II. AIDS Drug Administration Program (ADAP) Overview
2. ADAP Administration and Program Structure
Chapter Summary TOP
This chapter describes the administrative structure and responsibilities of the Health Resources and Services Administration's (HRSA) HIV/AIDS Bureau's (HAB) AIDS Drug Assistance Programs (ADAPs). Factors that affect how ADAPs organize program components are also addressed.
Eligibility and Formulary Parity TOP
The Department of Health and Human Services’ (DHHS) Health Resources and Services Administration’s (HRSA) Office of the General Counsel has determined reference to a “State ADAP,”  in the Ryan White Comprehensive AIDS Resources Emergency (CARE) Act, to mean that both eligibility criteria and covered treatments for anyone enrolled in the program must be consistently applied across any State. As long as they comply with this essential requirement about equity and consistency, States have significant flexibility in how they administer their ADAPs.
Administrative Structure TOP
Almost all States have centralized the administration of their programs. The main characteristics of centralized and decentralized programs are highlighted below.
Table 1 presents a breakout by State of how ADAPs are administered.Table 1: How States Administer Their ADAP
Administrative Responsibilities TOP
ADAP administrative responsibilities generally fall into three broad categories: program operations, oversight and monitoring duties, and managing the purchase and distribution of pharmaceuticals.
As mentioned above, each ADAP is unique in how it manages one or more of these administrative tasks. Although all ADAPs are subject to a cap on administrative, planning, and evaluation activities, a range of factors will affect how an ADAP organizes its operations, oversight, and purchasing/dispensing responsibilities.
The size of the program’s budget is often the most significant factor. A larger budget will allow the ADAP more flexibility for staff positions, technical resources, and the ability to serve a greater number of eligible clients. ADAPs with smaller budgets are often faced with the difficult task of balancing limited staff and resources with the demands of clients and necessary program oversight and reporting activities.
The data management capabilities of the ADAP will impact decisions related to both client tracking and drug purchasing/dispensing. For programs with limited technical resources, contracting out data-related activities may be a good solution to managing more complex program components. Identifying other State programs, such as the State Medicaid agency, that process similar types of data may assist the ADAP with its information management needs.
Finally, the number and geographical distribution of clients will be a significant consideration for the ADAP as it determines how to administer program enrollment and the distribution of medications. States with a significant number of rural clients face very different issues than those States where ADAP clients are concentrated in a few mid-size to large metropolitan areas.
Factors That Impact an ADAP's Choice of a Drug Purchasing and Dispensing System TOP
As mentioned previously, the size and demographics of the HIV/AIDS epidemic within the State, the program budget, number of staff, data management capabilities, and geographic distribution of clients are all factors that influence the administrative structure of the ADAP and define the most appropriate drug purchasing and dispensing system.
Low HIV/AIDS Incidence States
A State with a lower AIDS incidence level typically has a smaller budget, limited technical resources, and often serves fewer clients. A single staff person who handles many other tasks in addition to the ADAP often administers the program. For this type of ADAP, day-to-day client responsibilities may be all that the ADAP coordinator can reasonably manage. Consequently, the ideal purchasing system may be one in which the ADAP contracts with an entity to manage the processing, ordering, and filling of client prescriptions. Moreover, the ADAP can require the contractor to tailor its reporting to the ADAP’s specification. This will help the ADAP coordinator satisfy some, if not all, of HRSA’s ADAP reporting requirements and give the coordinator information needed to perform program oversight and monitoring activities.
Medium and High HIV/AIDS Incidence States
In contrast, an ADAP with a larger budget and additional staff has the ability to internally manage the administrative responsibilities of the ADAP. This larger ADAP can more easily manage the paperwork needed for reimbursing multiple pharmacies or monitoring the administrative requirements of the direct purchase option of the 340B Drug Discount Program.
