADAPs received funding from sources 

other than ADAP base grants, such as Severe Need grants, transfers from 

Title I grants or Title II base grants, and contributions from their state or 

territory. The additional funding that some ADAPs received in fiscal year 

2004 significantly increased funds available to support ADAP enrollees and 

services. Eligibility and other program design criteria varied among 

ADAPs that had waiting lists of eligible individuals in fiscal year 2004, as 

did the amount and sources of additional funding for those ADAPs. This 

variation among ADAPs with waiting lists contributes to coverage 

differences, just as it does among all ADAPs. 

Variation in Program 

Design and Funding 

Contributes to 

Coverage Differences 

among ADAPs 

Page 13 GAO-06-646 AIDS Drug Assistance Programs
ADAP program eligibility and other criteria, including income ceilings, 

copayments, and drug formularies, that states and territories establish 

vary considerably and contribute to coverage differences among ADAPs. 

According to the National ADAP Monitoring Project,27 some ADAPs use 

these criteria and others that can limit access to their services to contain 

program costs. Because these criteria vary among ADAPs, a person 

determined eligible and who receives certain ADAP services in one 

jurisdiction may not be eligible or receive the same ADAP services in 

another. 

Variation in ADAPs’ 

Eligibility and Other 

Program Criteria 

Contributes to Coverage 

Differences among ADAPs 

Income level is one program eligibility criterion that varies among ADAPs. 

Each ADAP has an income ceiling, which is the maximum income an 

individual can have and be eligible for the program. Among the 52 ADAPs 

included in our review, income ceilings reported to HRSA for the 2004 

grant year ranged from the most restrictive at 125 percent of the federal 

poverty level,28 or $11,638, in North Carolina to the most generous at 

556 percent, or $51,764, in Massachusetts. (See table 2.) Eleven ADAPs had 

income ceilings that were 200 percent or less of the federal poverty level.

Sixteen ADAPs reported income ceilings that were 400 percent or greater

than the federal poverty level. 

 27The National ADAP Monitoring Project, an initiative of the Henry J. Kaiser Family 

Foundation and NASTAD, issues a report on its annual survey of all jurisdictions receiving

ADAP base grants. The survey provides data on the status of ADAP programs and assesses

key trends. 

28The HHS 2004 federal poverty level for a single person was $9,310; the poverty levels were 

higher for Alaska ($11,630) and Hawaii ($10,700). The poverty level was not defined for

Puerto Rico. 

Page 14 GAO-06-646 AIDS Drug Assistance Programs
Table 2: ADAP Program Eligibility by Income Ceiling, Reported for ADAP Grant 

Year 2004 

Eligibility income ceiling and its percent of the 

federal poverty levela 

ADAP Dollars Percent

Alabama $23,275 250

Alaskab34,890 300

Arizona 27,930 300

Arkansas 27,930 300

California 37,240 400

Colorado 27,930 300

Connecticut 37,240 400

Delaware 46,550 500

District of Columbia 37,240 400

Florida 32,585 350

Georgia 27,930 300

Hawaiic42,800 400

Idaho 18,620 200

Illinois 37,240 400

Indiana 27,930 300

Iowa 18,620 200

Kansas 27,930 300

Kentucky 27,930 300

Louisiana 18,620 200

Maine 27,930 300

Maryland 37,240 400

Massachusetts 51,764 556

Michigan 41,895 450

Minnesota 27,930 300

Mississippi 37,240 400

Missouri 27,930 300

Montana 30,723 330

Nebraska 18,620 200

Nevada 37,240 400

New Hampshire 27,930 300

New Jersey 46,550 500

New Mexico 27,930 300

New York 45,340 487

Page 15 GAO-06-646 AIDS Drug Assistance Programs
Eligibility income ceiling and its percent of the 

federal poverty levela

 

ADAP Dollars Percent

North Carolina 11,638 125

North Dakota 37,240 400

Ohio 46,550 500

Oklahoma 18,620 200

Oregon 18,620 200

Pennsylvania 35,378 380

Puerto Ricod18,620 200

Rhode Island 27,930 300

South Carolina 27,930 300

South Dakota 27,930 300

Tennessee 27,930 300

Texas 18,620 200

Utah 37,240 400

Vermont 18,620 200

Virginia 27,930 300

Washington 27,930 300

West Virginia 23,275 250

Wisconsin 27,930 300

Wyoming 18,620 200

Source: GAO analysis of ADAP data. 

Note: The ADAP 2004 grant year covered April 1, 2004, through March 31, 2005. 

a

The HHS 2004 federal poverty level for a single person was $9,310 except as noted. 

b

The HHS 2004 federal poverty level for Alaska was $11,630. 

c

The HHS 2004 federal poverty level for Hawaii was $10,700. 

d

The HHS 2004 federal poverty level was not defined for Puerto Rico; we calculated the eligibility 

income ceiling for Puerto Rico by multiplying Puerto Rico’s 200 percent income ceiling by the federal 

poverty level of $9,310. 

Of the 52 ADAPs we reviewed, 29 reported to HRSA that their programs 

had one or more program design limitations, which also contributed to 

coverage differences among ADAPs for grant year 2004. These included a 

limit on an individual’s assets, copayment requirements, caps on program 

enrollment, or caps on expenditures per individual enrollee. (See table 3.)

Sixteen ADAPs reported that they have a limit on assets that enrollees are 

allowed to have, 9 reported having a copayment for drugs provided, 7 

reported having a cap on the number of individuals enrolled, and 5 

Page 16 GAO-06-646 AIDS Drug Assistance Programs
reported having a cap on amounts expended per enrollee for HIV/AIDS 

drugs. Eight ADAPs reported using more than one of these criteria. 

Table 3: Program Eligibility and Other Criteria, Reported for ADAP Grant Year 2004 

ADAP 

Enrollee 

asset 

limitationa

Copaymentsb 

Caps on 

number of 

enrolleesc

 

Caps on 

expenditures per 

enrolleed 

Alabama

Alaska

Arizona

Arkansas X

California X

Colorado X X

Connecticut

Delaware X X

District of Columbia X 

Florida X

Georgia X

Hawaii X

Idaho X X

Illinois X

Indiana

Iowa

Kansas X

Kentucky X

Louisiana X

Maine

Maryland X

Massachusetts

Michigan

Minnesota X

Mississippi

Missouri X

Montana X

Nebraska

Nevada X

New Hampshire 

New Jersey 

Page 17 GAO-06-646 AIDS Drug Assistance Programs
ADAP 

Enrollee 

asset 

limitationa

Copaymentsb 

Caps on 

number of 

enrolleesc

 

Caps on 

expenditures per 

enrolleed 

New Mexico X 

New York X 

North Carolina X 

North Dakota 

Ohio

Oklahoma X X

Oregon X X

Pennsylvania

Puerto Rico

Rhode Island 

South Carolina X 

South Dakota X X 

Tennessee X

Texas X 

Utah X X

Vermont

Virginia

Washington X X

West Virginia 

Wisconsin

Wyoming

Total ADAPs 16 9 7 5 

Sources: GAO analysis of HRSA and ADAP data.

Note: The ADAP 2004 grant year covered April 1, 2004, through March 31, 2005. 

a

An enrollee asset limitation is a maximum amount of assets, as defined by each ADAP, that an 

individual may have and be eligible to receive drug assistance from the respective ADAP. The asset 

limitations were reported as either the ADAP had a limitation or it did not, or by the dollar amount of 

the ADAP’s limit. For those ADAPs reporting a dollar amount, the range was from $2,500 in Colorado 

to $25,000 in Florida, Minnesota, and New York. 

b

A copayment is money that an individual must pay to receive the ADAP’s drug assistance. The 

copayments were reported as either the ADAP had a fixed or sliding scale copayment or it did not. 

c

The cap on the number of enrollees is a maximum number of eligible individuals who will be able to 

receive the ADAP’s drug assistance. The caps were reported as either the ADAP had a cap or it did 

not, or by the number of ADAP enrollees allowed. For the 5 ADAPs that reported an enrollee cap 

number, the range was from 75 in South Dakota to 3,600 in North Carolina. 

d

A cap on expenditures per enrollee is the maximum dollar amount for drug assistance that an ADAP 

will provide an eligible individual. The caps were reported as either the ADAP had a cap or it did not, 

or by the dollar amount of the ADAP’s cap. For the five ADAPs that reported an expenditure cap, the 

range was from $1,200 per month in Idaho to $24,000 per year in Illinois.

Page 18 GAO-06-646 AIDS Drug Assistance Programs
The number and type of drugs covered under ADAPs’ drug formularies 

vary and can also contribute to coverage differences among ADAPs. 

ADAPs are not required to cover particular drugs or a minimum number of

drugs. The Food and Drug Administration (FDA) has approved 27 

HIV/AIDS drugs in four drug classes.29 According to NASTAD, the majority 

of ADAPs cover several drugs in three of the classes.30 In the ADAP 2004 

grant year, 26 ADAPs reported that they covered Fuzeon, which is the only 

FDA-approved drug in the fourth class of drugs—fusion inhibitors.31 (See 

table 4.) The more drugs an ADAP covers under its formulary, the more 

likely it is that eligible individuals will receive the prescribed drugs they 

need, and that individuals who develop resistance to a particular HIV/AIDS 

drug regimen will have other drug treatment options available. In grant 

year 2004, the number of drugs included in ADAPs’ formularies ranged 

from 20 drugs in Colorado to 1,000 drugs in Massachusetts, New 

Hampshire, and New Jersey.32 Thirty-nine ADAPs reported they had 100 or 

fewer drugs, including 15 with fewer than 50 drugs on their formularies. 

 29The HIV/AIDS drug classes are protease inhibitors, nucleoside/nucleotide reverse 

transcriptase inhibitors, non-nucleoside reverse transcriptase inhibitors, and fusion

inhibitors. 

30National ADAP Monitoring Project’s Annual Report (Washington, D.C., April 2005). 

31Fuzeon is for individuals who have used other anti-HIV drugs but still have ongoing HIV 

viral replication; it was approved by the FDA in 2003. Fuzeon is to be used with a 

combination of medications for individuals with limited treatment options. 

32ADAPs may include in their formularies drugs to prevent or treat opportunistic infections 

and other HIV-related conditions. 

Page 19 GAO-06-646 AIDS Drug Assistance Programs
Table 4: Number of Drugs Included in ADAP Formularies and ADAPs that Cover 

Fuzeon, Reported for ADAP Grant Year 2004 

ADAPs Drugs in formulary Fuzeon included 

Alabama 32

Alaska 63

Arizona 46 Yes

Arkansas 46 Yes

California 152

Colorado 20

Connecticut 176 Yes

Delaware 241

District of Columbia 67 

Florida 57 Yes

Georgia 51

Hawaii 89

Idaho 39

Illinois 74 Yes

Indiana 77 Yes

Iowa 37 Yes

Kansas 52 Yes

Kentucky 45

Louisiana 21 Yes

Maine 36 Yes

Maryland 99 Yes

Massachusetts 1,000

Michigan 178 Yes

Minnesota 131

Mississippi 45 Yes

Missouri 272 Yes

Montana 105

Nebraska 100

Nevada 59

New Hampshire 1,000 

New Jersey 1,000 Yes 

New Mexico 65 

New York 495 Yes 

North Carolina 55 Yes 

Page 20 GAO-06-646 AIDS Drug Assistance Programs
ADAPs Drugs in formulary Fuzeon included 

North Dakota 85 

Ohio 74

Oklahoma 48

Oregon 62 Yes

Pennsylvania 600 Yes

Puerto Rico 63 

Rhode Island 65 Yes 

South Carolina 52 Yes 

South Dakota 41 

Tennessee 80 Yes

Texas 31 

Utah 39 Yes

Vermont 80

Virginia 62 Yes

Washington 125 Yes

West Virginia 30 

Wisconsin 67 Yes

Wyoming 73

Total ADAPs 52 26 

Sources: GAO analysis of HRSA and ADAP data.

Notes: Fuzeon is a fusion inhibitor medication for individuals who have used other anti-HIV drugs but 

still have ongoing HIV viral replication; it was approved by the FDA in 2003. Fuzeon is to be used with

a combination of medications for individuals with limited treatment options. 

Variation in Funding 

Amounts from Sources 

Other than the ADAP Base 

Grant Can Contribute to 

Coverage Differences 

among ADAPs 

Most ADAPs received funding from various sources, in addition to ADAP 

base grants. The amounts of funding and sources varied among ADAPs. 

The additional funding that ADAPs received can contribute to differences 

in the number of individuals served and the level of services provided. In 

fiscal year 2004, 46 of 52 ADAPs we reviewed reported receiving additional

funds from sources that included Severe Need grants, transfers from 

Title II base grants, transfers from Title I grants, contributions from the 

state or territory, and other sources. Nineteen ADAPs received funds from 

three or more of the additional funding sources. (See table 5.) 

