OPINION: The 340B Program Isn't Broken—It Was Built to Exclude Us

By: Ryan Alvey, Founder & Executive Director of the Positive Change Movement, and ADAP Advocacy 340B Patient Advisory Committee Member

I grew up gay in rural Kentucky—bullied, shamed, and told I had to pray the “sissy” away. At 17, I joined the military, thinking it would make me a man. It didn’t. What followed were years of trying to survive—through addiction, toxic relationships, and the adult film industry. Systems designed to help people struggling with life often fall short for someone like me.

In 2020, I was diagnosed with HIV. I thought it would break me. But instead, it sparked something in me—a drive to help others, to create something better, to make sure no one else felt the isolation I did. I pursued certifications. I trained. I showed up ready to lead. I believed that my lived experience was not a barrier, but an asset.

When I tried to step into leadership, the door was slammed shut. Local HIV service organizations in Kentucky weren’t interested in patients speaking up for themselves, especially not those of us living openly with HIV, eager to speak.

Fast-forward to 2025, when the ADAP Advocacy Association took a chance on me and offered me a seat on their 340B Patient Advisory Committee. I spent months digging into the 340B Drug Pricing Program, created over 30 years ago to help poor patients access lifesaving care. What I found instead was a program rife with exploitation, where profits are protected, and patients like me are left out.

So, I launched Fiscal Watchdog, a project to track the money and shed light on what these nonprofit giants would rather keep hidden. What I’ve discovered so far is infuriating. Multi-million-dollar hospital CEOs, while clinics serving marginalized people close their doors. 340B discounts meant for patients are instead generating surplus revenue, and very little is reinvested in community care. Tax-exempt organizations spend more on real estate and branding than on direct services, claiming to “empower” us. And across the board, People Living with HIV are excluded from boards, executive roles, and decision-making tables.

These organizations claim to serve us, but their filings and financial statements suggest otherwise.

Photo Source: 340B Map

This isn’t just about one organization. This is about an entire system that pretends to serve while quietly excluding. Hospitals and mega-service providers are helping patients, yes, but not to the extent that they could be helping us, because money is being spent on executive pay increases, questionable capital improvements, and sometimes, even funding ballot initiatives. How do any of these things help patients like me? I’ve seen it firsthand: people with lived experience—those in recovery, those living with HIV, those who've survived the streets—are pushed to the margins, tokenized when convenient, and discarded when they speak up.

These systems weren’t designed to empower us. They were built to contain us. However, participating in the 340B Patient Advisory Committee has allowed me to speak up and demand change. Pharmaceutical manufacturers aren’t perfect, but their calls for greater accountability and transparency seem reasonable to me, and that’s why it is time to remove any barrier that prohibits patients from seeing what is really going on.

Across Kentucky and beyond, gatekeeping in HIV services is rampant. Organizations claim to value equity, but their leadership is overwhelmingly white, cisgender, and disconnected from the communities they serve. Funding is allocated in ways that prioritize status quo institutions, rather than grassroots solutions. And when people like me speak up, we’re labeled "difficult" or "unprofessional," simply for demanding what’s right.

I’m sharing my story because I'm not the only one. Countless others—brilliant, resilient people—are kept out of leadership positions, denied jobs, or dismissed by systems meant to support us. Patients like me deserve to be at the table on issues like the 340B Program.

Disclaimer: Guest blogs do not necessarily reflect the views of the ADAP Advocacy Association, but rather they provide a neutral platform whereby the author serves to promote open, honest discussion about public health-related issues and updates.    

Is Trump's Executive Order on Most Favored Nations Drug Pricing a Wet Noodle?

By: Ranier Simons, ADAP Blog Guest Contributor, and Marcus J. Hopkins, ADAP 340B Consultant

The Trump Administration’s policies continue to generate uncertainty and disarray in most sectors of the economy in the United States, especially healthcare. On May 12, 2025, another executive order aimed at “reducing prescription drug costs” was signed. The President issued Executive Order (EO) 14297, ‘Delivering Most-Favored-Nation Prescription Drug Pricing to American Patients’, with the false claim that prescription drug and pharmaceutical prices will be reduced, almost immediately, by 30% to 80%. In actuality, the EO is vague, flawed, and has the potential to do damage to many areas within the healthcare ecosystem. The EO was presented as a strong-armed mandate to effect swift change to the status quo. However, STAT’s Matthew Herper reported, "As pharmaceutical investors see it, he stomped loudly and wielded a wet noodle" (Herper, 2025).

Photo Source: The White House

The premise of the EO is that the status quo of what the United States pays for prescription drugs compared to other developed foreign markets is unfair; thus, the imbalance needs to be corrected. The narrative presented is that drug manufacturers are taking advantage of American consumers and the government by charging the United States exorbitant prices for drugs to offset the low prices other foreign governments demand for the same drugs. A direct quote from section one of the EO states, “Drug manufacturers, rather than seeking to equalize evident price discrimination, agree to other countries’ demands for low prices, and simultaneously fight against the ability for public and private payers in the United States to negotiate the best prices for patients.”

According to the nonprofit RAND Corporation, a nonpartisan research organization, the United States pays almost three times what approximately 33 other comparatively developed nations pay for the same prescription drugs (Mulcahy, Schwam & Lovejoy, 2024). However, RAND Corporation’s 'apples to apples' findings ignore numerous factors that separate the United States from the other developed nations, thus calling into question the simplified comparison.

The following is an overview prepared by ADAP Advocacy on how the mechanisms of the EO describe solutions to the problem, including relevant notes:

1. Ordering the Secretary of Commerce to identify “foreign nations freeloading”—a catch-all term that will attempt to identify any “act, policy, or practice” that may be “unreasonable or discriminatory” or that “may impair United States national security and that has the effect of forcing Americans to pay for a disproportionate amount of global pharmaceutical research and development, including by suppressing the price of pharmaceutical products below fair market value.” (Editor's Note): This process is unlikely to consider that almost all these developed nations do not use the free-market for-profit healthcare model used by the United States, but have implemented a Universal or Single-Payer healthcare model. This means that there is one organized purchaser of these medications. If pharmaceutical companies wish to sell their products in those countries, they can either agree to the terms that those nations specify for the drugs or refrain from selling their drugs there. Meanwhile, in the United States, a patient's price for a drug can vary significantly from patient to patient, depending on their insurer. This means that every single payor (except for Medicare) must negotiate with pharmaceutical companies to determine what price they will pay, and those negotiations are protected by “trade secrets” laws that shield the entire process from consumers and most lawmakers.
2. Enabling direct-to-consumer sales of drugs from pharmaceutical companies to patients. This is an interesting proposal that can potentially eliminate several middlemen from the existing domestic drug procurement and purchasing system. (Editor's Note): Currently, by the time a patient actually purchases a medication from their pharmacist, it has already passed through at least two middlemen—drug wholesaling companies and pharmacy benefit managers (PBMs)—and each middleman is attempting to make a profit. This means that, even if the starting acquisition cost of a medication is $20/bottle, to make a profit, the wholesaler will mark up the cost to $22/bottle, which will require the pharmacy to mark up the cost to $24/bottle…but then, for the PBM to make a profit, they will pocket a percentage of the reimbursement to the pharmacy, which will necessitate increasing the price to $26/bottle in order for the pharmacy to make a profit.
3. By allowing pharmaceutical companies to sell their drugs directly to patients, the Trump Administration could potentially decrease consumer costs, but risks putting pharmacies out of business or creating a model where pharmaceutical companies could purchase pharmacies outright and increase their profits while putting local and community pharmacies out of business.
4. Enabling “Most-Favored-Nation Pricing” (MFN) by instituting price controls through administrative rulemaking. This would allow the Secretary of the U.S. Department of Health and Human Services (HHS) to request that pharmaceutical manufacturers come to the table with the federal government to agree upon a maximum price that they can charge for medications in the United States. This would first be done voluntarily…with the threat of involuntary price controls and the removal of drug approval by the U.S. Food and Drug Administration (FDA).

