ADAP: A Quest for Knowledge

When I was young, I remember my dad saying time and time again, “knowledge is power.” He was always on a quest to learn and to know why or how things worked. It was then, as he felt, his duty to educate my sisters and me. He would end his tutorial with “And now you know- the rest of the story;” the famous quote from Paul Harvey. This used to drive me crazy. Recently, I was asked by a client to explain why as a covered entity they need to be aware of the relationship between the AIDS Drug Assistance Program (ADAP) and the 340B Drug Pricing Program. I knew that 340B covered entities should not use 340B drug if the drug was paid for by ADAP; but why? What is the rest of the story?

The first question to be answered is “what is ADAP”? In 1987, Congress appropriated funds to help states purchase azidothymidine, the only approved antiviral for AIDS patients at that time. Since then, the program has expanded to include more antiviral agents but the original intent of the AIDS Drug Assistance Program to provide HIV-related prescription drug to low-income people with HIV/AIDS who have limited, or no prescription drug coverage has remained the same. In 1992, when the 340B Drug Pricing Program was enacted, a ceiling price for covered outpatient drugs was established since most 340B entities used a wholesaler to purchase drugs. A ceiling price refers to the maximum amount a manufacturer can charge a 340B Program covered entity for the purchase of a 340B covered outpatient drug. The 340B Program was designed for safety net hospitals to receive a reduced price for qualified outpatient drugs for which the manufacturer signed into a Preferred pricing Agreement (PPA) and patient eligibility requirements were met. The ceiling price was then uploaded to 340B covered entity wholesaler accounts. In 1998, the Program was amended to provide access to a statutory rebate for ADAPs that used a pharmacy network purchasing system rather than a wholesaler to purchase drugs, thus enabling them to obtain a rebate for drugs at or below the statutorily defined 340B ceiling price. Unlike other covered entity types, ADAPs can receive a 340B Program rebate, or an upfront discount on the purchase if drugs are purchased through a wholesaler, therefore, ADAPs are eligible for the 340B Program regardless of their purchasing processes. The intent of the 340B Program was that covered entities would then use the savings to spread scarce federal resources to enhance programs and services provided to patients.

Every individual that is enrolled in an ADAP is a 340B eligible patient for the purposes of the 340B Program. This differs from other covered entity program types where an eligible patient must meet patient eligibility requirements as defined in guidelines (61 Fed. Reg. 55156 (Oct.24, 1996)). Covered entities must be able to demonstrate that, for every 340B medication administered to an individual, the drug must (1) be a covered outpatient drug and (2) the covered entity must have established a relationship with the individual such that responsibility was maintained for their health care records (e.g., documentation and charges), (3) the individual must have received health care services from a health care professional employed or under a contract or other arrangement (e.g., referral) with the covered entity such that (4) the covered entity remained responsible for care with respect to the drug. For grantee covered entities, the services and medication administered or prescribed must also be within the scope of the grant.

In 2014 and again in 2018, the National Alliance of State and Territorial Aids Directors (NASTAD) who has programmatic responsibility for administering the HIV/AIDS and hepatitis healthcare, prevention, education, and supportive service program funded by the state and federal governments, published “Best Practices for Shared ADAP and 340B Drug Pricing Program Clients” that encouraged AIDS Drug Assistance Programs (ADAPs) to establish procedures for seeking rebates when a prescription is filled by another 340B entity pharmacy. Either the ADAP or the 340B covered entity should receive the 340B rebate or drug purchasing discount, respectively, but not both.

An individual may be considered a patient of both the ADAP and another covered entity and thus both the ADAP and the covered entity would be eligible for the 340B discounted drug. The question to be answered is who can take advantage of the 340B Program discounted pricing or rebate as only one entity is entitled to receive it? Covered entities must ensure that duplicate discounts do not occur for 340B drugs billed to ADAPs. ADAPs are entitled to 340B savings in the form of an upfront 340B discount or by way of manufacturer rebate. Therefore, prescriptions paid for by ADAPs pose challenges because both the ADAP and covered entity are eligible to keep the 340B savings. Covered entities should consider communicating with their state ADAP to determine what measures should be taken to ensure the manufacturer is not providing duplicate discounts on the same drug such that ADAPs are carved-out of the covered entities’ eligibility.

NASTAD in their best practice document strongly recommends that ADAPs establish clear policies and a systematic process for receiving the 340B Program discount/rebate for individuals who are considered 340B eligible patients of multiple entities. The recommendations published in the document are as follows:

▪ “For clients for whom ADAP is paying 100% of the client’s drug costs (i.e., clients who have no public or private insurance), the ADAP should be the entity that receives the 340B Drug Pricing Program rebate/discount. If the other entity is paying for 100% of the client’s drug costs, then the other entity should receive the 340B Drug Pricing Program discount and ADAP should not receive a rebate. The rebate/discount must not be duplicated by the two entities.”

▪ “For clients who are covered by private insurance, ADAPs should establish a policy and process that clarifies whether ADAP or the 340B entity that shares the patient is entitled to the rebate/discount. The policy could state that the entity paying for the insurance premium and/or the co-payment on the drugs should receive the 340B Drug Pricing Program rebate/discount.”

▪ “If ADAP is paying for a prescription and entitled to receive the rebate and the non-ADAP covered entity that fills the prescription maintains multiple inventories (i.e., 340B and retail), the entity should not use 340B inventory to fill the prescription paid for by ADAP. If the non-ADAP covered entity has only 340B inventory, then ADAP cannot file for a rebate; both entities cannot file for a rebate on the same drug transaction. The rebate/discount must not be duplicated by the two entities.”

▪ “For clients who are uninsured receiving a prescription through a 340B entity pharmacy with only 340B inventory, the 340B rebate/discount cannot be duplicated, and ADAP must not file for a rebate. However, since ADAP is paying 100% of the prescription costs, ADAP should establish a reimbursement rate to the 340B entity that reflects the loss of the rebates to ADAP. NASTAD | Bridging Science, Policy, and Public Health 444 North Capitol Street NW, Suite 339 – Washington, DC 20001 – (202) 434.8090 – 3 It is the responsibility of ADAP to identify 340B entities (pharmacies) who may receive reimbursement from ADAP for prescriptions and to inform them of ADAP policies on reimbursement and prevention of duplicate 340B rebates/discounts.”

The NASTAD best practice document states the responsibility lies with the ADAP to identify 340B entity pharmacies who may receive discounted drug pricing and that the ADAP should inform the 340B covered entity of ADAP policies on reimbursement and prevention of the potential duplication of discounts received from the 340B Program.

Turnkey Pharmacy Solutions, a SpendMend company, while supporting clients during HRSA audits, has also seen Bizzell auditors ask covered entities if they bill ADAP and have processes in place to prevent duplication of drug discount/rebate. We recommend that no matter your covered entity type that you review your utilization data to ensure an ADAP is not billed. If within your data you have 340B billable claims to ADAP, it is recommended that these claims be reversed from eligibility. You may also reach out to the ADAP and confirm that a 340B rebate was sought and that they have policies to support their practice. Covered entities may also want to include in policy and have processes to ensure that ADAPs are not billed 340B drug so that the ADAP can pursue the rebate. Ensuring compliant practices is the responsibility of each covered entity.

“And now you know -the rest of the story.” Paul Harvey