Page 21 GAO-06-646 AIDS Drug Assistance Programs
Table 5: Additional ADAP Funding Sources and Amounts by ADAP, Fiscal Year 2004 

Title II Severe Need grant

a

ADAP 

Severe Need

grant 

State 

matching 

funds for

Severe 

Need grant 

Title II base 

grant 

transferb

Title I grant 

transfer from

EMAc

Contributions

from 

jurisdiction

fundsd

Other funding

sourcese

Total

additional

ADAP funding

Alabama $824,913 $206,228 $0 0f$2,500,000 $0 $3,531,141

Alaska 0 0 0 0f50,000 0 50,000

Arizona 0 0 0 0 1,000,000 78,546 1,078,546

Arkansas 0g0g0 0f330,810 393,000 723,810

California 0g0g12,168,628 0 63,934,245 47,370,750 123,473,623

Colorado 660,427 165,107 136,000 560,254 934,134 3,212,522 5,668,444

Connecticut 0g0g0 0 606,678 0 606,678

Delaware 0g0g0 0f0 832,382 832,382

District of 

Columbia 0g

0g0 0 400,000 0 400,000

Florida 0g0g1,916,336 0 9,000,000 0 10,916,336

Georgia 2,789,298 697,324 0 1,540,022 11,305,339 0 16,331,983

Hawaii 0g0g0 0f440,535 0 440,535

Idaho 54,663 13,666 261,150 0f163,461 300,000 792,940

Illinois 0g0g0 0 7,000,000 5,619,843 12,619,843

Indiana 0g0g2,720,419 0f0 102,331 2,822,750

Iowa 0 0 0 0f0 0 0

Kansas 0g 0g 0 0f,h 400,000 550,000 950,000

Kentucky 481,282 120,320 100,000 0f90,000 199,462 991,064

Louisiana 1,628,705 407,176 0 0 0 422,638 2,458,519

Maine 0 0 0 0f57,638 125,327 182,965

Maryland 0g0g65,250 105,925 0 2,100,000 2,271,175

Massachusetts 0g0g0 104,819 747,990 1,900,000 2,788,809

Michigan 0g0g0 0 0 5,500,000 5,500,000

Minnesota 0g0g0 0 1,100,000 2,743,522 3,843,522

Mississippi 0g0g1,093,008 0f750,000 0 1,843,008

Missouri 0g0g771,167 1,549,422 669,000 1,913,547 4,921,136

Montana 36,525 9,131 178,548 0f0 7,120 231,324

Nebraska 130,445 32,611 74,000 0f115,938 160,000 512,994

Nevada 0g0g0 65,250 1,350,947 0 1,416,197

New Hampshire 0g0g0 0f,h 0 0 0

New Jersey 0g0g0 0 0 13,050,000 13,050,000

Page 22 GAO-06-646 AIDS Drug Assistance Programs
Title II Severe Need grant

a

ADAP 

Severe Need

grant 

State 

matching 

funds for

Severe 

Need grant 

Title II base 

grant 

transferb

Title I grant 

transfer from

EMAc

Contributions

from 

jurisdiction

fundsd

Other funding

sourcese

Total

additional

ADAP funding

New Mexico 0g0g0 0f0 0 0

New York 0g0g2,524,145 5,870,000 33,000,000 64,500,000 105,894,145

North Carolina 1,511,429 377,857 0 0f8,355,195 3,338,000 13,582,481

North Dakota 0 0 85,400 0f0 32,000 117,400

Ohio 0g0g0 300,000 7,843 20,000 327,843

Oklahoma 419,165 104,791 486,486 0f786,000 361,000 2,157,442

Oregon 0g0g0 0 300,000 5,650,000 5,950,000

Pennsylvania 0g0g0 0 10,452,000 6,044,000 16,496,000

Puerto Rico 2,661,337 0i3,455,671 0 2,093,000 0 8,210,008

Rhode Island 0g0g0 0f0 700,000 700,000

South Carolina 1,382,225 345,556 0 0f500,000 0 2,227,781

South Dakota 0 0 330,744 0f0 0 330,744

Tennessee 0 0 0 0f0 0 0

Texas 5,943,843 1,485,961 500,000 0 28,538,504 0 36,468,308

Utah 0 0 0 0f0 0 0

Vermont 0 0 0 0f175,000 130,000 305,000

Virginia 1,707,470 426,867 0 0 2,612,200 0 4,746,537

Washington 0g0g0 800,487 4,842,484 925,000 6,567,971

West Virginia 153,553 38,388 75,000 0f,h 0 180,000 446,941

Wisconsin 374,441 93,610 0 0f,h 186,658 855,317 1,510,026

Wyoming 0g 0g 0 0f 0 0 0

Total $20,759,721 $4,524,593 $26,941,952 $10,932,179 $194,795,599 $169,334,307 $427,288,351

Sources: GAO analysis of HRSA and ADAP data.

a

To be eligible for a Severe Need grant, a jurisdiction must have met one of four eligibility criteria as of

January 1, 2000. It must have limited (1) the eligibility of ADAP enrollees to those with incomes at or 

below 200 percent of the federal poverty level, (2) the number of ADAP enrollees by using medical 

eligibility restrictions, (3) the number of antiretroviral drugs covered in its drug formulary, or (4) the 

number of opportunistic infection medications to less than 10 in its drug formulary. (Opportunistic 

infections are illnesses such as parasitic, viral, and fungal infections, and some types of cancer, some

of which usually do not cause disease in people with normal immune systems.) In addition, a 

jurisdiction must also have agreed to provide a 25 percent match and not impose eligibility

requirements more restrictive than those in place on January 1, 2000. According to HRSA, grantees

can provide funds or in-kind services to meet the matching requirements. 

b

The Title II base grant transfers are CARE Act funds that were awarded to the state or territory where

the ADAP is located, and that the respective state or territory decides to provide or transfer to the 

ADAP program. 

Page 23 GAO-06-646 AIDS Drug Assistance Programs
c

Title I grant transfers from EMAs are CARE Act funds that were awarded to EMAs in the state or 

territory where the ADAP is located, and that the EMA decides to provide or transfer to the ADAP 

program. 

d

Contributions from jurisdiction funds are additional funds provided by the state or territory where the 

ADAP is located to the ADAP program. 

e

Other funding sources may include drug rebates ADAPs receive from manufacturers against prices

paid for drug purchases. These rebates do not actually constitute additional funding. However, we

were unable to identify the amounts attributable to drug rebates in these ADAPs’ reports. 

f

State did not have an EMA. 

g

State was not eligible for a grant.

h

The state did not have its own EMA but a portion of the state was included in an EMA in another 

state. 

i

HRSA officials told us that the agency did not require Puerto Rico to provide matching funds. 

The number of ADAPs that reported receiving funding from sources other 

than ADAP base grants and the amounts they received for fiscal year 2004 

varied: 

• Severe Need grants: Fifteen states and Puerto Rico received Severe

Need grant funds for their ADAPs ranging from about $37,000 in Montana 

to about $6 million in Texas.33 The total amount of funds from Severe Need

grants these ADAPs received was about $20.8 million. 

• Title II base grant transfers: Eighteen ADAPs reported receiving 

transfers from their respective jurisdiction’s Title II base grants. These 

transfers ranged from $65,250 in Maryland to about $12.2 million in 

California. The total amount of these transfers was about $26.9 million. 

• Title I grant transfers from EMAs: Nine ADAPs reported receiving

Title I fund transfers from the EMAs in their states ranging from $65,250 in

Nevada to about $6 million for New York. The total amount of Title I 

grantee transfers was about $10.9 million. 

• Contributions from state and Puerto Rico funds: Thirty-five ADAPs 

reported receiving contributions from their respective jurisdiction’s nonCARE Act funds ranging from about $8,000 in Ohio to about $64 million in 

California. For example, states can appropriate funds to be used by their 

respective ADAPs. The total amount of these contributions was about 

$194.8 million—the largest total amount received from the various 

sources. 

 33There were 25 grantees eligible to receive ADAP Severe Need grants in fiscal year 2004.

To receive these grants, eligible grantees must agree to match 25 percent of the funds. Of 

the 25 eligible grantees in fiscal year 2004, 16 received the grants, and 15 agreed to make

the match. HRSA awarded a grant to Puerto Rico but did not require it to provide matching

funds. 

Page 24 GAO-06-646 AIDS Drug Assistance Programs
Other sources: Thirty-two ADAPs reported receiving funding from other 

sources34 ranging from about $7,000 in Montana to $64.5 million in New 

York. The total amount of funds received from these sources was about 

$169.3 million. 

Among the ADAPs that reported receiving funding from sources other 

than ADAP base grants, the total dollar amounts received ranged from 

$50,000 in Alaska to about $123.5 million in California. Six ADAPs—Iowa, 

New Hampshire, New Mexico, Tennessee, Utah, and Wyoming—did not 

report receiving any additional funding. 

The amount of additional funding some ADAPs received significantly 

increased their funds available to support ADAP enrollees and services. 

The increases in funding per ELC and as a percent of the ADAP base grant 

varied among the ADAPs. (See table 6.) For example, the highest amount 

of additional funding received per ELC was $3,604, or 171 percent of the 

ADAP base grant, in Idaho. The lowest amount of additional funding 

received—excluding the 6 ADAPs with no additional funds—per ELC was 

$61, or 3 percent of the ADAP base grant, in the District of Columbia. Of 

the 46 ADAPs that received additional funding, 8 ADAPs—California, 

Colorado, Idaho, Minnesota, North Carolina, North Dakota, Oregon, and 

South Dakota—received total additional funding that was more than 

100 percent of the ADAP base grants to their states. Ten ADAPs—Alaska, 

Arizona, Connecticut, District of Columbia, Florida, Louisiana, Maryland,

Massachusetts, Ohio, and South Carolina—received total additional 

funding that was less than 20 percent of the ADAP base grants to their 

states. 

 34Other funding sources may include drug rebates ADAPs receive from manufacturers

against prices paid for drug purchases. These rebates do not actually constitute additional

funding. However, we were unable to identify the amounts attributable to drug rebates in

these ADAPs’ reports. 

Page 25 GAO-06-646 AIDS Drug Assistance Programs
Table 6: Total Additional ADAP Funding as a Percentage of the CARE Act ADAP Base Grants and Total Additional Funding 

Per ELC by ADAP, Fiscal Year 2004 

Total additional ADAP funding 

per ELC with rank among 46

ADAPs 

ADAP 

Total additional

ADAP funding ADAP base grant

Total additional ADAP 

funding as

percentage of the 

ADAP base grant Dollars Rank

Alabama $3,531,141 $7,004,635 50 $1,064 18

Alaska 50,000 472,602 11 223 42

Arizona 1,078,546 8,392,903 13 271 41

Arkansas 723,810 3,116,716 23 494 34

California 123,473,623 89,623,465 138 2,907 4

Colorado 5,668,444 5,607,928 101 2,133 8

Connecticut 606,678 11,315,018 5 113 44

Delaware 832,382 3,202,722 26 548 32

District of Columbia 400,000 13,842,594 3 61 46

Florida 10,916,336 80,386,630 14 287 40

Georgia 16,331,983 23,684,951 69 1,455 14

Hawaii 440,535 2,084,512 21 446 36

Idaho 792,940 464,163 171 3,604 1

Illinois 12,619,843 25,746,254 49 1,034 20

Indiana 2,822,750 6,529,924 43 912 24

Iowa 0 1,305,985 0 0 --

Kansas 950,000 2,045,495 46 991 22

Kentucky 991,064 4,086,741 24 512 33

Louisiana 2,458,519 13,829,935 18 375 39

Maine 182,965 833,383 22 463 35

Maryland 2,271,175 25,746,254 9 186 43

Massachusetts 2,788,809 14,684,416 19 401 37

Michigan 5,500,000 11,002,763 50 1,055 19

Minnesota 3,843,522 3,010,727 128 2,693 6

Mississippi 1,843,008 5,795,703 32 671 30

Missouri 4,921,136 7,409,723 66 1,401 15

Montana 231,324 310,145 75 1,574 12

Nebraska 512,994 1,107,661 46 977 23

Nevada 1,416,197 4,738,678 30 631 31

New Hampshire 0 755,319 0 0 --

New Jersey 13,050,000 34,877,598 37 789 25

New Mexico 0 2,127,024 0 0 --

Page 26 GAO-06-646 AIDS Drug Assistance Programs
Total additional ADAP funding 

per ELC with rank among 46

ADAPs 

ADAP 

Total additional

ADAP funding ADAP base grant

Total additional ADAP 

funding as

percentage of the 

ADAP base grant Dollars Rank

New York 105,894,145 124,956,784 85 1,788 9

North Carolina 13,582,481 12,834,095 106 2,233 7

North Dakota 117,400 92,543 127 2,730 5

Ohio 327,843 10,909,930 3 63 45

Oklahoma 2,157,442 3,655,707 59 1,279 17

Oregon 5,950,000 4,225,989 141 2,971 3

Pennsylvania 16,496,000 27,090,216 61 1,285 16

Puerto Rico 8,210,008 22,598,388 36 767 27

Rhode Island 700,000 1,911,506 37 773 26

South Carolina 2,227,781 11,736,984 19 400 38

South Dakota 330,744 204,654 162 3,410 2

Tennessee 0 12,018,438 0 0 --

Texas 36,468,308 50,471,351 72 1,524 13

Utah 0 1,980,565 0 0 --

Vermont 305,000 382,007 80 1,685 11

Virginia 4,746,537 14,498,751 33 691 29

Washington 6,567,971 7,966,718 82 1,739 10

West Virginia 446,941 1,303,875 34 723 28

Wisconsin 1,510,026 3,179,514 47 1,002 21

Wyoming 0 160,347 0 0 --

Total $427,288,351 $ 727,320,929 59%

Sources: HRSA and GAO analysis. 

