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. 

Reflections from an HIV Advocate's Journey: Jax Kelly

By: David "Jax" Kelly, JD, MPH, MBA, President at Let's Kick ASS (AIDS Survivor Syndrome) Palm Springs

It was my first time waking up in a hospital bed. Seventeen years ago I was in a private room at the end of an unusually quiet maternity ward. Attached to a vein in my left arm was one of those drip bags that was supposed to rehydrate me. No flowers or cards. Not even my partner of 14 years.

But I was grateful he brought me here.  

It's unlikely that he brought me to that hospital out of gratitude. I already had been sick for weeks. A cough had lingered so long I could only sleep if I lay on my side at a certain angle. When I bent over in the shower, I had to make sure I took a deep enough breath so I could come back up. At the hospital I was shocked to discover I weighed 144 pounds. My home scale said "65" and I thought the first digital number wasn't working. It turned out the scale had been switched to read in kilograms. But there's nothing like being sick if you want to lose a few pounds!

In the hospital, I had time to assess a lot of things in my life, including my long-term relationship. Laying in a hospital bed and being told you have AIDS can change your world. I didn't have one of those "life flashing before my eyes" moments, but I do remember thinking that if I died I felt I had lived a life with many accomplishments. I could die happy. But with a new lease on life, I started thinking of other clichés: "life's too short", "live life to its fullest" and most of all, "clean house".

I began a journey with a therapist who helped me come to terms with my diagnosis. Physically, I had not seroconverted for over twenty years since the pandemic begun. Emotionally, I had witnessed the shock and horror of uncontrollable disease on a generation I was supposed to gain wisdom and grow old with.The therapy unpacked a lot but took a break when I felt strong enough to find my own path.

The partner is now the "ex," and a new boyfriend has become my husband. My gratitude is shared between my new loves: him and members of the HIV positive community. The weight I regained is thrown around to advocate for HIV and aging services. My breath is stronger and louder to create meaningful change. Now I live with purpose, focus, and ability.

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.

Reflections from an HIV Advocate's Journey: Jennifer Vaughan

By: Jennifer Vaughan

Laying on my couch, shrouded in illness, shock and shame, I somehow knew very early on that I would be educating people about what happened to me. It was February 2016 and I had just been diagnosed with HIV and AIDS. I've always been an open book, so that glimpse into the future felt realistic, but never could I have imagined where my advocacy would take me.

With the blessings from my family and boyfriend (at the time), now husband, I shared my story through social media. Many people living with HIV would love nothing more than to share their status and story with the world to educate and help others, unfortunately we live in a world where HIV stigma is so profound that HIV+ individuals are forced into silence. It's never lost on me how privileged I am to speak freely about it.

I started with Facebook and quickly transitioned to YouTube bringing an overall larger audience to my story. In turn, I was bombarded with questions from all over the world and therein my advocacy journey began.  It was gratifying to answer questions knowing I was making a difference.

I realized quickly that putting myself "out there" meant taking the good with the bad. The joy of connecting with another poz person, knowing you've somehow given them a bit of renewed strength by being public is motivating to say the least. Even better at times, is knowing you've educated someone who was open to information they otherwise never knew. For example, I've had people reach out to me concerned about an HIV+ family member being near their children. I'm able to take these opportunities and shed light about HIV myths on a personal level that can actually make a difference. Not surprisingly though, the stigma that oppresses most living with HIV is no stranger to advocates. Sometimes the louder we are, the louder the uneducated and fearful roar back. It comes with the territory, as does growing a very thick skin.

My advocacy has granted me trips to AIDS2018 in Amsterdam, two USCAs, several podcast interviews and magazine articles about my story. In 2018, I had the utmost honor as Keynote Speaker at ADAP's Advocacy Association's Annual Conference in Washington D.C.and was recently asked to join their Board of Directors, a position I now covet. Dreams you never knew you had really do come true.

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.