Photo Source: Market.us Media

If pharmaceutical companies don’t agree to the terms set forth by this administration, the various Department Secretaries are empowered to:

a.) Propose a rulemaking plan that would “impose most-favored-nation pricing;”

b.) Allow drug importation from foreign countries (a position which ADAP Advocacy vehemently opposes);

c.) “Review” potential actions that could be taken to prevent the exporting of drugs to other countries (i.e., forbid U.S.-based manufacturers from exporting drugs);

d.) Review and modify approvals granted for drugs, which would force drug manufacturers to take their medications off the market—a punitive move that is likely illegal (Payne & Silverman, 2025); and

e.) “…address global freeloading and price discrimination against Americans.”

On its face value, the EO is hazy and does not explain much of its implementation. The overall theme is ‘facilitate, study, and propose’. There are several essential questions the EO leaves unanswered:

• How will HHS determine “Most-Favored-Nation” pricing?

• Which classes and how many drugs will be included in this pricing?

• Will this only apply to drugs purchased by Medicaid, Medicare, and Veterans Affairs, or will this apply to commercial insurers and the uninsured, as well? (Franco, 2025)

Most importantly, much of what the President desires to do requires cross-agency cooperative Congressional legislative action (Payne & Silverman, 2025). Nothing in the EO represents actionable endeavors that will reduce drug prices for Americans in the immediate future. For example, the EO directs HHS to set target prices for negotiations with drug manufacturers in the next 30 days. If, after an unspecified time, drug manufacturers have not voluntarily made “significant progress,” that is when rulemaking will begin to force MFN pricing.

Politics surely makes for strange bedfellows. Congressional Democrats were quick to embrace this latest EO – evidenced by Representative Ro Khanna, who represents California's 17th congressional district, introducing legislation to codify MFN into law. Sen. Bernie Sanders, one of the pharmaceutical industry’s greatest detractors, called on Republicans to support federal legislation mirroring the EO. It is unlikely any Republican would support an effort to impose price controls on pharmaceutical products.

Photo Source: X

The top two Republican Senators, Senate Majority Leader (SD) and Senate GOP Whip John Barrasso (WY), have already expressed skepticism about an MFN pricing model. Wall Street didn't seem too alarmed by its prospects, either. POLITICO's headline read, "Wall Street shrugs at Trump’s most-favored order," in an article that featured colorful responses from investment groups. Still, some organizations remain on the fence (Gardner & Lin, 2025).

The reality is that the MFN approach to "fixing" healthcare costs associated with prescription drugs ignores the complexities of the healthcare ecosystem. Moreover, instituting MFN pricing would be financially devastating to drug manufacturers. It would result in a drastic revenue reduction in tandem with the Trump Administration’s recently threatened pharmaceutical tariffs (Reed, 2025). It is not sustainable for pharmaceutical companies to lower domestic prices to the levels of the lowest foreign countries. In speaking with the Wall Street Journal, Stephen Schondelmeyer, a professor of pharmaceutical economics at the University of Minnesota College of Pharmacy stated, “The first thing we have to realize is if another country’s getting a drug at one-tenth of the price that we are, we’re not going to get all of our drugs at one-tenth of the price we’re paying now” (Hopkins & Loftus, 2025). 

For example, instituting an international pricing model for Medicaid would cost drug manufacturers an estimated $1 trillion over the span of a decade (Hopkins & Loftus, 2025). Drug companies would have to raise the prices that other countries are paying for drugs. Coincidentally, the President stated that other countries will have to pay more for drugs to expressly pay their ‘fair share’ for innovation and development (Hopkins & Loftus, 2025). Thus, the administration aims to disrupt the global pharmaceutical market. Convincing other countries to modify and increase their expenditures drastically does not appear plausible.

MFN pricing also threatens programs like the 340B Drug Pricing Program, given that it would drastically reduce rebates. Reducing 340B funding would adversely affect providers and covered entities that serve vulnerable populations (Lopez, 2025). This change would have a devastating impact on the State AIDS Drug Assistance Programs (ADAP). There could also be unintended consequences for the Medicaid Drug Rebate program, as MFN pricing would reduce federal matching Medicaid dollars. Dangerously, the MFN idea tangentially invites using quality-adjusted life years, or QALY, to make pricing decisions. While outlawed in the United States, many foreign governments use QALYs, which are discriminatory methodologies that devalue the lives of vulnerable populations. These measures also ignore the lived experiences of diverse racial and ethnic groups (Lopez, 2025).

Photo Source: STAT News

PlusInc, a nonprofit dedicated to health equity, has demonstrated how QALYs fuel health disparities. In a recent analysis, PlusInc argued, "If the math behind QALYs seems obtuse, you’re not alone—one of the primary criticisms of the QALY is that the methodology behind determining how a QALY is measured is predicated upon a lot of assumptions that may or may not hold true across every community. Some recognized experts who have studied QALYs have expressed concern over their impact on health equity."

Mike Eging, who leads the Rare Access Action Project (RAAP), summarized many of the concerns being expressed about the proposal: "Many rare products are developed through family foundations set up by patients and families to seek therapies to treat not just loved ones, but also their patient communities. Others are discovered by passionate scientists in universities, or through emerging smaller companies with only one or two products in development. These efforts can lead to therapies, some of which are never launched overseas due to price controls and regulatory hurdles. Or, they require partnerships with larger companies to navigate an expensive launch in Europe, at a price they no longer control. Further, some emerging rare companies never launch in Europe due to these challenges. Application of MFN to rare products could have a chilling effect on investment in these situations and across the rare disease in general. Rare medicines were exempted from the first iteration of this policy. We hope that continues."

EO 14297 is rife with vagaries but has the potential to do more harm than good. Threatening pharmaceutical revenues could reduce investment in developing needed therapies (Lopez, 2025). Legally, as it stands, the government would not be able to set prices outside of the Medicare program. Mandating the pricing of commercial, privately owned companies would require acts of Congress that would take lots of time and litigation (Jacobson, 2025). Patients could lose medication access due to a complex system response to adversarial price negotiations. Disrupting foreign markets could adversely affect international relations.

The ongoing debate over drug pricing in the United States is essential to the overall healthcare conversation. However, the EO does not present a foreseeable effective path for improving the status quo. In agreement with the EO’s objective of more equitably sharing research and development costs across countries, a Lily spokesperson expertly summarized the challenge stating, “an MFN approach is not the answer to help patient affordability; instead, lower prices for consumers in the United States can only happen if intermediaries take less for themselves” (Hopkins & Loftus, 2025). For these reasons, it is hard to understand why any patient advocacy organization could find itself supporting this approach.