Note: A dash indicates an ADAP that did not receive additional funding and could not be ranked. 

Page 27 GAO-06-646 AIDS Drug Assistance Programs
The eligibility and other program design criteria and additional funding 

ADAPs received varied among ADAPs with waiting lists and can 

contribute to coverage differences. When an ADAP cannot cover everyone 

it determines is eligible for its services, it may, but is not required to, 

establish a waiting list. HRSA’s HIV/AIDS Bureau does not have guidance

on what conditions should trigger an ADAP to establish a waiting list. In 

fiscal year 2004, 14 ADAPs had waiting lists of individuals they determined 

were ADAP eligible but the programs were unable to serve.35 (See table 7.)

Due to the lack of reliable data on both the number of unduplicated 

individuals on a list and the length of time individuals spend on waiting 

lists, we could not determine, for example, the exact number of 

individuals during a specific period who were on waiting lists. Based on 

data ADAPs with waiting lists reported to HRSA for fiscal year 2004, the 

average number of individuals on waiting lists for a particular ADAP and 

among ADAPs varied.36 For example, Montana’s monthly average ranged 

from 5 to 14 individuals during fiscal year 2004, while North Carolina’s 

monthly average ranged from 38 to 861. We do not know whether any 

ADAP turned away individuals who would have been eligible without 

establishing a waiting list. 

ADAPs with Waiting Lists 

Also Varied in Program 

Design and Additional 

Funding Sources and 

Amounts 

 35In 2005, HRSA reported that all ADAPs that maintained waiting lists determined 

individuals’ eligibility before placing them on the lists. Maximizing Access to Medications 

through Efficient Use of CARE Act Resources (Department of Health and Human Services, 

Health Resources and Services Administration, HIV/AIDS Bureau, May 2005). 

36The average number of individuals on a monthly waiting list could represent the total 

number of individuals on the list during the entire month, or the total number of individuals

on the list at any time during the entire month. 

Page 28 GAO-06-646 AIDS Drug Assistance Programs
Table 7: ADAPs with Waiting Lists and Number of Months Each Had Waiting Lists, 

Fiscal Year 2004 

ADAPs Number of Months

Alabama 12

Alaska 10

Arkansas 4

Colorado 10

Idaho 9

Indiana 2

Iowa 5

Kentucky 12

Montana 11

Nebraska 3

North Carolina 12

Oregon 2

South Dakota 12

West Virginia 12

Sources: HRSA and GAO analysis. 

Eligibility and other program design criteria reported for ADAP grant year 

2004 varied among ADAPs with waiting lists. For example, for 

• Income ceilings: Among the 14 ADAPs with waiting lists, income ceilings

ranged from the most restrictive at 125 percent of the poverty level, or 

$11,638 in North Carolina to the most generous at 330 percent of the 

poverty level, or $30,723 in Montana.

• Enrollment and service caps: Among the 14 ADAPs with waiting lists, 6 

ADAPs capped the number of enrollees, and two capped the amount they 

expend per individual for all HIV/AIDS drugs. 

• Drug formularies: Among the 14 ADAPs with waiting lists, the total 

number of drugs on their formularies ranged from 20 drugs in Colorado to 

105 drugs in Montana. 

In fiscal year 2004, the majority of ADAPs received funding from other 

sources in addition to ADAP base grants. The majority of ADAPs with 

waiting lists—13 of 14—also received additional funding. For example, for 

Page 29 GAO-06-646 AIDS Drug Assistance Programs
• Severe Need grants: Among the 14 ADAPs with waiting lists, 8 received 

funds from Severe Need grants.37

• Title II base grant transfers: Among the 14 ADAPs with waiting lists, 8 

received transfers of Title II base grant funds. 

• Title I grant transfers from EMAs: Among the 14 ADAPs with waiting 

lists, only one ADAP—Colorado—received a Title I transfer. 

• Contributions from state and Puerto Rico funds: Among the 14 

ADAPs with waiting lists, 9 received these contributions. 

• Other sources: Among the 14 ADAPs with waiting lists, 10 ADAPs 

reported receiving funding from other sources.38,39 Among those 10 ADAPs, 

the amount of funds from other sources ranged from about $7,000 in 

Montana to about $5.6 million in Oregon. 

Of the 13 ADAPs with waiting lists that received additional funding in 

fiscal year 2004, 5—Colorado, Idaho, North Carolina, Oregon, and South 

Dakota—were among the 10 ADAPs that received the most additional 

funding per ELC. (See table 8.) Idaho at $3,604 per ELC, South Dakota at 

$3,410 per ELC, and Oregon at $2,971 per ELC respectively ranked the 

highest among the 46 ADAPs that received additional funding. The rank

order of the remaining 10 ADAPs with waiting lists among all ADAPs that 

received additional funding ranged from seventh—North Carolina at 

$2,233 per AIDS case—to forty-second—Alaska at $223 per ELC. 

 37Three states whose ADAPs had waiting lists were eligible to receive Severe Need grants in

fiscal year 2004, but did not apply. 

38Other funding sources may include drug rebates ADAPs receive from manufacturers

against prices paid for drug purchases. These rebates do not actually constitute additional

funding. However, we were unable to identify the amounts attributable to drug rebates in

these ADAPs’ reports. 

39In June 2004, the President announced that $20 million would be used to provide 

HIV/AIDS drug assistance to over 1,700 individuals then on ADAP waiting lists in 10 states. 

The 10 ADAPs were in Alabama, Alaska, Colorado, Idaho, Iowa, Kentucky, Montana, North 

Carolina, South Dakota, and West Virginia. However, these funds were not distributed to

the ADAPs. HRSA contracted with Chronimed StatScript Pharmacy, a pharmaceutical 

distributor, to provide the HIV/AIDS drugs directly to these individuals. Chronimed began

providing drugs in October 2004, the first month of fiscal year 2005. The contract with 

Chronimed, now known as BioScript, was extended by HRSA through March 2006 to allow 

the approximately $1 million of remaining funds to be used. 

Page 30 GAO-06-646 AIDS Drug Assistance Programs
Table 8: Ranking of 13 ADAPs with Waiting Lists among the 46 ADAPs that 

Received Additional Funding Per ELC; Fiscal Year 2004

ADAPs with waiting 

lists that received additional 

funding 

Rank among 46 ADAPs 

by additional funding 

per ELC 

Additional funding 

per ELC 

Idaho 1 $3,604

South Dakota 2 3,410

Oregon 3 2,971

North Carolina 7 2,233

Colorado 8 2,133

Montana 12 1,574

Alabama 18 1,064

Nebraska 23 977

Indiana 24 912

West Virginia 28 723

Kentucky 33 512

Arkansas 34 494

Alaska 42 223

Sources: GAO analysis of HRSA and ADAP data.

Some ADAPs reported prices to HRSA that they paid for some of the top 

10 HIV/AIDS drugs purchased during 2003 that were higher than the 340B 

program prices.40 However, the reported prices may not be the final prices 

paid by ADAPs that receive rebates on the purchase price of their drugs. 

States and territories are expected to use every means at their disposal to 

secure the best price possible for HIV/AIDS drugs and are also required to 

adopt at least one cost-saving practice that is equal to or more economical 

Some ADAPs 

Reported HIV/AIDS 

Drug Prices that Were 

Higher than the 340B 

Prices 

 40The drugs were the top 10 drugs by expenditure that ADAPs purchased in 2002, the most

current expenditure data available at the time of our analysis. The expenditures for these 

10 drugs represented 73 percent of the total ADAP drug expenditures in 2002. The 10 drugs

were Combivir, Viracept, Sustiva, Norvir, Zerit, Trizivir, Epivir, Ziagen, Viramune, and 

Viread. See appendix III for a more detailed description of our methodology. 

Page 31 GAO-06-646 AIDS Drug Assistance Programs
than the 340B and prime vendor programs.41 While HRSA has identified 

340B prices as the measure of cost effectiveness, HHS does not provide 

ADAPs with the 340B prices to use as a guide when purchasing HIV/AIDS 

drugs due to statutory provisions regarding the confidentiality of 

information used to determine them. Drug manufacturers that participate 

in the 340B program are aware of the 340B prices, and as a condition of 

their participation in the Medicaid program, have agreed to sell HIV/AIDS 

drugs to those ADAPs that use the 340B direct purchase or rebate options

at prices no greater than the 340B prices.42 We found that among both the 

25 ADAPs that used the direct purchase option and the 27 that used the 

rebate option to purchase their drugs in 2003, nearly all of the ADAPs 

reported drug prices that were higher than the 340B prices for at least one 

of the top 10 drugs. 

All of the 25 ADAPs that used the 340B direct purchase option to buy 

HIV/AIDS drugs in 2003 reported prices that were higher than the 340B 

prices for at least one of the top 10 HIV/AIDS drugs.43 (See table 9.) For 

example, 7 ADAPs reported prices that were above the 340B price for 

Viramune. Three ADAPs reported prices that were more than the 340B 

price for at least 8 of the 10 drugs—Delaware (10), Oklahoma (9), and 

Kentucky (8). All 25 ADAPs reported prices that were more than the 340B 

price for the drug Norvir. Since ADAPs are not provided the 340B prices,

 41A HRSA official told us in 2005 that four ADAPs—District of Columbia, Kentucky, 

Michigan, and Pennsylvania—had special pricing arrangements other than under the 340B

program; these pricing arrangements were to be at least equivalent to the 340B prices. The 

District of Columbia had access to the FCP; Kentucky used a direct purchase option with a

fixed price contract; Michigan had a voluntary rebate agreement with drug manufacturers;

and Pennsylvania had a mandated drug manufacturer rebate. As of February 2006, all 

ADAPs except the District of Columbia, which has FCP access, were either 340B direct 

purchase or rebate ADAPs. 

42If a drug manufacturer does not comply with the 340B program pricing requirements, it 

can be dropped as a participating drug provider in the 340B and Medicaid programs. 

43We received the 340B prices from HRSA for our analysis. The 340B drug prices are not 

publicly available, so we do not report any pricing-related information that would allow a 

specific drug’s 340B price to be determined. See appendix III for an explanation of our 

price comparison methodology. 

Page 32 GAO-06-646 AIDS Drug Assistance Programs
they may be unknowingly paying more than the 340B price for a drug.44

Because the 340B, the 340B prime vendor, the FCP, and Medicaid drug 

prices are not public, we indicate only whether a reported price is above

the 340B price. 

Table 9: 25 340B Direct Purchase ADAPs that Reported Prices for the Top 10 HIV/AIDS Drugs that Were Above 340B Prices; 

2003 

ADAP Combivir Epivir Norvira

Sustiva Trizivir Viracept Viramune Viread Zerit Ziagen

Alabama X

Arizona X

Arkansas X X X

Colorado X X

Delaware X X X X X X X X X X

District of 

Columbia 

X N/A

Florida X

Georgia X

Hawaii X X

Iowa X

Illinois X X

Kentucky X X X X X N/A X X X

Louisiana X

Mississippi X X N/A

Montana X X

Nebraska X

New 

Mexico X X X X X X

Nevada X X

Ohio X

Oklahoma X X X X X X X X X

 44In a general review of the 340B program, the HHS OIG testified that in some cases drug

manufacturers may not bill 340B covered entities the correct 340B prices. The Department

of Health and Human Services Office of Inspector General, Testimony of Stuart Wright,

Deputy Inspector General for Evaluation and Inspections, on 340B Drug Pricing Program 

Oversight and Administration, before the Subcommittee on Oversight and Investigations of 

the U.S. House Committee on Energy and Commerce (Washington, D.C.: Department of 

Health and Human Services, 2005.) 

Page 33 GAO-06-646 AIDS Drug Assistance Programs
ADAP Combivir Epivir Norvira

Sustiva Trizivir Viracept Viramune Viread Zerit Ziagen

Puerto 

Rico 

X X X X

South 

Carolina 

X

Tennessee X X

Texas X N/A N/A

Virginia X X

Total 4 4 25 4 4 3 7 7 5 4

Sources: HRSA and GAO analysis. 

N/A = ADAP did not purchase the drug. 