Reflections from an HIV Advocate's Journey: Mark Janes

By: Mark Janes, California Advocate

My journey with HIV began in 1995, and I still remember the first time I discussed AIDS publicly, in a Speech Communication class I was attending, in 1997. The final segment was to be a Persuasion speech, and I decided to speak in favor of expanding resources for the prevention of, and more support for those living with, AIDS. My first line was, My name is Mark Janes, and I am a person living with AIDS.” I went on to discuss why prevention was money well spent, research our best hope, and why those who have it deserve support and compassion.

I had numerous struggles with opportunistic infections, including chemo for Kaposi’s Sarcoma, which was relatively mild in me, but not entirely invisible. I agreed to be involved in numerous drug trials, some of which were truly hard (like eight large capsules at a time), and at least one of which is now listed as an allergen on my chart. I remember the summer of 2002 receiving a call from my HIV pharmacist, offering a trial for a drug then called T-20, that was injected twice daily. Six months of that finally gave me viral control. The day that blood was drawn was March 3, 2003.

My re-entry into the world of HIV support and advocacy began on Facebook; I was poking around in a few HIV Groups there, when a woman by the name “Maria HIV” asked me if I would be willing to help her admin a new Group she’d started, “International Group for people with HIV/AIDS, and the people who love us.” At that time it had maybe 400 members; it currently has around 14,000 and is among the largest of its kind on Facebook. I soon found myself answering all sorts of questions from around the globe, and have learned many valuable lessons both from Maria Mejia and from the Group as a collective.

It was Eddie Hamilton who suggested that I apply to attend the ADAP Advocacy Association’s annual Conference in Washington, DC. I did so, and was approved for a partial scholarship; my parents paid for my airfare. It was the first time I’d flown since 1999, and an extraordinary welcome back: Virgin America Flight 1, from San Francisco to Washington National; a World War II Honor Flight- veterans going to see the newly-completed memorial. The flight left on time and arrived a few minutes early. The vets were treated like royalty and the rest of us weren’t forgotten. The plane was showered by the airport fire trucks on arrival. But the best was yet to come: I was paired with Bob Skinner, who is both a strong advocate and a really good man in general. I learned a lot, and grew a lot, that first time. It made me more effective online.

The following year I attended AIDSWatch, and actually met my Congressman; he was gracious enough to give us a couple minutes of his time. That September I attended USCA, and had a impromptu teaching moment with the TSA as I was going through security at Washington National. The agent told me he “felt something loose on my upper thigh” and that secondary screening was needed. We went into a small room, I pulled my pants down, and showed him the loose skin, “From just under a decade of injecting Fuzeon twice a day, to treat HIV.”

I hear from people newly diagnosed from all around the globe on an almost daily basis. I do my best to offer advice that is as accurate as possible, and I also believe it’s important that our representatives in Congress are aware of our existence and what our needs are. Simply put, no government tries to just dump money on random items; there needs to be a call, a demand, for resources. I still believe that people speaking out and asserting their needs, is part of living in a nation like the United States, and my main issue is HIV.

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.

California has an ADAP Problem

By: Marcus J. Hopkins, Blogger

A contentious switch in contractors approved by the California Department of Health’s Office of AIDS (CDPH/OA) in 2016 has had several negative consequences, including two lawsuits from the previous contractor, lost applications, dropped coverage, a broken application system, and wrongly denied coverage for California ADAP clients. In other words, it is a complete mess in California.

The AIDS Drug Assistance Program (ADAP), Part B of the Ryan White CARE Act (RWCA) is designed to be the “payer of last resort” for patients living with HIV/AIDS whose incomes fall near enough to the Federal Poverty Level (FPL) to make affording the cost of care prohibitive, if not entirely unaffordable. As such, ADAP clients come to rely upon the uninterrupted delivery of those services in order to effectively treat their HIV infection, address co-morbidities, and achieve and maintain the viral suppression that makes transmission of the virus highly unlikely. By those measures the state of California has abjectly failed the charges whose health the ADAP program was intended to address.

The process that resulted in California’s dereliction of duty began in October 2015, when the initial Request for Proposal Process (RFP) was sent out. The initial RFP followed state guidelines using a 1,000-point allocation system to award the bid to contractors. Consistent with government regulations, the actual monetary bid for the contract (“Cost Calculation”) was weighted at 75% (750 points) and “Technical Calculation” requirements were weighted at 25% (250 points), with a contract term of three years with two one-year extensions for a total of a five-year contract (Hews, 2016).