[1] Franco, M. A. (2025, May 14). Trump Administration Revives Most-Favored-Nation Drug Pricing: Here's What to Know. Holland & Knight: Insights. Retrieved from https://www.hklaw.com/en/insights/publications/2025/05/trump-administration-revives-most-favored-nation-drug-pricing

[2] Gardner, L., Lin, D. (2025, May 13). Wall Street shrugs at Trump’s most-favored order. Retrieved from https://www.politico.com/newsletters/prescription-pulse/2025/05/13/wall-street-shrugs-at-trumps-most-favored-order-00342967

[3] Herper, M. (2025, May 13). To understand why investors rejoiced at Trump’s attack on drug firms, think like a pharma CEO. Retrieved from https://www.statnews.com/2025/05/13/trump-drug-pricing-plan-analysis/

[4] Hopkins, J., Loftus, P. (2025, May 12). Drugmakers Avoid Worst-Case Pricing Scenario for Now. Retrieve from https://www.wsj.com/health/pharma/trump-drug-price-plan-pharmaceutical-companies-217f809b?st=UrWWgU&reflink=desktopwebshare_permalink

[5] Lopez, T. (2025, May 14). Most Favored Nation vs. Human Sustainability: How Federal Price Controls Fight Biology—and Americans Lose. Retrieved from https://nmqf.org/resource-library/most-favored-nation-vs-human-sustainability-how-federal-price-controls-fight-biology-and-americans-lose/

[6] Mulcahy, A., Schwam, D., Lovejoy, S. (2024, February 1). International Prescription Drug Price Comparisons: Estimates Using 2022 Data. Retrieved from https://www.rand.org/pubs/research_reports/RRA788-3.html

[7] Jacobson, L. (2025, May 14). Donald Trump exaggerates speed, certainty of prescription drug price reductions. Retrieved fromhttps://www.politifact.com/factchecks/2025/may/14/donald-trump/prescription-drug-price-cut-executive-order/

[8] Payne, D. & Silverman, E. (2025, May 12). Our biggest burning questions on Trump’s order to bring down drug prices. Retrieved from https://www.statnews.com/2025/05/12/trump-executive-order-drug-prices-analysts-five-questions-agency-authority-court-challenges/

[9] Reed, T. (2025, May 7). Pharma shipments surge as Trump tariff threat looms. Retrieved from https://www.axios.com/2025/05/07/tariffs-imports-drugs-pharmaceuticals

Disclaimer: Guest blogs do not necessarily reflect the views of the ADAP Advocacy Association, but rather they provide a neutral platform whereby the author serves to promote open, honest discussion about public health-related issues and updates.   

Why Is the 340B Drug Pricing Program the Next ‘Too Big to Fail’

Read the full policy paper, “Is the 340B Drug Pricing Program the Next ‘Too Big to Fail’?”

By: Brandon M. Macsata, CEO, ADAP Advocacy

The 340B Drug Pricing Program sounds wonky and complex, and most patients probably hear the program's name and think, “Oh, it doesn’t even apply to me or my care.” It is wonky; after all, it’s named after Section 340B of the Public Health Services Act of 1992. And even the most well-versed policy expert would admit the program is indeed complex. But rather than trying to explain it in words, click here to watch an amazingly straightforward patient education video produced by the Community Access National Network (CANN). The bottom line is this wonky, complex program has EVERYTHING to do with patient care, and it is highly likely it impacts the care of most of the folks who read this blog post. And here’s why the 340B Drug Pricing Program is the next ‘Too Big to Fail.’

Photo Source: ADAP Advocacy

Today, patients living with HIV can successfully access highly effective therapies to manage the disease and achieve undetectable status, thus making a robust 340B Program essential. Unfortunately, that concept has warped into putting providers before patients. Originally designed to help poor patients access affordable healthcare, it has grown into a $66 billion program, largely benefiting healthcare providers. These healthcare providers' CEOs have benefitted abundantly, too, as ADAP Advocacy noted in its 2024 report and its 2025 supplemental report. Ironically, charity care – which is basically “free” healthcare hospitals extend to patients who otherwise cannot afford their care – has declined. So much for helping poor patients, right?

To make matters worse, a few extremely powerful special interest groups and their high-powered inside-the-beltway Washington lobbyists have successfully created a reform denialism narrative. That narrative is a fallacy. The chief antagonist of reforming the program to serve patients better is the American Hospital Association (AHA). Isn’t it ironic that the AHA fights any effort to reform the program that would result in its hospital members having actually pony up charity care for marginalized communities? Sadly, patient advocacy groups see through this smoke and mirrors by the big hospital systems. 

Pharmaceutical manufacturers—who fund the 340B Program via drug rebates—are pushing reforms to NOT “gut” the program but rather ensure their rebates are going to the intended recipients: patients! Industry-backed reforms are all driven by asking for more accountability and transparency on how their rebates are being spent. What could be more “pro-patient” than asking that rebates designed to help patients actually help patients? Novel idea, right?

Photo Source: Live | Viewpoint

The 340B Program’s reform denialists are scared, evidenced by their lobbyists contacting patient advocacy organizations and all but saying they're being duped by industry because they’re not intelligent enough to know what is best for them. Insulting, right?

The reality is that patients, patient advocacy organizations, and industry can and often do share values on public health and the delivery of healthcare services. The 340B Program is one such example. The program keeps exponentially growing, year after year, and yet medical debt is simultaneously exploding. The program is growing but failing to meet the law's legislative intent, which is helping patients. That is why it begs the question: Is the 340B Drug Pricing Program the Next ‘Too Big to Fail’?

Read the full policy paper, “Is the 340B Drug Pricing Program the Next ‘Too Big to Fail’?”

Disclaimer: Guest blogs do not necessarily reflect the views of the ADAP Advocacy Association, but rather they provide a neutral platform whereby the author serves to promote open, honest discussion about public health-related issues and updates.

340B Paradigm Shift: New Rebate Model Puts Patients First, Not Providers

By: Ranier Simons, ADAP Blog Guest Contributor

Since its inception in 1992 up until 2010, patients were generally thought to have benefited from the 340B Drug Pricing Program. That perception began to change with the passage of the Affordable Care Act (ACA), however. Although the expansion of the 340B program was supposed to have worked hand in glove with the ACA to expand the provision of affordable health care to the underinsured and uninsured, the 340B program, post-ACA, was accompanied by new challenges that have remained largely unchecked over the subsequent 15 years. The result is a program that has veered from its intended purpose. This is evidenced by explosive growth in the number of healthcare providers, or covered entities, participating in the program, while 340B hospitals have actually reduced the charity care they offer to needy patients. The total value, at list price, of the purchases made under the program now exceeds $124 billion (Fein, May 2024), even as medical debt in the United States has soared to $220 billion (Rakshit, February 2024). An IQVIA study demonstrated that only 1.4% of 340B patients receiving 340B drugs through contract pharmacies had any assistance with their out-of-pocket costs at the pharmacy counter. But the growing chorus calling for reform of the 340B Program now includes a new idea: 340B pricing made available through rebates instead of upfront payments. Patients are beginning to ask if it is an idea that could benefit them?

Photo Source: Healthcare Dive

In August 2024, Johnson & Johnson Health Care Systems, Inc (JJHCS) announced its 340B rebate model (J&J, Aug 2024). The new model was an attempt to correct some of the improper utilization of the 340B program and ensure that patients received direct benefits from the savings. Instead of the most prevalent chargeback model, JJHCS decided to offer Stelara and Xarelto to disproportionate share hospital (DSH) covered entities via rebate (J&J, Aug 2024). All other 340B eligible entities would remain on the standard chargeback model. DSH-covered entities would be required to purchase the two drugs from wholesalers at the commercial non-discounted price and then submit a rebate claim for the 340B discount. After the claims are validated, the rebates would be deposited into the bank accounts of the DSH-covered entity. This arrangement applied regardless of whether the medication was dispensed through an in-house pharmacy or contract pharmacy.