Notes: An empty table cell indicates that the ADAP purchased the drug and paid at or below the 340B 

price for that drug. To compare the prices that ADAPs reported paying for HIV/AIDS drugs to 340B 

prices for such drugs, we first determined which HIV/AIDS drugs were the top 10 by ADAP 

expenditure using 2002 data, the most recently available expenditure data. We then compared the 

prices ADAPs reported they paid for the top 10 HIV/AIDS drugs to the 340B program prices for those 

same drugs. For this comparison, we used the 2003 340B program prices and the purchase prices

that 52 ADAPs provided in their quarterly reports submitted to HRSA for 2003. At the time of our 

analysis, 2003 was the most recent full calendar year of ADAP drug price data. 

a

In December 2003, Abbott Laboratories, the manufacturer of Norvir, an HIV/AIDS protease inhibitor, 

substantially increased the wholesale price per patient. In February 2004, Abbott Laboratories

announced a permanent Norvir price freeze for ADAPs at the price in place prior to the December 

2003 re-pricing. 

Among the 27 ADAPs that reported they used the 340B rebate option in 

2003, most reported prices for the top 10 HIV/AIDS drugs that were above 

the 340B prices. The 3 ADAPs that reported HIV/AIDS drug prices at or 

below the 340B prices, and the number of drugs they purchased at these

prices were Kansas (3), Washington (3), and Pennsylvania (1). ADAPs 

using the 340B rebate option report the prices they paid for drugs to 

HRSA, but these reports may not reflect the drug rebates ADAPs may 

eventually receive that would determine the final amount paid for the 

drug. The ADAPs that use the 340B rebate option almost always reported

HIV/AIDS drug prices higher than the 340B prices. An OPA official told us 

that there is no reporting that reconciles the rebate savings an ADAP may 

receive against the price it pays for a drug. 

Page 34 GAO-06-646 AIDS Drug Assistance Programs
ADAPs that negotiate their own HIV/AIDS drug discounts with drug 

manufacturers, or use the 340B prime vendor to negotiate drug discounts 

for them, are expected to negotiate prices equal to or less than the 340B 

prices.45 However, HHS does not disclose to the ADAPs or the 340B prime 

vendor what the 340B prices are that they should not exceed. A HRSA 

official told us that the ADAPs’ and the 340B prime vendor’s negotiating 

position is disadvantaged because they rely on the drug manufacturers 

they negotiate with to tell them whether the negotiated prices are equal to

or better than the 340B prices. 

In 2003, 10 ADAPs joined together to negotiate HIV/AIDS drug prices 

directly with drug manufacturers. These ADAPs formed a task force under 

the auspices of NASTAD to directly negotiate drug prices with eight drug 

manufacturers for HIV/AIDS antiretroviral drug discounts on behalf of all 

ADAPs.46 According to the ADAP task force representatives we

interviewed, the negotiated drug discounts they agreed to were the total of

the 340B discount plus whatever additional discounts they could 

negotiate. The representatives said that the discounts they agreed to were

lower than prices available under the 340B program, but we did not verify 

the representatives’ claim. The quarterly reports that ADAPs provide the 

Bureau do not indicate whether a drug price is the result of negotiations

conducted by an ADAP or other options such as the 340B direct purchase 

or rebate. All of these 10 ADAPs reported prices on their 2003 quarterly 

reports that were more than the 340B price for at least 1 of the top 

10 drugs. 

 45The 340B prime vendor assists 340B covered entities, including ADAPs that use the 340B 

direct purchase option, by negotiating drug prices at or below the 340B drug prices. 

46The 10 ADAPs represented were: California, Florida, Hawaii, Illinois, Maryland,

Massachusetts, New Jersey, New York, North Carolina, and Texas. All of the ADAPs except

Hawaii and North Carolina were among the top ten ADAPs based on total cumulative AIDS

cases reported from the beginning of the epidemic through December 2003. The eight drug

manufacturers involved in the negotiations were: Abbott Laboratories, Boehringer 

Ingelheim, Bristol-Myers Squibb Company, Gilead Sciences, GlaxoSmithKline, Hoffman-La

Roche, Inc., Merck & Company, and Pfizer, Inc. The ADAP representatives in these 

negotiations said that they negotiated on behalf of all ADAPs, not just the 10 task force

members, and each ADAP decided if it wanted to take advantage of the negotiated prices. 

Page 35 GAO-06-646 AIDS Drug Assistance Programs
HRSA’s HIV/AIDS Bureau is responsible for monitoring grantees’ 

compliance with the conditions of their grants, including those related to

HIV/AIDS drug prices. HRSA does not routinely compare the HIV/AIDS 

drug prices ADAPs report they pay to 340B program prices. When 

comparisons are made, they may not be complete, because the prices 

ADAPs report paying may not include all rebates they may receive under 

the 340B rebate option. If an ADAP is found to be out of compliance, 

HRSA can restrict the ADAP’s use of its current funds or deny it future 

grant funds.

HRSA Does Not 

Routinely Determine 

Whether Drug Prices 

ADAPs Report Paying 

Are Higher than the 

340B Prices 

To monitor ADAP drug prices, a Bureau official told us that the Bureau 

had only occasionally requested that ADAP drug prices be compared to 

the 340B prices. For example, the Bureau has requested some spot checks

rather than conducting quarterly price comparisons using the ADAPs’ 

quarterly drug price reports. No Bureau official has access to the 340B 

price information. HRSA’s OPA administers the 340B drug pricing 

program, including the 340B prime vendor program, and has access to the 

340B prices and the prime vendor’s negotiated prices.47 Therefore, to 

determine how ADAP reported prices compare to 340B prices, the Bureau

has to request that OPA make these price comparisons. When OPA makes 

the price comparisons at the Bureau’s request, the comparison results that 

OPA provides indicate whether an ADAP reported price is below, above, 

or close to the 340B price, or may show, for example, that a drug’s price is 

within a percentage range above or below the 340B price for that drug. 

According to the Bureau and OPA officials, requests for these comparisons 

are not routinely made by the Bureau. 

The results of OPA price comparisons do not necessarily show whether 

final prices paid by ADAPs using the rebate option are higher than the 

340B prices. According to HRSA officials, the drug prices reported paid by 

ADAPs that use the rebate option are not reflective of the final prices 

 47An OPA official told us that OPA does not routinely monitor whether the prices 

negotiated by the 340B prime vendor are at or below the 340B prices, but plans to develop 

a monitoring system. 

Page 36 GAO-06-646 AIDS Drug Assistance Programs
because they have not been reconciled by factoring in rebate savings.48 A 

Bureau official and an OPA official stated that without the reconciled 

ADAP rebate savings information on a particular drug purchased, it cannot 

be determined whether the final drug prices paid are at or below the 340B

prices or whether ADAPs that use the rebate purchase option are paying 

more than the 340B price for any drugs. 

Based on its finding that HRSA did not conduct systematic monitoring of 

340B prices, in December 2005, the HHS OIG recommended that HRSA 

develop monitoring mechanisms to compare the 340B prices to the prices

paid by 340B entities, which include ADAPs.49 During the course of our 

review, Bureau and OPA officials told us that they were discussing plans 

for OPA to begin making routine comparisons of the prices reported by 

the ADAPs to the 340B prices. As of April 2006, final decisions have not 

been made about when the comparisons will begin, how often they will be 

made during a year, or whether the results will be shared with the ADAPs. 

If the price comparisons do not include the rebates ADAPs receive and 

340B prime vendor prices, the comparisons cannot indicate whether the 

prices all ADAPs paid for their drugs were at or below the 340B prices. 

 48ADAPs’ financial data submitted to HRSA contain information on the total expected 

rebate savings but not the rebate expected on the purchase of a specific drug, which is the 

information needed to make drug price comparisons to the 340B prices. ADAPs report the

total amount of projected drug rebates they expect to receive on their ADAP profile 

reports. The rebates they report can include (1) the section 340B drug discount program 

rebates, (2) negotiated rebates, and (3) the NASTAD task force negotiated rebates. ADAPs 

can also report their sources of funding, such as rebates, on another report—the ADAP 

quarterly data report. Neither report asks ADAPs to list the amount of rebates they receive

by drug or to provide their rebate agreements. 

49The Department of Health and Human Services Office of Inspector General, Testimony of 

Stuart Wright, Deputy Inspector General for Evaluation and Inspections, on 340B Drug

Pricing Program Oversight and Administration, before the Subcommittee on Oversight and 

Investigations of the U.S. House Committee on Energy and Commerce (Washington, D.C.: 

Department of Health and Human Services, 2005.) 

Page 37 GAO-06-646 AIDS Drug Assistance Programs
ADAPs that purchase HIV/AIDS drugs at the 340B prices paid more for 

some of the top 10 drugs by expenditure than prices for these same drugs 

paid under the 340B prime vendor program and prices federal agencies 

pay under the FSS and FCP drug pricing programs. ADAPs paid less for 

their top 10 drugs than drugs purchased under the Medicaid program.50

ADAPs do not have access to the federal drug pricing programs. In our 

comparison of drug prices in 2000 to drug prices in 2003, all but one of the

top 10 drug prices that we included in our analysis increased under the 

340B, FSS, and FCP. During the same period, all top 10 drug prices for 

which we had data available decreased under the Medicaid program. 

The results of our analysis show that the 340B prices paid in 2003 for most 

of the top 10 HIV/AIDS drugs were higher than prices under the FCP and 

340B prime vendor programs, but lower than Medicaid prices.51 We 

compared 2003 drug prices under four drug pricing programs—340B prime 

vendor,52 FCP, FSS, and Medicaid rebate—to the 340B prices. Seven of the

top 10 HIV/AIDS drugs—Combivir, Epivir, Norvir, Sustiva, Trizivir, Zerit, 

and Ziagen—had 2003 prices available for comparison under all five drug 

pricing programs. The price comparisons are indicated by rank, rather 

than by the drug prices, because the prices for the 340B, the 340B prime 

vendor, the FCP, and Medicaid are not public. (See table 10.)

HIV/AIDS Drug Prices

Are Sometimes 

Higher Under the 

340B Program than 

Some Federal 

Programs 

340B Prices for Several 

Top 10 HIV/AIDS Drugs 

Were Higher than Prices 

Under Other Federal Drug 

Pricing Programs 

 50For purposes of this report, the Medicaid price is the average amount state Medicaid 

programs paid net of the basic rebate provided under the Medicaid Drug Rebate Program. 

51The drugs were the top 10 drugs by expenditure that ADAPs purchased in 2002, the most

current expenditure data available at the time of our analysis. The expenditures for these 

10 drugs represented 73 percent of the total ADAP drug expenditures in 2002. The 10 drugs

were Combivir, Viracept, Sustiva, Norvir, Zerit, Trizivir, Epivir, Ziagen, Viramune, and 

Viread. See appendix III for an explanation of our price comparison methodology. 

52For purposes of this comparison, we have treated the 340B prime vendor as a separate 

drug pricing program since it may have different prices than the 340B prices for the same 

brand name drugs. 

Page 38 GAO-06-646 AIDS Drug Assistance Programs
Table 10: Ranking of Top 10 HIV/AIDS Drugs from Lowest (1) to Highest (5) Unit Price Across Drug Programs; 2003 

Top 10 HIV/AIDS drugs ranked

by ADAP expenditurea

340B price

340B prime 

vendor price

Federal ceiling 

price

Federal supply 

schedule price Medicaid priceb

Combivir 3 2 1 5 4

Viracept 2 NPA NPA 1 3

Sustiva 4 3 1 2 5

Norvir 1 4 2 (tied) 2 (tied) 5

Zerit 3 1 2 5 4

Trizivir 3 2 1 4 5

Epivir 3 2 1 5 4

Ziagen 3 2 1 5 4

Viramune 1 NPA NPA NPA NPA

Viread 3 NPA 1 2 4

Sources: GAO analysis of HRSA, VA, and CMS data. 

NPA = no price was available for the drug. 

Notes: The unit price for a drug is the price for a unit of the dosage form and strength involved 

indicated by the National Drug Code (NDC). Each FDA-approved drug has at least one NDC which is 

a universal product identifier number for human drugs maintained by FDA. An NDC indicates a drug’s

manufacturer or distributor, a drug’s strength, dosage form and formulation, and its package size. For 

the 10 drugs we used, we determined the NDC for each drug that was most commonly purchased by

52 ADAPs, and used the price for that NDC for our comparisons. For example, since Sustiva has 

more than one NDC, we chose the Sustiva NDC that was most commonly purchased by ADAPs to 

identify which of Sustiva’s drug prices to use for our comparison. For a drug marked NPA, there was 

no price available using the NDC we identified under the drug pricing program. The available 2003 

prices were for brand name drug prices. The comparisons are indicated by rank, rather than price, 

because only the FSS prices are publicly available.

a

The drugs were the top 10 by ADAP drug expenditures for 2002, the most recent expenditure data 

available at the time of the analysis. 

b

The Medicaid price is the average amount state Medicaid programs paid net of the basic rebate 

provided under the Medicaid Drug Rebate Program. 

