ADAP Advocacy Urges Expansion of 340B Rebate Model, Citing Success in HIV/AIDS Programs

ADAP Advocacy has submitted formal comments urging the Health Resources and Services Administration to modify its proposed 340B rebate pilot project, describing it as unnecessary given the proven success of existing rebate models in AIDS Drug Assistance Programs. The organization argues that no pilot is required since ADAPs have already demonstrated that retrospective rebates work effectively without causing delays or undue administrative burdens.

Brandon M. Macsata, CEO of ADAP Advocacy, stated that State AIDS Drug Assistance Programs have essentially served as the pilot project for this rebate model, with their ability to account for how 340B rebates are used widely considered the gold standard among covered entities. The organization favors a robust 340B program because ADAPs rely on it to serve as the payor of last resort for thousands of people living with HIV/AIDS.

The impact of the rebate model on charitable healthcare services has been substantial. In 1997, 340B ADAP drug rebates offered just 5% of ADAP funding for HIV/AIDS patients, the year before the rebate system started. By 2022, those rebates successfully funded 47% of programs, an increase of more than 800%, including direct financial assistance to patients in need. 340B rebates are estimated to fund 55% of these programs in 2025.

Macsata noted that although ADAPs and many smaller covered entities utilize the 340B program to assist the uninsured and underinsured, reflecting the original intent of the program, many 340B hospitals receive 87% of the benefits while providing abysmally low levels of charity care. In 2002, the last year for which data is available, 340B hospitals devoted just 2.15% of their spending to charity care. ADAP Advocacy's 340B map shows the disturbing pattern of 340B hospitals growing their programs larger while their charity care commitments erode and executive compensation increases dramatically.

For 27 years, ADAPs have operated using a rebate mechanism, providing a gold standard for broader implementation. State Drug Assistance Programs demonstrate how rebates operate in the best interest of all 340B stakeholders. Using this model, ADAPs have dramatically grown their drug and non-drug services for HIV/AIDS patients while providing financial assistance and funding for support services.

The organization endorsed the agency removing itself as an obstacle to fully implementing a rebate model for all covered entities under the 340B Drug Pricing Program, particularly hospitals. Larger, better-resourced 340B hospitals are in an even better position to operate effectively under a rebate model than the pharmacies participating in ADAPs, which rely on significantly smaller annual federal funding awards compared to hospital system revenues.