While some people with HIV or AIDS are covered by private medical insurance, many others are either uninsured or have limited prescription drug coverage and must rely on one or a combination of federal and state programs and assistance programs offered by manufacturers of HIV and AIDS treatment drugs. The remainder (less than half) of the individuals with AIDS rely on sources other than ADAPs, VA, DOD, or Medicaid to finance their drug therapy. (For more detail on each state’s financial criteria for Medicaid and ADAP eligibility, see app. Recent Federal and State Spending on HIV and AIDS Drugs Through Medicaid and ADAPs Has Increased

The care of HIV and AIDS patients for all types of treatment, including drugs, involves a variety of programs funded by the federal government, states, and private payers, but the largest share of federal funding is through the Medicaid program. In fiscal year 1997, total federal spending on medical care, including inpatient and outpatient services and prescription drugs, for individuals with AIDS or HIV was estimated at $4.8 billion. Federal Spending for HIV/AIDS Drugs Has Increased Rapidly

We estimate that a substantial proportion of federal spending for AIDS or HIV medical care—at least one-sixth—is for prescription drugs, primarily through Medicaid and the ADAPs. Federal ADAP Funding Accounts for Most CARE Act Increases

Over the past several years, overall federal funding for the CARE Act has increased more than 50 percent, from about $760 million in 1996 to about $1.2 billion in 1998. II for state contributions.) Developing such estimates by insurance coverage or payer source is difficult. An Increasing Number of Medicaid Beneficiaries With AIDS Will Likely Seek Combination Drug Therapy

Although there are a number of FDA-approved drugs for the treatment of HIV, at least half of the people with AIDS in the United States are estimated to be receiving therapies that combine a protease inhibitor with other drugs. These drugs are also available for individuals who are HIV positive but do not have AIDS, but data on this population are of insufficient quality to pinpoint the number of HIV cases receiving combination drug therapy. They estimated that of the total number of people in the United States with AIDS or who are HIV positive, 50 percent would be on combination therapy in 1997 and 60 to 65 percent in 1998. Some states have cut costs by restricting patient access to ADAPs and implementing other emergency measures. Impact of New Therapies on Public Programs Is Difficult to Assess, but Effects on Programs Would Likely Vary

As discussed, it is not possible to accurately project the number of patients who will be on combination drug therapy in the future. Many factors—such as the long-term effectiveness of current therapies, evolving standards of care, and new research developments—influence future demand and cost. Long-Term Impact of Drug Therapies Would Influence Demand and Associated Costs

Rapid advances in HIV and AIDS treatment have occurred in the last 2 years. For Medicaid, reductions in hospitalizations could, in the short-term, offset the costs associated with HIV and AIDS combination drug therapy. Although insurance coverage for the estimated 410,000 to 660,000 individuals who are HIV positive but have not developed AIDS is unknown, ADAPs are the most likely to see increases in the number of individuals who are uninsured or underinsured and seeking funding for combination drug therapy in 1998.
Why GAO Did This Study

Pursuant to a congressional request, GAO provided information on the potential implications for federal and state budgets from the increased use of combination drug therapies for patients with human immunodeficiency virus (HIV) and acquired immunedeficiency syndrome (AIDS), focusing on: (1) federal and state spending on HIV and AIDS drug treatment, by major programs, over the last several years; (2) the estimated number of people with AIDS and HIV on combination drug therapy who are covered by Medicaid or other publicly funded programs, and measures that have been taken to stretch the resources in the Ryan White Comprehensive AIDS Resources Emergency (CARE) Act; and (3) the potential impacts of new drug therapies on federal and state government outlays.

What GAO Found

GAO noted that: (1) while state governments and private payers share in the financing of medical care for people with HIV and AIDS, the federal government currently funds more than half the cost of such care; (2) for fiscal year (FY) 1998, estimated federal spending on treatment for individuals with AIDS or HIV is expected to total over $5 billion, an increase of about 5 percent over FY 1997; (3) GAO estimates that a substantial portion of federal spending for AIDS or HIV medical care--at least one-sixth--is for prescription drugs, primarily through Medicaid and funding under title II of the CARE Act for states' AIDS Drug Assistance Programs (ADAP); (4) with recent research developments in HIV and AIDS treatment, the demand for federal and state funding for HIV and AIDS treatment is expected to increase; (5) more than half of the 240,000 people with AIDS in the United States are estimated to be receiving combination drug therapies that include a protease inhibitor and other drugs; (6) of the AIDS patients on Medicaid, GAO estimates that at least 67,500 are receiving combination drug therapy in 1998; (7) data on the number of individuals who are HIV positive but do not have AIDS are insufficient, so it is difficult to develop reliable estimates of the total number of Medicaid- and ADAP-eligible individuals who would likely qualify for and seek combination drug therapy; (8) however, some ADAPs report that a great majority of their clients will receive combination therapy in 1998; (9) ADAPs have taken several steps to stretch available funds and thereby maximize the number of clients they are able to serve; (10) other factors--such as evolving standards of care, the long-term effectiveness of current therapies, and new research developments--also influence projections of the impact of new drug therapies on federal and state government programs; (11) although the effect of the demand for the new combination therapies is difficult to estimate, ADAPs will likely experience greater financial pressure than Medicaid in caring for individuals with AIDS or HIV who seek assistance; (12) this is in part because Medicaid primarily provides coverage for those individuals whose HIV infection has progressed to AIDS, and there are some indications that Medicaid costs for drug therapy might be offset by reductions in hospitalizations; (13) in contrast, ADAPs cover drug costs for both AIDS and others who are HIV positive, and who have fixed incomes; and (14) since ADAPs only cover drugs, cost offsets are not as likely to occur.