We found that for six of the seven drugs that had prices available under all 

five programs—Combivir, Epivir, Sustiva, Trizivir, Zerit, and Ziagen—FCP 

and the 340B prime vendor prices were lower than 340B prices. The FSS 

price for one of the seven drugs—Sustiva—was lower than the 340B price.

Although some drug prices under FCP and FSS were lower than the 340B 

prices, ADAPs do not have access by statute to these two federal drug 

Page 39 GAO-06-646 AIDS Drug Assistance Programs
pricing programs.53 The 340B price was the lowest for one of the seven 

drugs—Norvir. Medicaid prices were the highest of all the pricing 

programs for three of the seven drugs—Norvir, Sustiva, and Trizivir. (See 

table 10.) 

Fuzeon is the only fusion inhibitor approved for individuals who have used 

other anti-HIV drugs, but still have ongoing HIV-viral replication. It was 

approved in 2003 by FDA, and was therefore not among the top 10 

HIV/AIDS drugs by ADAP expenditures for 2002 that we included in our 

analysis. However, we compared the 2003 340B price for Fuzeon to prices 

under the other pricing programs included in our analysis. In comparing 

the 2003 Fuzeon prices under the five drug pricing programs, we found 

that Fuzeon’s 340B price was higher than both the FCP and FSS prices, but 

lower than either the 340B prime vendor price or Medicaid price. 

Changes in Drug Prices 

Varied Widely Among 

HIV/AIDS Drugs and 

Among Drug Pricing 

Programs 

We found wide variability in the percentage change in unit price among 

the top 10 HIV/AIDS drugs and among the 340B, FCP, FSS, and Medicaid

rebate pricing programs.54 Because ADAPs provide drug coverage for 

eligible individuals over longer periods due to improved drug treatments, 

and increased life expectancy, the cost of HIV/AIDS drugs over time is an 

important concern for ADAPs. We analyzed the changes in the prices of 

the top 10 HIV/AIDS drugs under these programs by comparing the prices 

in 2000 to the prices in 2003. (See table 11.) From 2000 to 2003, all

available prices for the top 10 HIV/AIDS drugs increased under the 340B, 

FCP, and FSS, except for Norvir which had a decrease in its 340B price.55

 53The Institute of Medicine (IOM) and the HHS OIG have previously recommended allowing 

ADAPs to purchase HIV/AIDS drugs at FCP drug discount prices because those prices

would be lower than the 340B prices. However, both the IOM and OIG also raised concerns

about whether drug companies might be less willing to invest in HIV/AIDS drug research if

they might experience revenue losses from providing lower drug prices to additional 

entities such as ADAPs. Institute of Medicine of the National Academies, Public Financing

and Delivery of HIV/AIDS Care: Securing the Legacy of Ryan White (Washington, D.C.:

The National Academies Press, 2005, and the Department of Health and Human Services

Office of Inspector General, AIDS Drug Assistance Program Cost Containment Strategies 

(Washington, D.C.: Department of Health and Human Services, 2000). 

54The 340B prime vendor program was not included in this comparison because drug prices 

for 2000 were not available. 

55In December 2003, Abbott Laboratories, the manufacturer of Norvir, a HIV/AIDS protease 

inhibitor, substantially increased the wholesale price per patient. In February 2004, Abbott 

Laboratories announced a permanent Norvir price freeze for ADAPs at the price in place 

prior to the December 2003 re-pricing. 

Page 40 GAO-06-646 AIDS Drug Assistance Programs
During the same period, all available drug prices decreased under the 

Medicaid program. 

Table 11: Percentage of Unit Price Increases or Decreases from 2000 to 2003 for 

Top 10 HIV/AIDS Drugs 

Top 10 HIV/AIDS 

drugs ranked by

expenditurea

340B price 

Federal 

ceiling price

Federal 

supply

schedule 

Medicaid 

priceb

Combivir 7.95 18.42 7.52 -5.94

Viracept 116.91 NPA NPA -1.56

Sustiva 16.60 1.93 1.78 -1.92

Norvir -41.68 3.63 3.63 -13.77

Zerit 6.94 29.15 87.95 -11.66

Trizivir NPA NPA NPA -2.46

Epivir 7.90 24.84 7.53 -6.18

Ziagen 8.08 8.49 7.53 -5.48

Viramune 113.59 NPA NPA NPA

Viread NPA NPA NPA NPA

Sources: GAO analysis of HRSA, VA, and CMS data. 

NPA = no price was available for the drug. 

Notes: The unit price for a drug is the price for a unit of the dosage form and strength involved 

indicated by the National Drug Code (NDC). Each FDA-approved drug has at least one NDC which is 

a universal product identifier number for human drugs maintained by FDA. An NDC indicates a drug’s

manufacturer or distributor, a drug’s strength, dosage form and formulation, and its package size. For 

the 10 drugs we used, we determined the NDC for each drug that was most commonly purchased by

52 ADAPs in 2003, and used the price for that NDC for our comparisons. For example, since Sustiva 

has more than one NDC, we chose the Sustiva NDC that was most commonly purchased by ADAPs 

to identify which of Sustiva’s drug prices to use for our comparison. For a drug marked NPA, there 

was no price available using the NDC we identified under the drug pricing program for either 2000 or

2003 or both, so no calculations could be made. The available 2000 and 2003 prices were for brand 

name drug prices. No 2000 prices were available for the 340B prime vendor. 

a

The drugs were the top 10 by ADAP expenditures for 2002, the most recent expenditure data 

available at the time of the analysis. 

b

The Medicaid price is the average amount state Medicaid programs paid net of the basic rebate 

provided under the Medicaid Drug Rebate Program. 

All four drug pricing programs had prices that we could compare for 6 of 

the 10 HIV/AIDS drugs—Combivir, Epivir, Norvir, Sustiva, Zerit, and 

Ziagen. Among the four programs, the price changes varied widely. Under

both FCP and FSS, prices for the 6 drugs increased between 2000 and 

2003. The FCP price increases ranged from 1.93 percent for Sustiva to 

29.15 percent for Zerit. The FSS price increases ranged from 1.78 percent 

for Sustiva to 87.95 percent for Zerit. The FSS had the lowest percentage 

increase in price from 2000 to 2003 for four of the six drugs—Combivir, 

Page 41 GAO-06-646 AIDS Drug Assistance Programs
AIDS Drug Assistance Programs

Epivir, Sustiva, and Ziagen. Medicaid prices for all six drugs decreased 

with changes ranging from -13.77 percent for Zerit to -1.92 for Sustiva. The

340B prices increased for 5 of the 6 drugs—from 6.94 percent for Zerit to 

16.60 percent for Sustiva, and decreased for 1 of the 6—Norvir—by 

-41.68 percent. 

Among the same 6 HIV/AIDS drugs, the price increases and decreases 

varied widely among the drugs and by drug pricing program. For example, 

Combivir prices ranged from its highest price increase—FCP’s 

18.42 percent—to its only price decrease—Medicaid’s -5.94 percent. 

Sustiva prices ranged from its highest price increase—340B’s 

16.60 percent—to its only price decrease—Medicaid’s -1.92 percent. Norvir 

prices ranged from its only highest price increase—FCP’s and FSS’s 

3.63 percent—to its lowest price decrease—340B’s -41.68 percent. Zerit 

prices ranged from its highest price increase—FCP’s 87.95 percent—to its 

only price decrease—Medicaid’s -11.66 percent.

As the number of people with HIV/AIDS live longer due to improved drug 

treatments, the demand for ADAP services will increase, and expenditures 

by ADAPs for HIV/AIDS drugs will also likely increase. Therefore, it is 

important that ADAPs achieve the maximum benefit with the funds 

provided to them for drug purchases, and to do this, they have been given 

access to the 340B program. However, HRSA does not systematically and 

routinely determine whether ADAPs, particularly those using the 340B 

rebate option or those that have negotiated drug prices, are acquiring 

drugs at prices at or below the 340B prices. The HHS OIG has previously 

identified shortcomings in HRSA’s oversight of the 340B program and 

recommended that HRSA verify manufacturers’ calculations of 340B prices

and monitor their compliance with program requirements; HRSA 

acknowledged the need to increase its oversight. HRSA also needs to 

determine whether ADAPs are purchasing drugs at prices at or below the 

340B prices. While monitoring the prices paid for all the drugs on each 

ADAP’s formulary might be challenging, as some formularies have as many 

as 1,000 drugs, HRSA could routinely compare ADAP reported prices to 

340B prices for selected drugs. For instance, all antiretrovirals could be 

compared, which would include the top 10 drugs we used in our drug 

pricing analysis and which represented 73 percent of the total ADAP drug 

expenditures in 2002. Ensuring that the prices are reported on a schedule

to allow for the rebate reconciliation could also help HRSA to better 

monitor the final prices paid for the drugs and to gauge whether ADAPs 

are achieving maximum results with their grant funds. 

Conclusions 

Page 42 GAO-06-646
Recommendations for 

Executive Action 

To ensure that ADAPs are obtaining the best prices for drugs they provide, 

we recommend that the Administrator of the Health Resources and 

Services Administration take the following two actions: 

• require that all ADAPs report final prices they paid for drugs, and that 

those final prices reflect any discounts or rebates received. 

• routinely determine whether the prices ADAPs paid for the drugs they 

purchased were at or below the 340B prices. 

HRSA provided written comments on a draft of this report. HRSA 

commented that the report highlights a key issue facing ADAPs and HRSA 

in administering the program, but the agency raised concerns about its 

ability to implement our recommendations. The comments are reprinted in 

appendix IV. 

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. Specifically, HRSA noted that ADAPs may receive

rebate checks many months after the drugs were purchased, which 

complicates the task of comparing prices. HRSA further stated that it is 

taking steps to develop the information it will require to determine 

whether the prices ADAPs paid for the drugs they purchased are at or 

below the 340B prices, but that it lacks the resources to conduct manual 

cost comparisons on a large scale. HRSA noted that it is making efforts to 

develop systems to allow ADAPs to check drug prices and that the agency

has requested that drug manufacturers who participate in the 340B 

program voluntarily submit quarterly 340B prices on covered drugs to 

HRSA for comparison with the government computed 340B ceiling prices. 

As we stated in the draft report, ADAPs’ financial data submitted to HRSA 

contain information on the total expected rebate savings but not the 

rebate expected on the purchase of a specific drug, which is the 

information needed to make drug price comparisons to the 340B prices. 

While we recognize that 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. For example, 

HRSA could compare ADAP reported prices to 340B prices for all 

antiretrovirals, which would include the top 10 drugs we used in our drug 

pricing analysis and which represented over 70 percent of the total ADAP 

drug expenditures in a year. HRSA indicated that a manual comparison 

would be required, but in conducting our analysis we created a computer 

Agency Comments 

and Our Evaluation 

Page 43 GAO-06-646 AIDS Drug Assistance Programs
program that automatically compared information from the ADAP reports 

with the 340B prices, and HRSA could construct a similar cost-effective, 

automated process. Further, HRSA’s plans to develop systems that allow 

ADAPs to check drug prices would be a useful tool in assisting the ADAPs 

to obtain the best prices, but would still not fulfill HRSA’s responsibilities 

to oversee the programs to ensure compliance with the conditions of the 

grants. Given that we found ADAPs reported prices that were above the 

340B prices, we believe that HRSA needs to take additional steps to 

monitor the program. 

HRSA also provided technical comments, which we have incorporated 

where appropriate. 

We are sending copies of this report to the Secretary of Health and Human 

Services, the Administrator of Health Resources and Services 

Administration, the Director of the Centers for Disease Control and 

Prevention, and to interested congressional committees. We will also 

make copies available to others upon request. In addition, the report will 

be available on GAO’s Web site at http://www.gao.gov. 

If you or your staff have any questions about this report, please contact me 

at (202) 512-7119 or crossem@gao.gov. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page 

of this report. GAO staff who made major contributions to this report are 

listed in appendix V. 

Marcia Crosse 

Director, Health Care 

Page 44 GAO-06-646 AIDS Drug Assistance Programs
Appendix I: Pre

Perinata

States 

natal HIV Testing and 

l HIV Transmission Rates within 

Page 45 GAO-06-646

Appendix I: Prenatal HIV Testing and 

Perinatal HIV Transmission Rates within 

States 

In 2000, approximately 6,000 to 7,000 women infected with the human 

immunodeficiency virus (HIV), gave birth in the United States and an 

estimated 280 to 370 HIV-infected infants were born, according to the 

Centers for Disease Control and Prevention (CDC). 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. This appendix provides information on prenatal HIV testing 

and perinatal HIV transmission rates in certain states with and without 

mandatory HIV testing of newborns. 

In 1994, a pediatric acquired immunodeficiency syndrome (AIDS) clinical 

trials study group demonstrated that the risk of HIV transmission from 

mother to child could be reduced by nearly 70 percent if the antiretroviral

drug, zidovudine, is administered to the mother during pregnancy, during

labor and delivery, and to the baby after birth.1

 In 1995, as a result of these 

findings, CDC issued guidelines calling for universal counseling of 

pregnant women about the risk of AIDS and the benefits of HIV testing. 