Stelara and Xarelto are high-volume, expensive medications. Offering the 340B rebate on these two medications would provide significant savings for a large patient base and their providers, and it would also affect JJHCS’s financial bottom line. The rebate would be calculated as a Wholesale Acquisition Cost (WAC) 340B ceiling price even if a 340B DSH hospital has an agreement with a wholesaler for a lower price (J&J Innovative Medicine, 2024). The rebate concept is not novel. Kalderos, a data infrastructure and analytics company, presented a similar ideology in 2020 based on a discount drug payment platform of their own creation. Their research showed that converted entities benefited from higher revenues when rebates were based on WAC as opposed to contract pharmacy reimbursement tied to discounted Average Wholesale Price (AWP) (Fein, 2022).

HRSA responded to JJHCS unfavorably, even though the 340B statute requires HRSA to “provide for ‘any rebate or discount’ in accounting for the “amount required to be paid” under the program. HRSA nevertheless claimed that JJHCS’ proposed 340B rebate model violates the 340B statute. The agency’s interpretation of the law is that the rebate model’s requirement that a covered entity pay a commercial price upfront and then receive a rebate thereafter (even though payment is promised in “no more than seven to ten days”) violates the statute because the initial price is higher than the statutory ceiling price. Additionally, HRSA claims that it has the authority to approve any proposed rebate or other models before they are allowed to go into effect, even though it has never done so for any model employed over the 33 years that the program has been in effect. 

In contrast, JJHCS contends that the 340B rebate plan is like the rebate processes that AIDS Drug Assistance Programs (ADAPs) use and the replenishment model that most 340B covered entities use. 

In October 2024, Bristol-Myers Squibb (BMS) informed HRSA that it would also start using a 340B rebate model, and it was met with the same resistance by the agency. Despite some patient advocates arguing the BMS model is explicitly pro-patient, in that it offers “even faster” rebate payments if the covered entity “agrees to share” 340B pricing with the patient. The BMS model provides a real opportunity to encourage covered entities to live up to the original intent of the program by providing a direct benefit to patients at the pharmacy counter. 

HRSA has informed both JJHCS, BMS, and other manufacturers proposing rebate models that it will take significant enforcement action if they proceed. The threats of enforcement action were particularly sharp concerning Johnson & Johnson Health Care Systems. In that case, HRSA stated that implementation of the rebate would result in civil monetary penalties as well as termination of the company’s Pharmaceutical Pricing Agreement (PPA). A termination would mean that any affected manufacturer would not be able to participate in not just the 340B program but would also lose Medicare Part D and Medicaid coverage for all its products, cutting off potentially millions of patients from the drugs on which they are dependent for their health and safety. 

JJHCS, BMS, and multiple other manufacturers filed suit against HRSA arguing that the rebate model is explicitly permitted by statute. ADAP Advocacy and CF United jointly filed an amicus brief in support of the JJHCS lawsuit and BMS lawsuit (ADAP & CF, 2025). They were the first two patient advocacy groups to do so.

Photo Source: ADAP Advocacy

Amanda Boone, co-founder of CF United, a patient advocacy group representing people living with cystic fibrosis and other rare diseases, said, “Our patient organization, CF United, decided to file an amicus brief in support of this issue because the experiences of cystic fibrosis patients and other rare disease communities illustrate the urgent need for reform. The current system leaves many of us—who are already battling life-threatening conditions—burdened with insurmountable medical debt, often without being informed of available financial assistance.” Boone is a member of ADAP Advocacy’s patient working group focused on 340B reform.

The amicus brief supports the JJHCA and BMS lawsuits by adding needed color to the complaint from a patient perspective and highlighting additional issues for the court’s consideration. First, the amicus brief explains that manufacturers have a right to utilize the 340B rebate model under the statute (ADAP & CF, 2025). The statute does not specify a mode of 340B reimbursement. Nor does the statute give HRSA any “pre-approval” authority to solely and exclusively decide whether a particular rebate model is valid. The brief explains that assuming such authority is wholly inconsistent with the plain language of the statute and HRSA’s implementation of the program to date.

Second, the brief explores how some covered entities, particularly the large, highly resourced hospitals that receive up to 80% of the billions in profits from the program, serve their economic interests at the expense of patients at the pharmacy counter. According to the factual background provided in the brief, 340B program purchases increased by 1,000% from 2011 to 2022, but charity care decreased from 2.60% to 2.15% (ADAP & CF, 2025). Most egregiously, many 340B hospitals, even as they are making millions from the program, pursue aggressive collections against poor patients without offering any charity care to those in need (ADAP & CF, 2025). The 340B rebate model, particularly as BMS has proposed it, enables transparency that can and should benefit patients. BMS’ model ensures that 340B purchases are legitimate, directs the rebate to the proper entities, and helps encourage low-cost pricing to be shared directly with patients.

Third, the amicus briefs express serious concerns about HRSA’s threat to remove JJHCS’s PPA because of the far-reaching adverse effects it would have on patients. William Sarraille, ADAP Advocacy’s Special Counsel on issues related to the 340B Drug Pricing Program, explains, “HRSA’s threat to remove manufacturers from the 340B program—and thereby cut off Medicare and Medicaid patient access to their drug therapies—was a recklessly anti-patient act. Sadly, it showed that HRSA cares more about protecting covered entities that engage in diversion, duplicate discounts, and that fail to share 340B pricing with patients than it does about patient access to desperately needed medications.” Sarraille adds, “HRSA could have insisted on certain safeguards in helping to adapt the rebate model for such covered entities as clinics serving HIV and AIDS patients, but it was willing, under lobbyist pressure, to put patients at risk in a blanket refusal to entertain any additional transparency.”

Community Access National Network’s President & CEO, Jen Laws, added, “HRSA has had 30 years to figure itself out in terms of correcting some of the misaligned incentives of the 340B program. Indeed, as recently as the passing of the Inflation Reduction Act, HRSA got the nudge from federal legislators to figure it out. The agency has simply refused to do so.” CANN was the first patient advocacy organization in the HIV space to express support for the new rebate model so long as protections existed for Grantees.

Laws’ reference to the Inflation Reduction Act’s (IRA) drug price negotiation program is, in fact, part of the impetus for the litigation. Under rules established to implement the IRA, drug manufacturers are responsible for ensuring duplicate IRA and 340B discounts are not applied.  Without a rebate model, manufacturers will inevitably pay those duplicates, contrary to the IRA. 

“You can’t just say, ‘Well, good luck figuring it out’ and then disempower any ability to audit claims”, Laws commented. “HRSA doesn’t have the capacity and covered entities, PBMs, and third-party administrators have refused to do so”, he added.  “If you’ve got nothing to hide, this shouldn’t be such a big deal.” Laws argued that it is always CANN’s preference for policy issues to be hammered out by policymakers as opposed to judges with what amounts to ‘downloaded expertise’, either by litigation or legislation. “We support 340B reform. Adjusting payment models to empower manufacturers to ensure their dollars meant to benefit patients actually are benefiting patients is simply good stewardship of the program. It’s a damned shame HRSA can’t get on board with that,” he added.

Photo Source: CANN

In general, hospitals oppose the 340B rebate model. They purport that the rebate model would cause financially damaging delays in recouping rebates, would place manufacturers in charge of 340B pricing, instead of HRSA, and would overburden hospitals with bureaucratic red tape (Freedman et al., 2024). Conversely, manufacturers point out that their rebate system increases transparency, provides for prompt payment, upon validation of a claim, within 7-10 days (faster than covered entities are required to pay wholesalers), and involves only the submission of data that covered entities already are required to collect and maintain. Additionally, the platform for execution is free (J&J, Aug 2024). Ryan White clinics oppose the model out of concern for the upfront financial expenditure, but are, at least at this point, carved out of several of the proposed models, including the JJHCS model, which is limited to disproportionate share hospitals.