Using this state-mandated RFP, the then-existing contractor, Ramsell Corp (Oakland, CA) submitted a bid of $900,000 per year, with no increases over the five-year period, for a total of $4.5 million for the Enrollment Benefits Management (EMB) part of the program – the process where clients apply for coverage and maintain enrollment in the program. A competing bid was submitted by Michigan-based A.J. Boggs & Co., Inc.: $4,699,585 for the first year, $2,212,563 for the second, $2,208,767 for the third, $2,211,532 for the fourth, and $2,235,012 for the fifth and final year, totaling $13,567,459 – a bid roughly $9.067 million higher than Ramsell’s (Hews).

Under the terms of the RFP, point allocation to the lowest bidder – Ramsell – would have been 750 points, while Boggs would have received 296 points, using the state-mandated formula. That was the case, until CDPH/AO Procurement Officer, Jeffrey Mapes, changed the terms of the RFP on December 03, 2015, reversing the calculations so that the Technical Calculation became weighted 75% and the Cost Calculation, weighted by 25% (Hews). Mapes’ actions, along with simple math miscalculations, led the Boggs being awarded the new contract on March 04, 2016.  Ramsell, unaware of these changes and miscalculations, submitted a Freedom of Information Act (FOIA) request for all documents related to the Boggs bid – a request whose fulfilment was delayed and incomplete. 

Realizing the errors in the process, Ramsell submitted a protest on April 06, 2016, from which the following excerpt comes:

We are concerned that the amount of time that has been allotted for system beta testing and enrollment worker training is not adequate. The Office of AIDS has notified us that the new system is still being developed, beta testing has not yet begun, and enrollment worker training will not begin until just weeks before the July 1st transition.  Further, the system is transitioning from one to three contractors which will require additional coordination to effectively serve clients. In order to ensure a seamless transition, we believe additional time is necessary to adequately beta test the new system, train enrollment workers, and ensure time for feedback on what works properly and what needs improvement (Otiko, 2016).

In June 2016, Ramsell Corp filed two separate suits related to the EBM and the Pharmacy Benefits Management (PBM) contract awarded to Magellan Rx Management, LLC. The EBM suit alleges that:

…after Ramsell complained about major defects in the unfair procurement, CDPH cancelled the award to Boggs, and then gave them an illegal, sole-sourced contract only days later in violation of the requirements of the State Contracting Manual. The lawsuit also notes that the Boggs’ bid was about three times higher ($9 million more) than the Ramsell bid (Allen & Barajas, 2016).

The PBM suit alleges that:

…in procuring the new contracts, CDPH: (1) failed to follow its own rules as set forth in the Request for Proposals (RFP); and (2) conducted the procurement in a biased manner that was slanted in favor of the out-of-state companies (Allen & Barajas).

Despite these lawsuits being filed, CDPH/OA continued the transition to the three new vendors, which also included Pool Administrators Inc. (which covered the Health Insurance Premium Payments (OA-HIPP) and Medicare Part D premium payment programs), effective July 01, 2016 (Grimes, 2016). Since that transition occurred, ADAP clients, healthcare providers, clinics, pharmacies, and AIDS Service Organizations (ASOs) have experienced numerous problems accessing coverage.

Clients have been turned away at pharmacies, forced to postpone medical procedures, and some have been dropped from the program, altogether (Gorman, 2017). Additional complaints from patients and caseworkers allege that reimbursement claims have been repeatedly rejected (Allday, 2017) and patients have been dropped from the health insurance because ADAP failed to send premium payments to the correct address (Gorman). Dr. Karen Smith, director of California’s Public Health Department, stated in a letter to state Senator Scott Wiener (D-San Francisco) that: 

Shortly after [the department switched to new contractors in July 2016], …CDPH received a letter from constituents expressing concerns that there were issues for some clients receiving medications.  …As you note, the ADAP portal was unexpectedly unavailable for ADAP enrollment worker and client use as of November 29, 2016, due to information security vulnerabilities in the system. …To ensure uninterrupted client access to medications, we have extended client eligibility to their next reenrollment or recertification date occurring after June 30, 2017 (Hemmelgarn, 2017). 