The guidelines recommended voluntary testing of all pregnant women and 

providing information about antiretroviral treatment for those women 

testing positive.2

 In 1999, the Institute of Medicine (IOM) issued a report 

on preventing perinatal transmission of HIV.3

 The report described factors 

that lead to perinatal transmission including the lack of prenatal HIV 

testing and antiretroviral therapy for HIV-infected women and HIVexposed infants. IOM recommended that the U.S. adopt a national policy 

of universal HIV testing, with patient notification, as a routine component 

of prenatal care. Subsequent to this recommendation, in its 2001 revised 

guidelines, CDC endorsed universal HIV testing as a routine part of 

Background 

 1

E.M. Connor et al. “Reduction of Maternal-Infant Transmission of Human

Immunodeficiency Virus Type 1 with Zidovudine Treatment,” The New England Journal of 

Medicine, 331, 1173-80 (1994). 

2

Department of Health and Human Services, Centers for Disease Control and Prevention, 

“U.S. Public Health Service Recommendations for Human Immunodeficiency Virus

Counseling and Voluntary Testing for Pregnant Women,” Morbidity and Mortality Weekly 

Report, vol. 44 (1995). 

3

Institute of Medicine, “Reducing the Odds: Preventing Perinatal Transmissions of HIV in 

the United States,” (National Academy Press, Washington, D.C.: 1999). 

AIDS Drug Assistance Programs
Appendix I: Prenatal HIV Testing and 

Perinatal HIV Transmission Rates within 

States 

prenatal care. Under CDC’s prenatal HIV testing guidelines women would 

have the right to refuse HIV testing, and CDC makes it clear that existing 

state laws must be followed. In 2005, the U.S. Preventive Services Task 

Force recommended that clinicians screen all pregnant women for HIV.4

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. The eight states we contacted—California, Connecticut, 

Illinois, Louisiana, Michigan, New Jersey, New York, and North Carolina—

use two approaches to testing pregnant women. 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. 

Few states collect the data needed to determine statewide perinatal HIV 

transmission rates. Six of the eight states we contacted, however, reported 

that the number of HIV-positive newborns declined in their state from 1997

to 2002. 

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, and most are consistent with CDC’s 

guidelines. CDC guidelines recommend HIV counseling and voluntary 

testing for all pregnant women and support a woman’s right to refuse 

testing. According to a 2004 report on state approaches to HIV testing for 

mothers and newborns, most states, the District of Columbia, and Puerto 

Rico rely on voluntary HIV testing that follows CDC guidelines.

5

 All eight 

states in our review require providers to give, or at least offer, pregnant 

women HIV counseling or information related to testing. Seven of the eight 

states have specific requirements that providers offer or perform HIV tests 

Prenatal HIV Testing 

Encouraged to 

Reduce HIV Perinatal 

Transmission 

States Encourage Prenatal 

Testing of Pregnant 

Women to Help Reduce 

Perinatal HIV 

Transmission 

 4

The United States Preventive Services Task Force is a source of recommendations and 

guidelines for screening tests, counseling, immunizations, and use of medications for

disease prevention. It is composed of medical experts and sponsored by the Department of

Health and Human Services’ Agency for Healthcare Research and Quality. 

5

The Henry J. Kaiser Family Foundation State Health Facts Online, “50 State Comparisons: 

HIV Testing for Mothers and Newborns, 2004.” http://www.statehealthfacts.org/cgibin/healthfacts.cgi?action=compare&category=HIV%2fAIDS&subcategory=HIV+Testing&to

pic=HIV+Testing+for+Mothers+and+Newborns> (downloaded Jan. 19, 2006). 

Page 46 GAO-06-646 AIDS Drug Assistance Programs
Appendix I: Prenatal HIV Testing and 

Perinatal HIV Transmission Rates within 

States 

on pregnant women, but performing the test is contingent on obtaining 

informed consent.6

Allowing pregnant women to opt-out of HIV testing is the approach to HIV 

testing that CDC recommends. Under this approach, pregnant women are 

notified that an HIV test is routinely included in the standard battery of 

prenatal tests for all pregnant women, but they can decline HIV testing. 

Officials from three of the eight states we contacted—California, North 

Carolina, and Michigan—said that their states use an opt-out approach. 

Officials from the remaining five states—Connecticut, Illinois, Louisiana,

New Jersey, and New York—said their states use the opt-in approach. 

Under this approach, pregnant women typically receive HIV counseling 

during prenatal care but must specifically consent to an HIV antibody test,

usually in writing. Connecticut and New York supplement the opt-in 

approach with mandatory newborn HIV testing requirements. CDC has 

stated that the opt-in approach is associated with lower testing rates than

either the opt-out or the mandatory newborn HIV testing approach.7

Connecticut and New York have enacted laws that require HIV testing of 

newborns. Under Connecticut’s newborn testing law enacted in 1999, HIV 

testing must be offered to pregnant women and newborn testing is 

mandatory if the pregnant woman refuses to be tested.8

 Under New York’s 

newborn testing law enacted in 1997, newborns are required to be tested 

for HIV, regardless of whether the mother’s HIV status is known. The 

testing is done with or without the mother’s consent. Officials from 

Connecticut and New York told us that their mandatory newborn testing 

laws resulted in an increase in the number of pregnant women who were 

tested for HIV. A Connecticut official stated that the rate of HIV testing of 

pregnant women before the state’s mandatory testing law passed was 

about 25 percent and since the law was enacted, the state’s testing rate has 

increased to 90 percent or more. Similarly, New York officials told us that 

prenatal HIV testing has increased. Data on New York prenatal testing 

 6

Officials in the remaining state, Louisiana, said that in all of their perinatal prevention 

efforts with providers they emphasize routine offering of HIV tests as the standard of care 

supported by federal guidelines. 

7

Centers for Disease Control and Prevention, “HIV Testing Among Pregnant Women—

United States and Canada, 1998-2001”, Morbidity and Mortality Weekly Report, vol. 51, 

no. 45 (2002). 

8

This mandatory testing requirement does not apply when parents object based on conflicts 

with their religious tenets and practice. 

Page 47 GAO-06-646 AIDS Drug Assistance Programs
Appendix I: Prenatal HIV Testing and 

Perinatal HIV Transmission Rates within 

States 

show that the prenatal HIV testing rate had increased from 64 percent in 

1997 to 95 percent in 2003. 

Less than half of the states we contacted collected data sufficient to 

calculate a statewide perinatal HIV transmission rate in 2002.

9

 Of the eight 

states we contacted, three—Connecticut, New Jersey, and New York—

reported data sufficient to calculate their statewide perinatal HIV 

transmission rate for 2002. The 2002 perinatal HIV transmission rates for 

these states were 0.0 percent, 3.0 percent, and 3.1 percent, respectively. 

One state, New Jersey, reported sufficient data that showed its perinatal 

HIV transmission rate declined from 13.3 percent in 1997 to 3.0 percent in 

2002. The perinatal transmission rates calculated for different states may 

not be directly comparable because of variations in the specific 

procedures used to collect or categorize the data. For example, while New 

York includes newborns who have had a single positive test for HIV in its 

count of HIV-positive newborns along with those newborns whose HIVpositive status has been confirmed by a second test, other states may use 

different approaches to collecting data. 

Although data collected by most of the states we contacted were not 

sufficient to calculate statewide perinatal HIV transmission rates, some 

states collected information on the number of HIV-positive newborns for 

the 2 years we inquired about. Six of the eight states we contacted—

California, Connecticut, Michigan, North Carolina, New Jersey, and New 

York—reported that the number of HIV-positive newborns declined in 

their state in 2002 compared to 1997. Louisiana reported an increase in the 

number of HIV-positive newborns in 2002 compared to 1997. Louisiana 

officials said that the number of newborns with HIV in 1997 was unusually 

low. The change in the number of HIV-positive newborns from 1997 to 

2002 was not reported by the remaining state—Illinois—because the data

on HIV-positive newborns were not available for 1997. 

Few States We Contacted 

Collect the Data Needed to 

Determine Statewide 

Perinatal HIV 

Transmission Rates 

 9

Perinatal transmission rate is defined as the frequency with which newborns contract HIV 

through exposure by pregnant women immediately preceding, during, or immediately 

following birth. We calculated statewide perinatal HIV transmission rates by dividing the 

number of newborns that tested positive for HIV by the number of live births to pregnant

women that tested HIV-positive. 

Page 48 GAO-06-646 AIDS Drug Assistance Programs
Appendix II: St

and Noti

Individua

ate Approaches to Identifying

fying Partners of HIV-Infected 

ls of Possible HIV Exposure 

Page 49 GAO-06-646

Appendix II: State Approaches to Identifying 

and Notifying Partners of HIV-Infected 

Individuals of Possible HIV Exposure 

Research suggests that most new HIV infections originate from HIVinfected persons not yet aware of their infection.1

 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.2

 Partner 

counseling and referral services (PCRS) assist HIV-infected persons with 

notifying their partners, including spouses, of their exposure to HIV.3

 This 

appendix provides information on state approaches to identifying and

notifying partners of HIV-infected individuals of possible HIV exposure. 

In 1996, legislation amending the CARE Act also prohibited CARE Act 

grants to any state that did not take administrative or legislative action to

require that a good faith effort be made to notify the spouse of an HIVinfected individual that he or she may have been exposed to HIV and 

should seek testing. CDC, in coordination with the Health Resources and 

Services Administration (HRSA), took the lead in determining state 

compliance with the requirement. In December 1996, CDC asked the states 

to certify compliance with the spousal notification requirement and to 

submit a summary of additional actions taken or planned for assuring that 

a good faith effort is made to notify spouses of a known HIV-infected 

person. Because states had been administering partner notification 

programs that included spouses for years, particularly programs for 

syphilis and other sexually transmitted diseases (STD), the actions states 

certified were both ongoing efforts and additions to their PCRS programs 

that were designed to specifically address the spousal notification 

Background 

 1

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). 

2

Pub. L. No. 104-146, § 8, 110 Stat. 1346, 1372 (codified at 42 U.S.C. § 300ff-27a (2000)). The

statute defines a spouse as “any individual who is the married partner of an HIV-infected 

patient, or who has been the married partner of that patient at any time within the 10-year 

period prior to the diagnosis of HIV infection.” 

3

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. 

AIDS Drug Assistance Programs
Appendix II: State Approaches to Identifying

and Notifying Partners of HIV-Infected 

Individuals of Possible HIV Exposure 

requirements. In 1997, CDC approved the certifications of compliance 

submitted by all states, the District of Columbia, and five territories.4

In August 1999, the Department of Health and Human Services’ (HHS) 

Office of Inspector General issued a report on state implementation of 

their CDC-approved plans for the spousal notification requirement.5

 The 

HHS Inspector General reported that all 11 sampled states had followed up 

on the actions reported to and approved by CDC for compliance with the 

spousal notification requirement. For example, states were revising 

training materials, revising counseling guidelines, and retraining 

counselors based on the spousal notification requirement. Also, several 

states were undertaking promising notification efforts, according to the 

report. The HHS Inspector General recommended that states make 

additional efforts to ensure maximum notification while ensuring 

confidentiality. 

We contacted 12 states to determine what approaches they use to identify

and notify partners of HIV-infected individuals.6

 These 12 states said they 

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 

cases7

—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 without the consent of the index case. Some states 

reported integrating their HIV activities with established programs that are 

focused on syphilis and other STDs. 

States Use Various 

Approaches to Elicit 

Information and 

Notify Partners of 

Possible HIV 

Exposure 

 4

The five territories included Guam, the Northern Mariana Islands, the Republic of Palau,

the Commonwealth of Puerto Rico, and the Virgin Islands. 

5

Department of Health and Human Services Office of Inspector General, The Ryan White

CARE Act: Implementation of the Spousal Notification Requirement (Washington, D.C.: 

Department of Health and Human Services, 1999). 

6

The 12 states we contacted were California, Connecticut, Florida, Kentucky, 

Massachusetts, Minnesota, Missouri, New York, North Carolina, Pennsylvania, Texas, and

Washington. 

7

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. 

Page 50 GAO-06-646 AIDS Drug Assistance Programs
Appendix II: State Approaches to Identifying

and Notifying Partners of HIV-Infected 

Individuals of Possible HIV Exposure 

States Conduct HIV 

Partner Notification 

Activities Using a Variety 

of Trained Workers 

Officials from all 12 states we contacted reported having PCRS programs 

that include eliciting information about the partners of individuals known 

to be infected with HIV, notifying the partners of their possible exposure 

to the virus, and providing the partners with counseling and testing 

services. Officials in all 12 states said that they use public health care 

workers known as disease intervention specialists for conducting partner 

notification activities.8

 Four states also use physicians; three states use 

community-based organizations; one state uses staff at counseling and

testing sites; and one state uses staff working in jails to help conduct 

partner notification activities. 