In filing its amicus brief in support of the manufacturers' new rebate model, ADAP Advocacy noted because of the difference between 340B hospitals and some covered entities, like clinics serving clients living with HIV, it appreciates that, in deploying rebate mechanisms, steps have been taken to carve out some 340B clinic types. 

The 340B rebate program has evolved far from its narrowly focused beginnings. Instead of being patient-focused, directly benefiting the vulnerable populations it was meant for, it has become a runaway cash cow for those knowledgeable enough to game the system and willing to put their interests above their patients. Various 340B rebate policy proposals aim to make sure rebate revenues flow in the manner they were originally meant. Patients deserve better, and the country continues to suffer excessive medical and fiscal expenditures due to 340B abuse. All eyes will be watching the outcomes of these and future 340B lawsuits.

[1] ADAP Advocacy, CF United. (2025, February 10). Motion for Leave by Amici Curiae, CF United, and ADAP Advocacy. Retrieved from https://www.adapadvocacy.org/urls/DC_Dist_Court_Johnson-Johnson_v_Dorthy-Fink_DHHS_Diana-Espinosa_HRSA_02-10-25.pdf

[2] Fein, A. J., PhD. (2022, January 14). The 340B rebate model: a solution to the contract pharmacy controversy. https://www.drugchannels.net/2022/01/the-340b-rebate-model-solution-to.html

[3] Freedman, L., Hardy, X., Santiago, A. (2024, November 12). Unpacking Johnson & Johnson’s Lawsuit Over 340B Rebate Model. Retrieved fromhttps://www.mintz.com/insights-center/viewpoints/2146/2024-11-19-unpacking-johnson-johnsons-lawsuit-over-340b-rebate#:~:text=The%20announcement%20of%20the%20rebate,protect%E2%80%9D%20the%20DSH%20covered%20entities.

[4] Johnson, Carole. (2024, September 17). Letter to JJHCS. Retrieved from https://340breport.com/wp-content/uploads/2024/09/HHS-letter-to-JJ-09.17.2024.pd

[5] Johnson & Johnson. (2024, August 23). Notice to 340B End Customers Regarding Purchases of STELARA and XARELTO. Retrieved from https://sponsors.aha.org/rs/710-ZLL-651/images/Johnson%20%20Johnson%20Innovative%20Medicine%20340B%20Rebate%20Model%20Policy%20Update%2008-23-2024_FINAL.pdf?version=0

[6] Johnson & Johnson Innovative Medicine. (2024).12 things to know about J&J’s 340B Rebate Model Policy. Retrieved from https://transparencyreport.janssen.com/12-things-to-know-about-j-js-340b-rebate-model-policy#:~:text=340B%20rebates%20will%20be%20paid,”%20until%20January%201%2C%202026.&text=J&J's%20rebate%20model%20requires%20industry,purchase%20and%20the%20product%20dispense.

[7] Rajan, G., Coates, S. (2024, November 15). Lilly sues US agency over blocking of drug-rebate program. Retrieved fromhttps://www.reuters.com/legal/lilly-sues-us-agency-over-blocking-drug-rebate-program-2024-11-15/#:~:text=Eli%20Lilly%20said%20its%20program,Sign%20up%20here. 

[8] White, S. (2024, September 30). Letter to HRSA. Retrieved from /https://transparencyreport.janssen.com/letter-in-response-to-hrs

Disclaimer: Guest blogs do not necessarily reflect the views of the ADAP Advocacy Association, but rather they provide a neutral platform whereby the author serves to promote open, honest discussion about public health-related issues and updates. 

A Call to Serve: Patient Advocates Must Step-Up During T2

By: Brandon M. Macsata, CEO, ADAP Advocacy

In December 2024, ADAP Advocacy hosted its final Health Fireside Chat of the year as part of a broader Health Policy Retreat held in collaboration with the Community Access National Network. Despite hopes that the country's better angels would be reflected at the ballot box, both organizations had been preparing for what once seemed impossible: Trump Two (T2). POSITIVELY AWARE captured the sentiments shared by members of several national and state-level HIV advocacy and policy organizations from across the country prior to the Election. But now the rubber meets the road...

ADAP Advocacy CEO Brandon M. Macsata on The Morning Meeting, 12/09/24

At the Health Fireside Chat, political commentator Mark Halperin, editor-in-chief of 2WAY Interactive and host of The Morning Meeting podcast, pointedly dished out some straight talk about how patient advocates need to view the election as a call to serve. During the 2024 presidential election, Halperin scooped that President Joe Biden was dropping out of the presidential race days before the news broke, as well as three weeks prior to the election sounding the alarm that the Harris-Walz campaign was in big trouble in the swing states' suburbs. Agreeing to disagree in a few areas, most attendees in the room understood the merits of the advice being given by a political insider.

In fact, Halperin's message echoed the words of the late Bill Arnold (former President & CEO of the Community Access National Network and former founder and board co-chair of the ADAP Advocacy Association): leave your personal politics at the door! Halperin challenged the patient advocates and other stakeholders in the room to fight for a seat at the preverbal table. Ironically, it sounds awfully similar to The Denver Principles and the "Nothing About Us Without Us" principle!

To that end, ADAP Advocacy is returning some of its targeted advocacy efforts back to the very roots of the organization's founding some seventeen years ago...GRASSROOTS, that is. Back in 2010 during the height of the ADAP Crisis that landed over 1,300 people living with HIV/AIDS in thirteen states on waiting lists under the State AIDS Drug Assistance Program (ADAP), including a couple reported deaths, ADAP Advocacy helped to galvanize state grassroots networks to raise awareness and demand action by lawmakers. It is time to re-activate these state grassroots networks to push back against those dark forces seeking to gut the social safety-net, spread misinformation about science and vaccine efficacy, and perpetuate hate and stigma against marginalized communities...many of whom are disproportionately impacted by HIV.

ADAP Advocacy CEO Brandon M. Macsata at Florida town hall in 2010

Patient advocates are encouraged to contact ADAP Advocacy at info@adapadvocacy and indicate which state they're residing in, and how they might help with advocacy efforts. Aside from targeting federal lawmakers with constituent visits to better educate them, there will be plenty of opportunity for patient advocates to influence their state legislatures on many HIV-related issues.

Additionally, ADAP Advocacy leverages patient advocates and other public health stakeholders to serve on numerous patient advisory committees. This is a call to serve!

• ADAP State Drug Formulary Patient Advisory Committee

RE: Drug Formularies

Committee Chair: Rev. Alexander Garbera (Connecticut)

ADAP Advocacy works to improve access to timely, appropriate care and treatment for people living with HIV/AIDS being served by the State AIDS Drug Assistance Programs (ADAPs) under the Ryan White HIV/AIDS Program, including promoting robust drug formularies to best serve the needs of clients. Whenever feasible, ADAP Advocacy strongly supports "open" drug formularies. Approximately 20 seats need to be filled for this committee.

Learn more about the ADAP State Drug Formulary Patient Advisory Committee.

• ADAP Long-Acting Injectables Patient Advisory Committee

RE: Long-Acting Injectables

Committee Chair: Joey Wynn (Florida)

ADAP Advocacy strives to identify best practices on how to improve patient access to long-acting injectable therapies for the treatment of (and prevention of) HIV/AIDS. As general guidelines, they would be designed to help State AIDS Drug Assistance Programs (ADAPs), and other relevant payers, remove the barriers to accessing injectable HIV-related therapies, as well as other non-ARV, health-related injectable therapies. Three seats need to be filled for this committee.

Learn more about the ADAP Long-Acting Injectables Patient Advisory Committee.