California State Senator Senator Scott Wiener; Gloss Magazine

Dr. Smith noted that her agency identified two separate breaches of information, and that impacted clients were notified. Those breaches, however, led to the online portal, where patients could register, re-enroll, and re-certify, being taken offline indefinitely on November 29, 2016. As of January 23, 2017 – just seven days short of the January 30 extension deadline – that online portal has not been replaced. This failure on the part of Boggs forced patients and caseworkers to register for ADAP by fax – a process that took weeks, due to a shortage of both fax machines and customer service workers to handle the load (Allday).

In response to patients being unable to access pharmacy services due to complications with PBM contractor, Magellan, the staff at Magellan were authorized by the state 

…to provide real-time, 24 hours a day, seven days a week authorizations to pharmacies for a 30-day supply of medications for ADAP clients with active eligibility who experience access issues at the pharmacy (Hemmelgarn). 

While this step is a nice quarter-way measure to ensure that active patients – those who have not been erroneously dropped or unable to enroll or certify – can gain access to their lifesaving HIV medications, it in no way serves as a long-term solution to address the myriad disasters that this ill-advised contract switch has created. For those patients, providers, and caseworkers who have been unable to successfully register clients, process claims, pay premiums, or be successfully reimbursed, this disastrous transition is entirely unacceptable.

Further frustrating already harried caseworkers and providers is that this transition from one California-based, minority-owned contractor (Ramsell) to three out-of-state contractors, one of which is inexperienced in the arena, could and should have been entirely avoided, had the CDPH/OA complied with the state-mandated RFP process and properly calculated the points, even within the new calculation. That Ramsell Corp, a company that had successfully provided services to California’s ADAP program for nearly twenty years, was summarily dismissed and their bids rejected in what appears to be retaliation for filing a formal protest in response to the procurement process is foolish behavior on the part of the CDPH/OA.

CDPH/OA’s failure to follow even the most basic statutes indicates the need for a new Procurement Officer, as Jeffrey Mapes’ unexplained and potentially illegal (Hews) actions indicates that he is unfit for the position. California’s patients deserve better, and until there is a permanent fix in place, it is incumbent upon all California residents, advocates, caseworkers, and providers to keep the pressure on the CDPH/OA.

According to sources, the Health Resources & Services Administration (HRSA) at the U.S. Department of Health & Human Services is aware of the situation and monitoring it.


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.

References:

• Allday, E. (2017, January 23). HIV patients call drug program fractured after shift in operators. San Francisco, CA: San Francisco Chronicle. Retrieved from: http://www.sfchronicle.com/health/article/HIV-patients-call-drug-program-fractured-after-10874920.php
• Allen, S. & Barajas, H. (2016, June 16). Lawsuits Charge California Department of Public Health With Placing AIDS/HIV Patients at Risk. Oakland, CA: Ramsell Corp: PR Web. Retrieved from: http://www.prweb.com/releases/2016/06/prweb13491971.htm
• Gorman, A. (2017, January 23). Crucial California HIV program in disarray after contract switch. Sacramento, CA: The Sacramento Bee: California Healthline. Retrieved from: http://www.sacbee.com/news/local/health-and-medicine/article127340804.html
• Grimes, K. (2016, June 29). Fishy Circumstances as CA Department of Public Health Replaces 20-Year Vendor. CA: Flashreport. Retrieved from: http://www.flashreport.org/blog/2016/06/29/fishy-circumstances-as-ca-department-of-public-health-replaces-20-year-vendor/
• Hemmelgarn, S. (2017, January 18). AIDS drug assistance program hits a snag. Los Angeles, CA: The Pride, The Los Angeles LGBT Newspaper. Retrieved from: https://thepridela.com/2017/01/aids-drug-assistance-program-hits-snag/
• Hews, B. (2016, June 30). Questionable State Bid Process Leaves California HIV/AIDS Community In Jeopardy. Cerritos, CA: Hews Media Group. Retrieved from: http://www.loscerritosnews.net/2016/06/30/questionable-state-bid-process-leaves-california-hivaids-community-in-jeopardy/
• Otiko, M. (2016, June 28). State Agency Sued Over Questionable Bidding Process. Sacramento, CA: The Sacramento Observer: California Black Media. Retrieved from: http://sacobserver.com/2016/06/ramsell-corp-files-lawsuits-against-state-agency-over-questionable-bidding-process/