Officials from all 12 states told us that the state provides training for the 

individuals who conduct partner notification activities for their PCRS 

programs. These individuals are trained to use various techniques for 

eliciting information from index cases, their partners, and their social 

associates, and for notifying partners of their possible exposure to HIV or 

other communicable diseases. Officials from all 12 states said they provide 

CDC-developed training and other training for disease intervention 

specialists.9

 In addition, some state officials said they provide training to 

other groups that are involved in PCRS. For example, New York officials 

said that the state department of health conducts PCRS training with a 

variety of groups, including community-based organizations and staff 

working in jails, to improve their skills in eliciting information about 

partners. Massachusetts officials told us that they were training 

community-based organization staff in how to elicit partner information 

and notify exposed partners in an effort to integrate them into prevention

services, and California officials said that they were training staff working 

at community-based organizations and disease counseling and testing 

sites. 

 8

Disease intervention specialists interview patients, at-risk individuals, and those infected 

with STDs (including HIV), and ensure appropriate examination, treatment, and follow-up 

to persons exposed or infected with an STD. Pennsylvania uses its field staff to perform 

duties similar to those of disease intervention specialists in other states. In this report, we 

refer to these Pennsylvania field staff as disease intervention specialists. 

9

CDC training includes courses such as Introduction to STD Intervention, Fundamentals of 

STD Intervention, and HIV Partner Counseling and Referral Services. 

Page 51 GAO-06-646 AIDS Drug Assistance Programs
Appendix II: State Approaches to Identifying

and Notifying Partners of HIV-Infected 

Individuals of Possible HIV Exposure 

Generally, all 12 states use similar methods to obtain identifying 

information about partners of persons known to be infected with HIV and 

notifying the partners of their possible exposure to the virus. The states 

elicit information about HIV-exposed partners primarily through 

interviewing the index cases about their direct sex and needle-sharing 

partners. Some states also use interviews and a technique called clustering

to identify social associates of the index case that may be at risk of 

exposure to HIV. In clustering, states may try to obtain information about 

things such as buildings where drug use occurs or other venues frequented 

by HIV-infected individuals. Because participation in PCRS is voluntary, 

some index cases may opt not to participate and may not provide 

information about their partners and other contacts. For example, New 

York officials we contacted said that the proportion of HIV index cases 

that do not provide partner identifying information is quite high. They do

not know what percent of index cases refuse to divulge the information 

versus the health care provider’s failure to ask or record the information. 

In 2003, New York City health care providers submitted 5,213 reports to 

the city’s HIV Epidemiology Program that were completed on patients with 

a new diagnosis of HIV. Seventy-five percent of the reports did not list a 

partner of the newly diagnosed HIV-positive patients. 

Once partners are identified, states primarily use three CDC-suggested 

methods to notify them of their possible exposure to HIV.10 These methods 

are (1) client self-referral, in which index cases notify partners, 

(2) contract referral, in which a time frame is negotiated and agreed to

with index cases for them to notify partners, and (3) provider referral, in 

which the health care provider or health department conducts the followup with partners. 

In all 12 states we contacted, index cases retain the option of notifying 

their partners that they have exposed them to HIV. Although they have this

option, index cases may prefer to receive assistance from individuals 

trained in partner notification. For example, North Carolina officials said

that most index cases prefer to have trained disease intervention 

specialists do the notification on their behalf because of concerns with 

confronting their partners about their HIV infection and having exposed 

them to the virus. When index cases opt to notify their partners, it is 

States Primarily Use 

Interviews to Identify 

Partners and Various 

Methods to Notify Them of 

Their Possible Exposure to 

HIV 

 10Centers for Disease Control and Prevention, Program Operations Guidelines for STD 

Prevention: Partner Services (Atlanta, Ga.: Centers for Disease Control and Prevention, 

2001). 

Page 52 GAO-06-646 AIDS Drug Assistance Programs
Appendix II: State Approaches to Identifying

and Notifying Partners of HIV-Infected 

Individuals of Possible HIV Exposure 

difficult for the health department to track whether partners indeed have 

been notified. Eight of the 12 states negotiate agreements with index cases 

that include, for example, that index cases will notify their partners by a 

certain date or the state may notify the partners. In Connecticut, such 

agreements are in writing and outline how partners will be informed, how 

it will be confirmed that partners were notified, and what follow-up is 

required when partner counseling and referral services are not provided.

In all 12 states, health care providers or workers may notify partners. With 

this CDC-suggested method, index cases request provider assistance with 

partner notification and may give the provider identifying information 

such as addresses and phone numbers to follow-up with their partners. 

Research suggests that the use of health care providers or workers is more 

effective than the index cases notifying partners of their possible exposure 

to HIV.11

Of the 12 states we contacted that conduct partner notifications, 10 have 

statutory or regulatory provisions that require or permit certain health

care workers or entities, such as physicians and health departments, to 

notify partners, including spouses, of their possible exposure to HIV 

without the consent of the index case.12 In New York, North Carolina, and 

Texas, statutory or regulatory provisions require that public health 

officials or health departments notify partners, including spouses,13 of their 

possible exposure to HIV. In California, Connecticut, Florida, Kentucky, 

Missouri, New York, Pennsylvania, and Washington the provisions permit 

health care providers, public health officials, or health departments to 

notify partners, including spouses, of their possible exposure to HIV.14 In 

California where physicians are permitted to notify partners, a California 

 11Suzanne E. Landis et al., “Results of a Randomized Trial of Partner Notification in Cases

of HIV Infection in North Carolina,” The New England Journal of Medicine, vol. 326, no. 2,

101-106 (1992). Beth A. Macke and Julie E. Maher, “Partner Notification in the United 

States: An Evidence-Based Review,” American Journal of Preventive Medicine, vol. 17, 

no. 3, 230-242, (1999). 

12In some of these states, physicians or health departments may notify partners only when

certain conditions are met, such as when the index case has been advised to notify partners

but refuses. Some states have provisions also permitting parties other than health care

providers or health departments to notify partners. 

13The 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. 

14One New York provision requires public health officials to notify partners; another

permits physicians to notify partners. 

Page 53 GAO-06-646 AIDS Drug Assistance Programs
Appendix II: State Approaches to Identifying

and Notifying Partners of HIV-Infected 

Individuals of Possible HIV Exposure 

official told us that the health department is trying to get physicians more 

involved in partner notification but said that generally physicians do not 

have the time or staff to conduct the notifications. In the remaining 2 

states—Massachusetts and Minnesota—public health officials or health 

departments may notify partners, including spouses, only with the consent

of the index case. Moreover, Massachusetts has an HIV-specific 

confidentiality provision that explicitly prohibits health care providers and 

facilities from disclosing an individual’s name or HIV test results without 

the individual’s written informed consent. Massachusetts officials said that 

they believe the number of partners notified is lower in states with strict 

confidentiality laws compared to states without strict laws. 

Some states use the Internet as a tool for contacting and notifying partners

of known HIV-infected individuals. A California official told us that the 

Internet provides a new opportunity to facilitate partner notification. 

Officials from Minnesota, Missouri, Pennsylvania, and Texas said they 

obtain information, such as Web site addresses and associated chat rooms 

that partners use, partners’ screen names, and e-mail addresses, from 

index cases and use the Internet to initiate contact and send messages to 

partners. Officials from three states expressed concern about using the 

Internet and visiting certain Web sites to contact partners because of 

confidentiality concerns or provisions that prohibit employees from 

visiting sexually-oriented sites. The extent to which states use the Internet 

for HIV partner notification varies. For example, Kentucky, New York, and 

Washington State officials said that their use of the Internet is limited to 

certain geographic areas within the state. 

After partners are contacted and notified about their possible exposure to

HIV, they are usually counseled about HIV and offered testing. CDC 

guidelines state that counseling should consist of providing a description 

of the ways in which HIV is transmitted, the importance of obtaining test 

results, the meaning of HIV test results, and ways to prevent future 

exposure to HIV. Officials from all 12 states we contacted said that disease 

intervention specialists that notify partners of their possible exposure to a 

communicable disease encourage them to get tested. Officials from these 

states said that when partners have been exposed to more than one 

communicable disease, such as syphilis and HIV, they will encourage 

partners to get tested for both diseases. Officials in California and 

Connecticut told us that when index cases are co-infected and want health

department assistance with informing their partners about possible 

exposure to syphilis but not HIV, the partners will not be told about their 

exposure to HIV. Instead, the partners may be told that the risk behavior 

Page 54 GAO-06-646 AIDS Drug Assistance Programs
Appendix II: State Approaches to Identifying

and Notifying Partners of HIV-Infected 

Individuals of Possible HIV Exposure 

that exposed them to syphilis may have also exposed them to HIV and that 

getting tested for both is recommended. 

The participation of HIV index cases and partners in PCRS program 

activities varies among the states. As previously mentioned, participation 

in state PCRS is voluntary. New York officials told us that the number of 

index cases that do not provide partner identifying information is quite 

high, but they do not know what percentage of index cases refuse to 

divulge this information. Pennsylvania Department of Health officials told

us that in 2004, there were over 300 HIV-positive cases in the state, and 

that 89, or less than one-third, used PCRS. A California state official told 

us that because the state does not use name-based reporting of individuals

diagnosed with HIV, the state is not able to track those who received 

partner services and how many actually got tested. PCRS data collected by

CDC show wide variability in elicitation and notification activities among 

states. Among 10 of the 12 states in our review,15 CDC data for 2002 show 

that the percentage of index cases interviewed for PCRS ranged from 

about 46 percent to 100 percent. Similarly, the percentage of partners 

elicited who were located and notified ranged from about 42 percent to 

83 percent. Among partners who were located and notified, about 

89 percent received counseling, and approximately 90 percent of partners 

who were counseled were then tested for HIV. 

Health officials from 7 of the 12 states we contacted said they have 

combined certain activities in their HIV and STD programs to facilitate 

partner notification. In these 7 states, staff that conduct partner 

notification are trained in notifying partners of their exposure to HIV and 

other STDs. For example, Texas state public health officials said that their 

PCRS program integrates HIV and STD activities. They said a large 

percentage of their HIV cases are also infected with syphilis, and disease 

intervention specialists that are trained in all STDs can notify partners of 

their exposure regardless of the disease. In Texas, local health

departments that have separate HIV and STD units have been encouraged 

to consolidate their efforts. Florida officials said that information from a 

syphilis outbreak among men who have sex with men shows that in 2004, 

28 percent of these men were infected with HIV at the time they were 

Seven States Have 

Integrated HIV and STD 

Partner Notification 

Activities and Training 

 15CDC’s 2002 PCRS data did not include data from Massachusetts and Missouri. CDC told 

us that Massachusetts did not use its CDC HIV prevention funds for PCRS so it was not 

required to report PCRS data. Missouri’s data did not pass CDC’s reliability tests. 

Page 55 GAO-06-646 AIDS Drug Assistance Programs
Appendix II: State Approaches to Identifying

and Notifying Partners of HIV-Infected 

Individuals of Possible HIV Exposure 

diagnosed with syphilis. These officials said that from a resource 

standpoint, it does not make sense to have one person notify partners 

about their exposure to HIV and another person notify them about 

syphilis. Florida maximizes its resources by using the same staff to 

conduct all STD notifications. North Carolina health officials told us that 

their HIV and STD programs are totally integrated because it is hard to 

separate HIV and STD prevention efforts. North Carolina disease 

intervention specialists are trained in all STDs and can notify partners of 

their exposure to HIV and other STDs. Washington officials said that some, 

but not all, of their STD and HIV programs are integrated. In some 

jurisdictions the programs are divided while in others the staff is shared. 

They said that small health departments are more integrated because they 

cannot afford to have separate staff doing partner notification for the 

different diseases. 

Page 56 GAO-06-646 AIDS Drug Assistance Programs
Appendix III: Scope and Methodology

Page 57 GAO-06-646

Appendix III: Scope and Methodology 

The Ryan White Comprehensive AIDS Resources Emergency Act of 1990 

(CARE Act) authorized grants to states, territories, and metropolitan areas 

to provide health care, medications, and support services to individuals 

and families affected by AIDS. The CARE Act Amendments of 1996 

authorized AIDS Drug Assistance Program (ADAP) grants for states, 

including the District of Columbia, and certain territories specifically to 

operate their own ADAPs to purchase and provide HIV/AIDS medications 

to eligible individuals. We examined how program design and funding 

sources contributed to differences in coverage—who and what is 

covered—among ADAPs, how the prices ADAPs reported paying for 

HIV/AIDS drugs compare to prices under the 340B program, how HRSA 

monitors the drug prices ADAPs pay, and how the 340B prices compare to 

selected other federal drug pricing programs. We also developed 

information on state prenatal HIV testing and perinatal HIV transmission 

rates and state approaches to identifying and notifying partners of HIVinfected individuals of possible exposure to HIV. 