• Ryan White Grantee 340B Patient Advisory Committee

RE: 340B Drug Pricing Program

Committee Chair: Guy Anthony

ADAP Advocacy ensures the voice of people living with HIV/AIDS shall always be at the table and the center of the discussion, including on how supports and services are financed under the Ryan White HIV/AIDS Program. To that end, reforming the 340B Drug Pricing Program is of paramount concern by returning the program to its original legislative intent: putting the patient first. Two seats need to be filled for this committee.

Learn more about the Ryan White Grantee 340B Patient Advisory Committee.

ADAP Advocacy has long prided itself on using its Values Statements to define its advocacy work. Among these values, that the voice of persons living with HIV/AIDS shall always be at the table and the center of the discussion. Patient advocates must step-up during T2, so join the fight!

Photo Source: shutterstock.com

Fireside Chat Retreat in Washington, DC Tackles Pressing Public Health Issues

By: Brandon M. Macsata, CEO, ADAP Advocacy, and Ranier Simons, ADAP Blog Guest Contributor

ADAP Advocacy hosted its Health Fireside Chat retreat in Washington, DC, as part of a broader health policy retreat convened collaboratively with the Community Access National Network (CANN) and its Industry Advisory Group. Board members from both organizations, as well as respective consultants and funders, assembled to discuss pertinent public health issues facing patients in the United States. The Health Fireside Chat convened on Friday, December 6th. The 27 diverse stakeholders discussed Trump Two, one-party rule returning to the nation’s capital, Inflation Reduction Act, 340B Drug Pricing Program, Prescription Drug Affordability Boards (PDABs), AIDS Drug Assistance Program’s drug formularies, and long-acting injectables. 

Photo Source: Getty Images

The Health Fireside Chat kicked off with a political recap from political commentator Mark Halperin, editor-in-chief - 2WAY Interactive. During the 2024 presidential election, Halperin had scooped that President Joe Biden was dropping out of the presidential race days before the news broke, as well as three weeks prior to the election sounding the alarm that the Harris-Walz campaign was in big trouble in the swing states' suburbs. 

Halperin shared his perspectives on what a second Trump Administration might look like, both from a potentially positive viewpoint, as well as a not-so-positive one. He offered some predictions on the Cabinet nominations, again noting where some could serve as potential change agents to improve public health – but also emphasized the unpredictability behind some of those same nominees if confirmed by the U.S. Senate. Halperin offered strong advice on the need to “get in the room” for the important conversations, which he argued won’t happen by merely attacking the incoming administration. Despite the extremes of both parties gaining more power, he offered examples whereby the “center” still holds a lot of weight over the legislative process to do good. Halperin took questions about what Trump Two and the GOP-led Congress might do for HIV, sharing even more advice on how to navigate those waters.

Mark Halperin discusses political landscape and health policy

The day-long strategy session was designed to capture key observations, suggestions, and thoughts about how best to address the challenges being discussed at the Health Fireside Chat. The following represents the attendees:

• Guy Anthony, President & Founder, Black, Gifted & Whole Foundation
• Donna Christensen, former Member of Congress
• Erin Darling, Associate Vice Pres. & Counsel, Federal Policy, Merck
• Amy Dempster, Director, Issue Advocacy and Alliances, Genentech
• Robert Dorsey, Chief of Staff, DC Department of Small & Local Business Development
• Alexander Garbera, Member, New Haven Mayor’s Task Force on AIDS, City of New Haven, CT
• Dusty Garner, Patient Advocate
• Patrick Ingram, Implementation Project Manager, Midwest AETC
• Ashley John, Director, Issue Advocacy, Novartis
• Lisa Johnson-Lett, Peer Support Specialist, AIDS Alabama
• Amanda Kornegay, President, Kornegay Consulting
• Jen Laws, President & CEO, Community Access National Network
• Darnell Lewis, Patient Advocate
• Brandon M. Macsata, CEO, ADAP Advocacy
• Travis Manint, Policy Consultant, Community Access National Network
• Maria Mejia, Patient Advocate
• Judith Montenegro, Program Director, Latino Commission on AIDS
• Theresa Nowlin, Patient Advocate
• Kassy Perry, President & CEO, Perry Communications Group
• Amanda Pratter, Director, Policy Advocacy, Gilead Sciences
• Kalvin Pugh, Policy Consultant, Community Access National Network
• Josh Roll, Director, Strategic Alliances & Issue Advocacy, Bristol Myers Squibb
• Ranier Simons, Policy Consultant, Community Access National Network
• Cindy Snyder, Retired
• David Spears, Creatives Consultant, ADAP Advocacy
• Jennifer Vaughan, Patient Advocate
• Joey Wynn, Grants & Contract Manager, Holy Cross Hospital

ADAP Advocacy is pleased to share the following brief recap of the Health Fireside Chat.

This particular Fireside chat did not have its standard format of specific formal presentations followed by discussion. It was more free flowing, consisting of an exchange of ideas surrounding many sub-topics and all surrounding public policy strategies. One of the most important threads of discourse was navigating policy and advocacy work in dealing with the incoming Trump Administration. A significant concern is figuring out how to manage hostile spaces in order to effect needed change.

The reality is that Trump is the president-elect. Moreover, albeit narrow, Republicans do have majority control across the board. This potentially makes it harder to achieve policy and advocacy goals because effecting change requires being in the room at the table when things are being done. A prevailing sentiment is that those rooms and tables are not welcome to racially and ethnically diverse, sexually diverse, and vulnerable communities that traditionally are adversely affected by and targeted by right-wing conservative ideology and policies. Yet, on some issues, Republican interests could be better aligned with patient interests on things like access to therapies (i.e., right-to-try), or reforming the abuses by big hospital systems and mega service providers under the 340B Drug Pricing Program.

An important focus of group discourse surrounded staying true to marginalized communities while speaking truth to power. The consensus is “wins” can be scored in unfriendly spaces by focusing on common ground, and in doing so doesn’t negate the deeply rooted concerns in other policy or political areas. As the late Bill Arnold often argued, “In this space, you have to leave your personal politics at the door if you’re going to achieve anything meaningful.” One example that was cited was the success in harm reduction policies by the North Carolina Harm Reduction in the Tarheel State.

Photo Source: JazzHR.com

Similarly, it is essential to not leave certain groups behind when broader community discussions are happening around legislation. It is necessary for advocates to figure out how to strategically call out grievances without compromising opportunities to access the players required to effect change. Sometimes, it is a matter of identifying the appropriate messenger for a specific audience. This does not mean the sociologically identified middle-aged white woman or cis-gendered heterosexual white male must be the vehicle to get a seat at every table. It does mean it’s wise to navigate relationships and understand the parties involved to determine the best messengers for different steps of strategic processes. The group had strong consensus that more women of color need to be invited to these proverbial tables. If for nothing else, t requires trust between the messengers and the communities they represent. The most effective messengers for an issue may not always look like or have the lived experience of some of the people for which they are representing. Thus, trust must be built in that they are effectively representing the needs and interests of affected communities when messengers are operating in hostile spaces. Humanizing issues with policymakers is a way to work through the muck and mire of ideological toxicity.

Another significant portion of this Fireside Chat discourse revolved around federal versus state issues. ADAP Advocacy collaborates with CANN to effect change on state and federal matters, as both have specific inroads of expertise. It is increasingly likely that more issues will be impacted at the state level more so than at the federal level. For example, there is a lot 340B-related activity and PDAB (Prescription Drug Affordability Board) legislation occurring on the state level. On the federal level, PEPFAR, Ending the HIV Epidemic, and the possibility of a Ryan White reauthorization are several issues of concern. There is strong evidence to suggest that the new incoming Republican majority in Congress plans to take a hard look at all the sunset programmatic laws as a way to achieve "savings" in the federal budget.