Californication and the Battle Over Drug Pricing

By: Brandon M. Macsata, CEO, ADAP Advocacy Association

POLITICO reported this week that California's controversial Prop 61, entitled the "California Drug Price Relief Act," is likely to get the green light from voters at the ballot box this November, according to a recent poll. Nearly three quarters (73%) of those polled indicated that they support Prop 61, compared to only 13% who are opposed to it -- with approximately 14% of the survey's respondents remain undecided. The ballot initiative appears to have the strongest support among registered Democrats (77%), but also 70% of registered Republicans and 68% of unaffiliated voters.[1]

Photo Source: Moyers & Company

According to Californians for Lower Drug Prices, which is supporting the ballot initiative, (verbatim language from the Yes on Prop 61, Californians for Lower Drug Prices, with major funding by AIDS Healthcare Foundation and California Nurses Association PAC) "The Drug Price Relief Act would require the state of California to negotiate with drug companies for drug prices that are no more than is paid for the same drugs by the U.S. Department of Veterans Affairs (DVA).  Unlike Medicare, the VA negotiates for drug prices on behalf of the nearly 22 million veterans it serves, and pays on average 20-24 percent less for medications than other government agencies, and up to 40 percent less than Medicare Part D.  The Drug Price Relief Act empowers the state, as the healthcare buyer for millions of Californians, to negotiate the same or an even better deal for taxpayers, saving the state billions."[2]

The poll was conducted by Tulchin Research, among 800 likely voters conducted from July 21-24, 2016. According to a Tulchin Research memorandum obtained by the ADAP Advocacy Association:

"The survey finds that nearly three-quarters of voters would vote yes in support of Proposition 61 (73% yes with leaners, 66% without leaners) when presented the measure’s title and summary, including four out of 10 (41%) who say they would definitely vote yes, while just 13% of voters would oppose the measure (12% without leaners) and 14 percent are currently undecided."[3]

Prop 61 has been endorsed by a long list of organizations -- including the AIDS Healthcare Foundation (AHF) and the American Association of Retired Persons (AARP) – California Chapter. To view endorsements, go to http://www.yeson61.com/endorsements/.

But not everyone is behind the ballot initiative. Aside from groups expected to oppose such a measure -- such as the Pharmaceutical Research and Manufacturers of America (PhRMA) -- it is being opposed by some other heavy hitters. Among them; the Veterans of Foreign Wars, the California NAACP, and the California Medical Association. To view opponents to Prop 61, go to http://www.noprop61.com/who.

Interestingly enough, some national and state HIV/AIDS organizations are opposing the ballot initiative; and other organizations -- such as Project Inform and the San Francisco AIDS Foundation -- are staying on the sidelines. The chief complaint against it is...it won't actually save the state any money. In fact, "highly uncertain" is how the California Legislative Analyst’s Office characterized the impact of the ballot initiative, should it pass in November.[4]

The state's analysis found, "Even if the initiative were to result in cost savings to the state, it is unclear whether or not lower prices would be realized for consumers. The initiative does not include any provisions that would lower the cost of prescription drugs for consumers who are increasingly having difficulty accessing treatment, both because employers and insurers are passing on more of the cost to employees and consumers, and because more restrictions to access are being placed on higher-cost drugs."[5]

Summarized Eddie Hamilton, with the ADAP Educational Initiative, "The current convulsed, inconsistent system across the country compounded with the widespread conflicts of interest is hurting access more than any state Proposition could ever do. That is what had created the breeding ground for that ballot initiative."

And for now, voters in California are moving in the direction of the "Yes" forces during this contentious battle in the Golden State! Stay tuned...