Other factors that will influence the most appropriate drug purchasing and dispensing systems for each State include:
Finally, as more ADAPs seek to provide eligible clients with access to health insurance coverage that includes prescription benefits, ADAPs’ purchasing and dispensing systems should be flexible enough to allow the appropriate party to be billed for their portion of each prescription. The most efficient systems are ones in which the dispensing pharmacy bills each responsible party so that the ADAPs do not have to “pay and chase” for amounts owed by an insurance company or other reimbursement source. However, these “up-front” systems are not feasible in all States. Consequently, several State ADAPs have developed pay-and-chase models.
Purchasing and Dispensing Options for State ADAPs TOP
Cost-Containment Strategies: HRSA Expectations
In the 1996 conference report authorizing the first appropriation of ADAP-specific funds, Congress strongly encouraged State ADAPs to employ cost-saving measures to maximize assistance to HIV patients. Congress asked HRSA to ensure that States seek the best possible price for AIDS drugs purchased with these funds. They also suggested that ADAPs could participate in the Section 340B Drug Discount Program or seek voluntary manufacturers’ rebates/discounts and negotiate pharmacy-based discounts.
Shortly after this initial appropriation of funds, HRSA’s HIV/AIDS Bureau’s Division of Service Systems (DSS) released a letter to CARE Act grantees that asserted the expectation that all State ADAPs make every effort to secure the best possible price for HIV/AIDS drugs. In each subsequent appropriation report, Congress reiterated the expectation that HRSA continue to encourage States to maximize use of cost-saving strategies so that ADAPs are purchasing pharmaceuticals at the lowest possible price.
Point of Purchase Discounts
In general, ADAP purchasing systems fall under two models: point of purchase discount (also called direct purchase) or reimbursement to a network of local pharmacies. Under the point of purchase discount model, the ADAP pays a discounted price for each prescription at the point of sale. Most ADAPs utilizing this cost-saving strategy receive discounted drug prices through the Section 340B Drug Discount Program, which calculates a significant reduction from the average manufacturers’ price of each drug, based on a Federally-mandated formula for qualified “covered entities.” Participation in the point of purchase system is easiest for States that centrally purchase and distribute medications. Other options for purchasing drugs at a discount are participating in a buying alliance or directly negotiating with the pharmacy, wholesaler, or manufacturer.
Under a reimbursement model, ADAPs reimburse participating pharmacies and then submit rebate claims (refunds) for some or all of the drugs on their ADAP formulary (to pharmaceutical manufacturers). Prior to July 1998, ADAPs using this system negotiated individually with each manufacturer for a rebate, and possibly also with dispensing pharmacies for an initial discount on purchase price. States with a high volume of drug purchases were generally in a better position to negotiate larger rebates, either directly or through a contracted agent.
Section 340B ADAP Rebate Option
On June 29, 1998, HRSA published a final notice in the Federal Register that allows State ADAPs to receive rebates as an alternative means of accessing the Section 340B Drug Discount Program. The 340B ADAP rebate option allows ADAPs using a reimbursement model to achieve cost savings that are closer to the savings received by ADAPs purchasing drugs at the 340B point of purchase discount.
Currently, the majority of ADAPs use the Section 340B Drug Discount Program strategy--through either the point of purchase discount or the rebate option--as their primary cost-saving mechanism. As of April 2001, 29 ADAPs receive Section 340B pricing through a point of purchase discount, and 29 ADAPs participate in the ADAP Section 340B rebate option. One State ADAP uses both Section 340B options. Of the remaining three ADAPs, one State receives State-mandated rebates from manufacturers, one program uses Section 603 of the Veteran’s Health Care Act, and one ADAP is in the process of developing its purchasing and dispensing systems.
Sources Used for This Chapter
October 17, 1996 letter from DSS to grantees re: Expectations and Recommendations about the Administration of State ADAPs supported with Ryan White CARE Act funds.
 The fifty States, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, and Guam operate ADAPs.
 Although this requirement applies to ADAPs, ADAP is not an entitlement program.