CANN shared a recently released video on PDABs, and how these boards are embarking on inadvertently creating a service delivery crisis for patients living with HIV. The video can be viewed online, here. Additionally, ADAP Advocacy shared a sneak peek of its new patient-centric advocacy tool highlighting why the 340B Program needs reform. Some discussion centered around California's Proposition 34, and embracing what voters achieved to bring better accountability and transparency to the 340B program. 

Photo Source: CANN

HIV is the tip of the spear that opens the door to conversation that makes room for navigating other community issues. Group discourse emphasized the need to strengthen the “Grassroots-to-Capitol Hill” pipeline of advocacy and influence. It was deemed necessary to enhance communication among major advocacy organizations such that there is a commonality of messaging on major issues when Capitol Hill interests inquire for guidance about community concerns. Additionally, it is necessary to identify members, such as some in the House, who can be ‘allies’ knowingly or unknowingly, to help influence the influencers to target things in a bipartisan manner to move the needle in favor of vulnerable and marginalized communities. Most importantly, it is imperative to open their eyes to how positively affecting change for these communities is beneficial to the general population as well.

ADAP Advocacy’s Health Fireside Chats are deeply rooted in the diverse voices who contribute valuable insight from various spaces of their expertise and lived experiences, all focused on the same issue of effecting positive change. In addition to lively and productive group discussion, individual spontaneous conversations occur between people who would otherwise not be in the same room. Virtual meetings are effective and have their place. However, there are times when the power and value of being physically present is undeniable.

Additional Fireside Chats are planned for 2025.

Disclaimer: Guest blogs do not necessarily reflect the views of the ADAP Advocacy Association, but rather they provide a neutral platform whereby the author serves to promote open, honest discussion about public health-related issues and updates. 

Voters Put Guardrails on 340B Program, Also Aiding Reform Efforts to Ebb Abuse

By: Ranier Simons, ADAP Blog Guest Contributor, and Marcus J. Hopkins, ADAP Blog Guest Contributor

Judges aren’t the only ones putting guardrails on the 340B Drug Pricing Program. On November 5th, 2024, voters in the state of California passed Proposition 34 (Prop 34), enacting the Protect Patients Now Act (2024; PPNA) by a margin of 50.9% to 49.1% (California Secretary of State, 2024c). The PPNA, which goes into effect on January 1st, 2025, requires covered entities who receive revenues through the 340B drug pricing program to “…spend at least 98 percent of their net revenues generated in this state through the discount prescription drug program on direct patient care” (CSOS, 2024b).

Photo Source: The Real Deal

The issue of using 340B-related revenues for purposes other than their original intent has been one that has stoked calls for reform, particularly considering ADAP Advocacy’s 2024 report highlighting how 340B-eligible covered entities—particularly hospitals—have seen significant increases in revenue accompanied by significant decreases in at-cost charity care provision. Overall, hospitals receiving 340B revenues saw average revenues increases of 217% after becoming eligible for the 340B Program while decreasing charity care provision as a percentage of annual revenues by an average of 15%. HIV organizations saw revenue increases averaging 2,095% after becoming eligible for the 340B program (Hopkins, Macsata, & Laws, 2024).

The California Chronic Care Coalition's (CCCC) President and CEO, Elizabeth Helms, explained her organization's support of Prop 34 prior to the election to The Sacramento Observer, "We are patient-centric. We care that people are able to access the care that they need, including their medications, seeing physicians. And when we see that not happening, or we start hearing it from the field that (people are) having problems, (people) can’t do this, (people) can’t afford this, (people) can’t get timely care; you know, (people are) having to choose food over medicine or all these other things. Proposition 34 is important. Especially to people who need care, who can’t get it” (Henderson, 2018).

The text of Prop 34 was very specific in its justification for passing the amendment:

...some safety net health care providers have manipulated the program to receive enormous markups on the discounted prescription drugs they receive and then stick taxpayers with the added cost. Instead of using this massive windfall to help patients, the worst offenders have used their fortunes to purchase luxury coastal condominiums, wasted hundreds of millions of dollars on failed political campaigns, put elected politicians on their payrolls, and acquired low-income multifamily housing complexes that are operated as slums (CSOS, 2024b).

Proposition 34 has many layers. It is an attempt to codify the current statewide negotiation of Medi-Cal drug prices in addition to being a roadmap to prevent potentially bad actors from abusing net revenues received from the 340B Program. In 2019, Governor Gavin Newsome issued Executive Order N-01-19, which required the California Department of Health Care Services (DHCS) to migrate all Medi-Cal pharmacy services from managed care (MC) to fee-for-service (FFS) (Dept. of Health Care Services, n.d.). In addition to strengthening the state’s negotiation buying power, the order standardizes pharmacy benefits throughout the entire state, and greatly improves access to Medi-Cal beneficiaries by creating a pharmacy network that includes approximately 94% of the state’s pharmacies (Dept. of Health Care Services, n.d.). Proposition 34 seeks to “permanently authorize the Medi-Cal Rx program so that its expanded patient access and continued access and cost-savings can be continued in perpetuity.”(Secretary of State, 2024). Executive orders are not permanent and can be revoked, legally challenged as being unlawful, or ended by a changing political guard. Codifying the order will ensure it lives even after the Governor is no longer in office.

Proposition 34 strikes against the exploitation of the 340B Program by requiring, what it describes as prescription drug price manipulators, to spend at least 98% of revenues generated from participation in the program on direct patient care. As part of the oversight to enforce this requirement, the entities must submit annual reports detailing their statewide and nationwide gross and net revenues obtained from the 340B Program, as well as details on how the program revenues were spent (Secretary of State, 2024).  Non-compliance results in license revocation and a ban from obtaining operating licenses for ten years. Additionally, tax exempt status is revoked for ten years, and an entity is rendered ineligible for state and local grants and contracts for ten years (Secretary of State, 2024). Moreover the proposition grants several state departments the authority to standardize the specifics of the accounting reporting requirements (Secretary of State, 2024). This ensures that entities cannot obscure their numbers.

The controversy that has surrounded Proposition 34 is due to its very specific definition of ‘prescription price manipulator’. The proposition describes such an entity as one the fulfills all of the following requirements: it utilizes the 340B Program to obtain medication, has spent more than $100 million on non-direct patient care activities during any ten-year period, and is currently or has a history of owning and operating highly dangerous multifamily dwellings (Secretary of State, 2024). Additionally, said entity meets one of the following criteria: has had a license to provide healthcare services, has currently or formerly contracted with the Centers for Medicare and Medicaid Services (CMS) as a Medicare special needs plan, or presently or in the past has had a license to operate as a clinic or a pharmacy”(Secretary of State, 2024). While there are many entities who improperly utilize 340B funding, only one group seems to embody the proposition’s multifaceted assignment of characteristics – AIDS Healthcare Foundation (AHF).

AHF has faced significant scrutiny for its activities over the past three decades, particularly in states where voters are able to vote directly on laws, such as Prop 34. Most recently, AHF has come under fire for its 2017 purchase of the Madison in Los Angeles’ Skid Row for use as part of its venture into providing housing services for lower-income people. A 2023 investigation by The Los Angeles Times reported that tenants:

“…live[d] in squalid conditions with dozens under the threat of eviction. Roaches and bedbugs infest rooms. Electricity, heating and plumbing systems fail. Elevators malfunction. Code enforcement and public health complaints at foundation buildings are more than three times higher than those owned by other Skid Row nonprofits. Meanwhile, the foundation has evicted tenants over debts of just a few hundred dollars, eviction records show, while suing nearly 70 others for back rent in small claims court (Dillon, Smith, & Oreskes, 2023).”