To determine how program design and funding sources contributed to the 

coverage differences among 52 ADAPs in the states—including the District 

of Columbia—and Puerto Rico, we reviewed and summarized program 

eligibility criteria, including enrollment limitations, and funding sources 

available to ADAPs, including and in addition to the CARE Act ADAP base 

grants. We obtained data from ADAP profile reports submitted to HRSA by 

52 ADAPs and analyzed the ADAP grant year 2004 data covering the period 

April 1, 2004, through March 31, 2005. We did not verify the data reported 

by ADAPs. In our analysis of funding sources available to ADAPs, we 

determined the total amount of additional funding each ADAP reported for 

fiscal year 2004, and calculated the percentage that this total represented

of each ADAP’s fiscal year 2004 base grant. The percentages were then 

compared among the ADAPs to show which programs had more or less 

additional funding than their ADAP base grants. We also determined for 

each ADAP how much the total additional ADAP funding represented on a 

per estimated living AIDS case (ELC) basis.1

ADAP Coverage 

Differences Analysis 

 1

HRSA calculates a jurisdiction’s ELCs using data from CDC on the reported AIDS case 

counts for the last 10 years and weights those numbers to account for the likelihood of 

deaths. See also GAO, HIV/AIDS: Changes Needed to Improve the Distribution of Ryan

White CARE Act and Housing Funds, GAO-06-332 (Washington, D.C.: Feb. 28, 2006) for a 

discussion of ELCs. 

AIDS Drug Assistance Programs
Appendix III: Scope and Methodology

To examine coverage for ADAPs with waiting lists, we used HRSA ADAP 

waiting list data for fiscal year 2004. When an ADAP has more eligible 

individuals than it has funds to provide services and cannot cover 

everyone it determines is eligible for its services, it may establish a waiting 

list. We determined that the available data were not reliable to establish 

the number of unduplicated individuals on waiting lists during a year or 

the length of time an individual was on a waiting list before being served 

by the ADAP, but this data were sufficiently reliable to indicate whether or 

not a waiting list existed and what were the average number of individuals

on lists. 

For our ADAP drug pricing analysis, we used the top 10 HIV/AIDS drugs by 

expenditure among those purchased by ADAPs in 2002, the most current 

expenditure data available at the time of our review. The expenditures for 

these 10 drugs represented 73 percent of total ADAP drug expenditures in 

2002. The 10 drugs were Combivir, Epivir, Norvir, Viracept, Sustiva, 

Trizivir, Viramune, Viread, Zerit, and Ziagen; these drugs are all brand 

name drugs. 

We used the purchase prices for these 10 drugs that 52 ADAPs provided on

their quarterly drug pricing reports submitted to HRSA for 2003—the most 

recent full calendar year of ADAP drug price data available at the time of 

our analysis. ADAPs report the following data to HRSA for the drugs they 

purchase: (a) the drug by national drug code (NDC);2

 (b) the quantity for a 

30-day supply by units; (c) the unit price; (d) the total cost of the drug (the

quantity by units multiplied by the unit price); (e) the dispensing fee; and

(f) the gross price (the total cost of the drug plus the dispensing fee). 

To determine how the prices an ADAP reported it paid compared to the 

340B price for any of the top 10 drugs it purchased in 2003, we compared 

each ADAP’s 2003 average price over the four quarters to the 2003 340B 

price for the same drug. For each of the 10 drugs they purchased, each

ADAP also reported that drug’s NDC identifier. Because all ADAPs did not 

purchase the same version of the same drug, we used the NDCs each 

ADAP reported to determine which drug’s price to compare to the 340B 

price. We then categorized the ADAPs by those using the 340B direct 

ADAP HIV/AIDS Drug 

Pricing Analysis 

 2

Each drug approved by the Food and Drug Administration has at least one national drug

code (NDC) which is a universal product identifier number for a human drug. An NDC 

indicates a drug’s manufacturer or distributor, a drug’s strength, dosage form and 

formulation, and its package size and types.

Page 58 GAO-06-646 AIDS Drug Assistance Programs
Appendix III: Scope and Methodology

option, and those using the 340B rebate option, and determined how many 

drugs they reported at prices above the 340B prices. ADAPs that use the 

340B rebate option reported to HRSA the drug prices that they paid which 

may not reflect the drug rebate amount they may later have received from 

a drug manufacturer. 

To determine how the 340B prices for some HIV/AIDS drugs compared to 

prices available through selected federal drug pricing programs, we 

compared prices for the top 10 drugs across five federal drug pricing 

programs. We used the 2003 prices3

 from the following federal drug pricing 

programs to make price comparisons: (a) the 340B prices provided by

HRSA’s Office of Pharmacy Affairs; (b) the 340B prime vendor negotiated

prices provided by HRSA’s Office of Pharmacy Affairs;4

 (c) federal supply 

schedule (FSS) prices provided by the Department of Veterans Affairs 

(VA) Pharmacy Benefits Management; (d) the federal ceiling prices (FCP) 

provided by the VA Pharmacy Benefits Management; and (e) Medicaid 

prices5

 that we calculated using publicly available pricing data and rebate 

data provided by the Centers for Medicare & Medicaid Services (CMS). 

Because a drug may have more than one NDC, ADAPs did not always 

report the same NDC for the same drug they purchased. For each of the 10

drugs, we determined the NDC that was most commonly purchased by 52

ADAPs during 2003.6

 We used the 10 most commonly purchased NDCs in 

2003 for the price comparisons we did among the five federal drug pricing 

programs. However, the 340B prime vendor, the FSS, the FCP, and 

Medicaid did not have prices for all 10 drugs. In addition some federal 

drug pricing programs did not have a price for a particular common NDC 

 3

The 2003 price data were the most recent data available at the time of our review. 

4

We treated the 340B prime vendor as a separate drug pricing program for price 

comparison purposes. Section 340B of the Public Health Service Act required the Secretary

of Health and Human Services to establish a prime vendor program for 340B covered 

entities. 42 U.S.C. § 256(a)(8) (2000). Because the prime vendor negotiates its own prices, it

can have different prices than the 340B prices for the same drugs. 

5

For purposes of this report, the Medicaid price is the average amount state Medicaid 

programs paid net of the basic rebate provided under the Medicaid Drug Rebate Program. 

6

For the 10 drugs we used, we determined which NDC for each drug that was most

commonly purchased by 52 ADAPs, and used the price for that NDC for our comparisons. 

For example, since Sustiva has more than one NDC, we chose the Sustiva NDC that was 

most commonly purchased by ADAPs to identify which of Sustiva’s drug prices to use for 

our comparison. 

Page 59 GAO-06-646 AIDS Drug Assistance Programs
Appendix III: Scope and Methodology

that could be used to compare prices across federal pricing programs.7

Although we had the drug prices from all the federal drug pricing 

programs, only the FSS prices are publicly available. To prevent the 

possible calculation of a non-public drug price, we used rankings to 

indicate which drug pricing program had the lower prices for the drugs. 

We ranked a drug “1” under a particular drug pricing program when that 

program had the drug’s lowest price for the drug across the drug pricing 

programs. We ranked a drug “5” when that program had the drug’s highest 

price for the drug across the drug pricing programs. 

To determine whether the five federal drug pricing programs had price 

increases or decreases over time for the 10 drugs, we compared the prices

in 2000 to the prices in 2003 for the ADAPs’ most commonly purchased 

NDC for each drug in 2003 across the federal drug pricing programs. When 

a federal drug pricing program was missing a price for either 2000 or 2003

or both, no price comparison could be made. No price comparisons could 

be made for the 340 prime vendor prices because no 2000 drug price data 

were available. Some of the drug prices are not publicly available, so we 

reported only the drugs’ percent of price increase or decrease so that a 

specific drug’s price could not be determined. 

To assess the reliability of the drug pricing data from HRSA, VA, and CMS, 

we (1) reviewed existing documentation related to the data sources, and 

(2) electronically tested the data to identify any obvious problems with 

completeness or accuracy. We determined that the HIV/AIDS drug pricing

data were sufficiently reliable for the purposes of this report. 

To develop information on state prenatal HIV testing and perinatal HIV 

transmission within states, we reviewed data on approaches that states 

use to test pregnant women and newborns for HIV and studies and reports 

by CDC, the Institute of Medicine, and various states related to prenatal 

testing for and perinatal transmission of HIV. We also requested prenatal

HIV testing and perinatal HIV transmission data for 1997 and 2002,

8

 from 

eight states—California, Connecticut, Illinois, Louisiana, Michigan, New 

Jersey, New York, and North Carolina, to determine their statewide 

Prenatal HIV Testing and 

Perinatal HIV 

Transmission 

 7

Even if a drug discount program had no price available for the most commonly purchased 

NDC we used, it may have had prices for the same drug under a different NDC than we

used. 

8

Data for 2002 were the latest available at the time of our initial data request.

Page 60 GAO-06-646 AIDS Drug Assistance Programs
Appendix III: Scope and Methodology

perinatal transmission rates. These states were selected based on (1) their 

high cumulative numbers of HIV infections among children as of 2002; 

(2) variations in the type of approaches they followed for HIV testing of 

pregnant women; and (3) geographic location. In addition, we interviewed

officials from each of the eight states’ departments of health to discuss 

prenatal testing for HIV and perinatal HIV transmission within the states. 

We used a definition of perinatal transmission rate that describes the 

frequency with which newborns contract HIV through exposure by 

pregnant women immediately preceding, during, or immediately following

birth. We calculated statewide perinatal HIV transmission rates by dividing 

the number of newborns that tested positive for HIV by the number of live 

births to pregnant women that tested HIV positive. The majority of the 

eight states did not have complete data on prenatal HIV testing and 

perinatal HIV transmissions for the 2 years we requested. 

To assess the reliability of data the eight states collected and provided to 

us, we reviewed the data for accuracy and completeness and discussed the 

information with state officials. We determined that data limitations, such 

as incomplete information on live births to pregnant women who tested 

HIV-positive, precluded us from accurately calculating statewide perinatal 

transmission rates for five of the eight states. We therefore report such 

data only for Connecticut, New Jersey, and New York. 

To determine what approaches states are using to identify and notify 

partners of HIV-infected individuals, we reviewed reports related to 

partner notification programs; reviewed and analyzed data from CDC’s 

2002 PCRS database and states’ Web sites; and contacted 12 states in 2004 

and 2005.9

 Of the 12 states we contacted, seven—California, Florida, 

Massachusetts, Minnesota, New York, North Carolina, and Texas—were 

recommended by CDC and the National Alliance of State and Territorial 

AIDS Directors (NASTAD) because of their innovation in partner 

notification efforts. The other five states—Connecticut, Kentucky, 

Missouri, Pennsylvania, and Washington—were randomly selected. We 

interviewed officials from CDC, NASTAD, HRSA, and the 12 states. 

Partner Notification of HIV 

Exposure 

 9

The 12 states that we contacted were California, Connecticut, Florida, Kentucky, 

Massachusetts, Minnesota, Missouri, New York, North Carolina, Pennsylvania, Texas, and

Washington. 

Page 61 GAO-06-646 AIDS Drug Assistance Programs
Appendix III: Scope and Methodology

To assess the reliability of these data, we held discussions with CDC 

officials about the completeness and accuracy of the data in their 

databases and any limitations associated with the information. We also 

followed up with states about the accuracy of the data they provided. 

Based on our review of the data and discussions with CDC and state 

officials, we determined that CDC’s 2002 PCRS data and the data states 

provided were sufficiently reliable for the purposes of this report. 

We performed our work from June 2004 through April 2006, in accordance

with generally accepted government auditing standards. 

Page 62 GAO-06-646 AIDS Drug Assistance Programs
Appendix IV: Comments from the Health and Appendix IV Resources and Services Administration : Comments from the Health 

Resources and Services Administration 

Page 63 GAO-06-646 AIDS Drug Assistance Programs
Appendix IV: Comments from the Health and 

Resources and Services Administration 

Page 64 GAO-06-646 AIDS Drug Assistance Programs
Appendix IV: Comments from the Health and 

Resources and Services Administration 

Page 65 GAO-06-646 AIDS Drug Assistance Programs
Appendix V: 

A

GAO Contact and Staff 

cknowledgments 

Page 66 GAO-06-646

Appendix V: GAO Contact and Staff 

Acknowledgments 

GAO Contact Marcia Crosse, (202) 512-7119 or crossem@gao.gov

In addition to the contact above, 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 report. 

Acknowledgements 

AIDS Drug Assistance Programs
Related GAO Products Related GAO Products 

HIV/AIDS: Changes Needed to Improve the Distribution of Ryan White 

CARE Act and Housing Funds. GAO-06-332. Washington, D.C.: 

February 28, 2006. 

Ryan White CARE Act: Factors that Impact HIV and AIDS Funding and 

Client Coverage. GAO-05-841T. Washington, D.C.: June 23, 2005. 

HIV/AIDS: Use of Ryan White CARE Act and Other Assistance Grant 

Funds. GAO/HEHS-00-54. Washington, D.C.: March 1, 2000. 

HIV/AIDS Drugs: Funding Implications of New Combination Therapies 

for Federal and State Programs. GAO/HEHS-99-2. Washington, D.C.: 

October 14, 1998. 

(290523) Page 67 GAO-06-646 AIDS Drug Assistance Programs
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