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[1] POLITICO, "New poll shows strong support for landmark drug pricing ballot measure,"  August 2, 2016; available online at http://www.politico.com/states/california/story/2016/08/new-ca-poll-shows-strong-support-for-landmark-drug-pricing-ballot-measure-104415#ixzz4IqofRI5q. 
[2] Yes on Prop 61, Californians for Lower Drug Prices, "Californians for Lower Drug Prices Launches TV Ad Campaign," June 7, 2016; available online at http://www.aidshealth.org/#/archives/27268.
[3] Tulchin Research, "California Statewide Survey Shows Strong Support for Proposition 61, the Ballot Measure to Lower Prices on Prescription Drugs," July 28, 2016.
[4] Hemmelgarn, Seth, The Bay Area Reporter, "Prop 61 targets drug prices," August 25, 2016; available online at http://www.ebar.com/news/article.php?sec=news&article=71839. 
[45 Hemmelgarn, Seth, The Bay Area Reporter, "Prop 61 targets drug prices," August 25, 2016; available online at http://www.ebar.com/news/article.php?sec=news&article=71839. 

Healthcare is Hostage to Rx Pricing

By: Michael Weinstein, President, AIDS Healthcare Foundation

The impossible has happened. Harvoni, a pill that cures Hepatitis C made by Gilead, is selling for $1044 per pill. Decades ago we were outraged at the high price of AZT which was the first anti-retroviral HIV medication to come to market. Now the price of drugs threatens the long term viability of the entire U.S. healthcare system.

Gilead did not discover Harvoni. It bought the primary compound from a company named Pharmasset for $11 billion. That money came almost entirely from huge profits made by Gilead from the sale of grossly over-priced HIV medications. Pharmasset had planned to charge $36,000 for their drug. But, Gilead was not satisfied with that price and decided to push the envelope all the way up to $94,000 for a three month cure for Hepatitis C. During the same year, John Martin the CEO of Gilead, had total compensation of $206 million.

Michael Weinstein, AHF President, leading a protest.

Anger over drug prices has made this the number one healthcare issue by far among the American people. Presidential candidates Hillary Clinton, Bernie Sanders, and Marco Rubio are condemning Pharma on the campaign trail. Senators Charles Grassley and Ron Wyden are denouncing Gilead and other companies and conducting investigations. Yet, not a single piece of significant legislation is likely to be passed at the national or local level. A simple bill that would have required a little more transparency by drug companies was squashed twice in the last year in the dark blue state of California. Pharma's contributions to candidates on both sides of the aisle combined with vast lobbying budgets make passing legislation impossible.

Citizen ballot initiatives are one of the few avenues available to start to change the system. In fact, ballot initiatives were created to allow citizens to directly enact legislation when their elected officials refuse to act. Which brings us to the California and Ohio Drug Drug Relief Acts that will appear on their respective ballots in November. Pharma is so threatened by these initiatives that they have already contributed $40 million to defeat it in California and are trying every legal trick in the book to keep it off the Ohio ballot.

Pharma is working very hard to try to confuse the issue and pick apart the initiative because polling shows that 78% of California voters would support the initiative. First, to be clear this initiative is only a start to reining in drug prices. It is a very simple concept. The state will pay no more than the Veterans Administration for any drug. Critics, many of whom are directly funded by Pharma, say that the initiative can't be implemented and want us to address every hypothetical implementation issue. That is not our job. That will be the state's job after the initiative passes.

You don't have to believe us about how important these initiatives are in giving voice to the anger over drug prices. Here is what PharmExec.com had to say on December 8, 2015:

"If the voters of California approve this proposition it would establish an incredibly deep, mandatory discount - in essence a "price control" - for the public purchase of prescription drugs in American's largest state. Such an action would not doubt cause an immediate demand for the same VA discount rate to be made available to other states, the federal government, and likely private entities as well. In short, adoption of VA pricing by the State of California would be a pricing disaster for the entire U.S. drug industry."

The California and Ohio Drug Price Relief initiatives can be a catalyst for a movement to stop the rampant greed of drug companies with your support. Please don't be distracted by all the dust the industry will try to throw up to try to divert attention from the real issue - an out-of-control system that is victimizing our country.

Editor's Note: This blog was submitted in response to our previous blog, "Is Ohio the Frontline in the War on Rising Drug Prices?"

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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.