ADAP Advocacy Urges HRSA to Abandon Flawed 340B Rebate Pilot, Citing Proven Success of Existing Model
ADAP Advocacy calls on HRSA to implement a proven 340B rebate model immediately rather than conducting a pilot program, highlighting how rebates have successfully funded HIV/AIDS programs and criticizing hospitals for profiting while providing minimal charity care.
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 State AIDS Drug Assistance Programs have effectively served as the pilot project for this rebate model for 27 years. According to ADAP Advocacy CEO Brandon M. Macsata, ADAPs' ability to account for how 340B rebates are used is widely considered the gold standard among covered entities.
The organization emphasized that ADAPs rely on the 340B program to serve as the payor of last resort for thousands of people living with HIV/AIDS. Macsata stated that HRSA is dragging its feet with the pilot program and called for the program to return to its legislative intent of serving patients.
ADAP Advocacy's analysis reveals a concerning disparity in how different entities benefit from the 340B program. While ADAPs and smaller covered entities utilize the program to assist the uninsured and underinsured, reflecting the 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.
The organization's 340B map demonstrates a disturbing pattern of 340B hospitals expanding their programs while charity care commitments erode and executive compensation increases dramatically. This contrast highlights the urgent need for reform in how the program benefits are distributed and accounted for.
The rebate mechanism has proven extraordinarily effective for ADAPs over nearly three decades. In 1997, the year before the rebate system started, 340B ADAP drug rebates provided just 5% of funding for HIV/AIDS patients. By 2022, those rebates efficiently funded 47% of programs—an increase of more than 800%—including direct financial assistance to patients in need. Projections for 2025 estimate rebates will fund 55% of these critical programs.
ADAP Advocacy 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 operate on annual, means-based federal funding awards significantly smaller than most hospital systems' yearly revenue, hospitals have the infrastructure and resources to implement rebate systems successfully.
The organization's position underscores the growing tension between the program's original patient-focused intent and how some entities have leveraged it for financial gain. As the debate over 340B reform continues, ADAP Advocacy's experience provides a proven model for ensuring the program benefits patients as Congress originally intended.