ADAP Advocacy Urges HRSA to Abandon 340B Rebate Pilot, Citing Existing Success of AIDS Drug Programs

ADAP Advocacy has submitted written comments urging the Health Resources and Services Administration to modify its proposed 340B rebate pilot project, describing it as deeply flawed and potentially contrary to the Administrative Procedure Act. The organization called for the agency to remove itself as an obstacle to fully implementing a rebate model for all covered entities under the 340B Drug Pricing Program, particularly hospitals.

The comments, submitted in response to HHS Docket No. HRSA–2025–14619, argued that no pilot program is necessary because the ADAP experience has already demonstrated that retrospective rebates work without causing delay or undue administrative burdens. Brandon M. Macsata, CEO of ADAP Advocacy, stated that State AIDS Drug Assistance Programs have essentially served as the pilot project for this rebate model, with their ability to account for 340B rebate usage considered the gold standard among covered entities.

Macsata emphasized that ADAPs rely on a robust 340B program to serve as the payor of last resort for thousands of people living with HIV/AIDS, accusing HRSA of dragging its feet with the pilot program. He called for the program to return to its legislative intent of serving patients rather than creating unnecessary bureaucratic hurdles.

The advocacy group highlighted a significant disparity in how different entities utilize the 340B program. While ADAPs and smaller covered entities use the program to assist the uninsured and underinsured—reflecting its original intent—many 340B hospitals receive 87% of the program's benefits while providing minimal charity care. Data from 2002, the last year available, shows 340B hospitals devoted just 2.15% of their spending to charity care.

ADAP Advocacy's 340B map reveals a disturbing pattern of 340B hospitals expanding their programs while charity care commitments erode and executive compensation increases dramatically. This contrast underscores the need for reform and proper implementation of rebate mechanisms that prioritize patient care over institutional profit.

For 27 years, ADAPs have operated using a rebate mechanism that has proven highly effective. The rebate system has enabled dramatic growth in drug and non-drug services for HIV/AIDS patients, providing financial assistance and funding for support services. In 1997, before the rebate system began, 340B ADAP drug rebates provided just 5% of funding for HIV/AIDS patients. By 2022, rebates efficiently funded 47% of programs—an increase of more than 800%—with projections indicating 55% funding by 2025.

The organization argues that larger, better-resourced 340B hospitals are in an even better position to operate effectively under a rebate model than the pharmacies participating in ADAPs. Unlike ADAPs, which depend on annual, means-based federal funding awards to state programs that are significantly smaller than hospital system revenues, hospitals have the infrastructure and financial capacity to implement rebate systems successfully without additional pilot programs.