Photo Source: The Los Angeles Times

These incidents, which resulted in a class action suit on behalf of AHF’s tenants being filed in 2020 and settled in September of this year (Wagner, 2024), along with various other lawsuits that AHF has settled over the past six years, provide the examples specifically mentioned in the Prop 34 text, above. AHF, for its part, came out vocally against Prop 34 in language that was included in the CSOS’s Quick Reference Guide:

Prop. 34—The Revenge Initiative. California Apartment Association, representing billionaire corporate landlords, doesn't care about patients. Their sole purpose is silencing AIDS Healthcare Foundation, the sponsor of the rent control initiative. 34 weaponizes the ballot, is a threat to democracy, and opens the door to attacks on any non-profit (CSOS, 2024a).

While Prop 34’s language obliquely seems to target AHF, generally speaking any alleged misuse of 340B revenues in ways that do not directly improve patients’ access to healthcare services and medication is an issue that ADAP Advocacy has reported on for over a decade. While AHF qualifies for the 340B Drug Pricing Program as a HIV healthcare provider, other types of covered entities—providers and pharmacies that qualify to purchase medications at significant discounts, dispense them to outpatients, and receive revenues in the form of rebates for the difference between the purchase price and the list price—including major hospitals and hospital systems, are facing calls to be more forthcoming with information about the amount they receive in 340B revenues and how those revenues are spent.

Summarized ADAP Advocacy's CEO, Brandon M. Macsata, "Matthew 26:52's proverb, 'Live by the sword, die by the sword', best characterizes what happened in California on November 5th. For the last decade, AHF has routinely played Russian roulette with ballot initiatives to advance its interests in California and Ohio, even ones that had nothing to do with healthcare. Ironically, even though their ballot initiative strategy is marked by loss after loss, in the end they got beat at their own game."

It is unclear from the Prop 34 text whether or not the prop’s sponsors intended for other types of covered entities to be subject to the law, as hospitals and other types of covered entities are not required under federal law to report 340B revenues in their annual tax filings. The text of Prop 34 requires any “prescription drug price manipulators” that hold tax exempt status, a pharmacy license, a health care service plan license, or a clinic license to comply with the PPNA. In order to comply with the PPNA, covered entities must submit an annual detailed accounting of both its California statewide and nationwide gross and net 340B revenues for the prior year. If an entity falls out of compliance, they are subject to the following penalties:

(a) Any and all California pharmacy licenses, health care service plan licenses, or clinic licenses held by the prescription drug price manipulator shall be permanently revoked. 

(b) The prescription drug price manipulator shall be prohibited from applying for, or obtaining or possessing, a California pharmacy license, health care service plan license, or clinic license for a period of 10 years.

(c) Any person serving as an owner, chief executive officer, chief financial officer, chief administrative officer, chief operating officer, president, or any other similar position exercising significant influence or control over the prescription drug price manipulator at the time the violation of Section 14124.44 occurred shall be prohibited from serving as an owner, officer, director, or employee of a California licensed pharmacy for a period of 10 years.

(d) The prescription drug price manipulator shall lose, and no longer be eligible for, tax-exempt status in the State of California […] and shall instead be subject to the Revenue and Taxation Code and other state laws as a taxable organization. The prescription drug price manipulator shall be prohibited from reapplying for, or again being granted, tax-exempt status in this state for a period of 10 years.

(e) The prescription drug price manipulator shall be ineligible to receive any new or renewed state or local grants or contracts for a period of 10 years (CSOS, 2024b).

The big question in all of this well be whether or not any of this can—or rather, will—be enforced. While the California proposition system provides voters with great opportunities to directly impact the laws under which they live and work, bring a proposition to the ballot is an expensive exercise that is always funded (and opposed) by large financial interests.

Photo Source: The Sacramento Bee

In addition to opposition by AHF, Prop 34 was opposed by the National Organization for Women, Consumer Watchdog, Coalition for Economic Survival, CA Democratic Parry Renters Council, Dolores Huerta Foundation, Unite HERE Local 11, and the Monterey County Renters United (No on 34, 2024). In the effort of full disclosure, ADAP Advocacy was one of the organizations that came out in favor of Prop 34, as well as 25 other organizations and 12 news organizations (Yes on Prop 34, 2024).

Jen Laws, President and CEO of the Community Access National Network (CANN) reflected, "CANN supported Prop 34 because it aligned with the original intent of the 340B statute – serving patients. 340B revenues should never be used to further political initiatives or programs that leave patients behind with regard to comprehensive care."

The PPNA will, if fully enforced, be one of the broadest and strictest state-level attempts to overhaul and regulate how 340B revenues are used. ADAP Advocacy will continue to monitor the impacts of Prop 34 as it is implemented.

References:

Cadelago, C. (2023, August 30). California proposal would sideline a prolific ballot measure player. Politico: News. https://www.politico.com/news/2023/08/30/california-proposal-ballot-measure-00113475

California Secretary of State. (2024a). Quick Reference Guide, Prop 34. California Secretary of State: California General Election. https://voterguide.sos.ca.gov/quick-reference-guide/34.htm

California Secretary of State. (2024b, November 05). General Election Voter Information Guide - Proposition 34 Text of Proposed Laws. California Secretary of State: California General Election. https://vig.cdn.sos.ca.gov/2024/general/pdf/prop34-text-proposed-laws.pdf

California Secretary of State. (2024c, November 10). State Ballot Measures - Statewide Results. California Secretary of State: California General Election. https://electionresults.sos.ca.gov/returns/ballot-measures

Dillon, L., Smith, D., & Oreskes, B. (2023, November 16). Inside the world's largest AIDS charity's troubled move into homeless housing. Los Angeles Times. https://www.yahoo.com/news/inside-worlds-largest-aids-charitys-110010062.html

Department of Health Care Services. (n.d). Medi-Cal Rx. Retrieved from https://www.dhcs.ca.gov/provgovpart/pharmacy/Pages/Medi-CalRX.aspx

Henderson, Edward (2024, September 18). On Your November Ballot: Prop 34 Aims to Expand Medi-Cal Prescription Drug Funding — With Restrictions. CBM Newswire - The Sacramento Observer. https://sacobserver.com/2024/09/on-your-november-ballot-prop-34-aims-to-expand-medi-cal-prescription-drug-funding-with-restrictions/

Hopkins, M. J., Macsata, B. M., & Laws, J. (2024, July). The 340B Drug Rebate Program and its potential impacts on annual revenues, executive compensation, and charity care provision in eligible covered entities. Nags Head, NC: ADAP Advocacy. https://www.adapadvocacy.org/pdf-docs/2024_ADAP_RW_340B_Project_Asset_6_ExecComp_FInal_Report_06-05-24.pdf

Secretary of State. (2024). Text of Proposed Laws. Retrieved from https://vig.cdn.sos.ca.gov/2024/general/pdf/prop34-text-proposed-laws.pdf

Wagner, D. (2024, September 16). AIDS Healthcare settles. The Brief: News. https://laist.com/brief/news/housing-homelessness/los-angeles-aids-healthcare-foundation-michael-weinstein-madison-hotel-settlement-rent-control-proposition-prop-33

Disclaimer: Guest blogs do not necessarily reflect the views of the ADAP Advocacy Association, but rather they provide a neutral platform whereby the author serves to promote open, honest discussion about public health-related issues and updates.