Case Study: Making the Most of ADAP Drug Rebates

Generally, Dose of Change does not cover technical matters of policy, however, given the ongoing ADAP funding crisis and surrounding advocacy efforts, we thought this brief case study of how ADAP drug rebates work in Indiana can provide advocates fodder for messaging and strategy.

Indiana reports that its HIV Medical Services Program has realized great benefits by using its Ryan White Part B funds to purchase insurance and cover drug co-payment costs.  The state uses its Part B award to provide a short-term traditional ADAP benefit and a long-term comprehensive health insurance benefit.

• Approximately 18% of its ADAP award is used for traditional ADAP services.

• Approximately 82% of the ADAP award, 65% of the base award, and 100% of the Supplemental ADAP award are used for premium and co-payment assistant.

Indiana purchases insurance exclusively from the state’s high-risk insurance pool and seeks drug rebates on every traditional ADAP expenses and every drug co-payment made through the insurance benefit.

In FY2009-2010, Indiana spent $1.3 million on the traditional ADAP benefit, $16 million on insurance premiums, and $3.2 million on insurance co-payments.  In total, direct service expenditures for the year were in excess of $21 million.  Yet, the Part B award (base, ADAP, and Supplemental ADAP) was less than $13 million.  The difference was drug rebate receipts.

On average, for every dollar spent on traditional ADAP drugs or drug copayments, the program received 30 cents back from the pharmaceutical industry.  At first glance, this would have equaled approximately $1.4 million for the program.  However, because co-payment rebates are based on the full amount paid to the pharmacy for each drug (not on the amount the program paid for the co-payment), rebates receipts were actually closer to $8 million.

As a simplistic example, a $12 co-payment for a drug billed at $1000 could yield a rebate of $300.

Indiana returns 100% of its rebate receipts to the program to cover additional premiums and co-payments so, in theory, rebates are earned on payments made using rebate funds.  Parlayed over four years, the 30% rebate could yield as much as 45%.

These additional funds have allowed Indiana to eliminate its waiting list and increase its enrollment cap to one of its highest levels ever.

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