ADAPs Work. Federal Policy Is Defunding Them on Accident.
NASTAD released its 2026 National Ryan White HIV/AIDS Program (RWHAP) Part B AIDS Drug Assistance Program (ADAP) Monitoring Project Annual Report this month, and the numbers tell two stories at once. In 2024, state and territorial ADAPs served 257,644 people living with HIV across 49 reporting jurisdictions, achieving an 87% viral suppression rate among clients served. That figure significantly outpaces the estimated 67% suppression rate among all people living with diagnosed HIV in the United States, and it was achieved within a population where 65% of clients live at or below 200% of the Federal Poverty Level (FPL). By any clinical measure, ADAPs are delivering.
The second story is fiscal. Drug rebates generated through the 340B Drug Pricing Program now constitute 52% of total ADAP budgets, dwarfing the federal ADAP earmark at just 29%. A $2.7 billion safety net serving nearly one-quarter of all people living with diagnosed HIV in the country is now majority-funded by a revenue source that multiple federal policy changes are actively eroding. And demand is about to surge.
The Unwinding as Stress Test
The post-COVID Medicaid unwinding that began in April 2023 showed us what happens when coverage shifts push low-income people living with HIV off their insurance. ADAPs absorbed a 30% increase in new client enrollments and an 11% increase in total enrollment compared to 2022. Across 40 jurisdictions with comparable data, prescription drug spending grew 17% in two years, from $1.31 billion to $1.54 billion. Some states faced localized shocks: Pennsylvania's drug costs rose 82%, Arizona's nearly tripled. A JAMA Health Forum study confirmed that more than 25 million people nationally had Medicaid terminated during unwinding, with coverage losses concentrated among younger, healthier adults most likely to fall out of care when coverage disappears.
The system held. But the unwinding was a stress test, not the main event.
The Rebate Dependency Trap
Congressional appropriations for RWHAP Part B totaled $1.41 billion in FY2024, with ADAP-specific funding essentially flat. States have bridged the gap through 340B rebate revenue. In FY2019, 73% of rebates were applied to ADAP budgets; by FY2024, that figure reached 86%. Programs are retaining nearly every rebate dollar generated, and it still barely meets demand.
The Inflation Reduction Act (IRA) creates an unintended problem here. Its Medicare Part D reforms cap annual out-of-pocket drug costs at $2,000 in 2025 and $2,100 in 2026, which genuinely benefits Medicare beneficiaries. But ADAPs generate "partial-pay rebates" on cost-sharing payments made on behalf of clients enrolled in Medicare Part D. Lower cost-sharing means lower rebate revenue. The IRA's Medicare Drug Price Negotiation Program is likely to further compress the pricing benchmarks driving rebate calculations. The third negotiation round, announced in January 2026, selected Biktarvy for negotiated pricing effective in 2028. Biktarvy is the most widely prescribed single-tablet HIV regimen in the country and cost Medicare approximately $3.9 billion for 101,000 beneficiaries in the most recent measurement period. A negotiated reduction in Biktarvy's Medicare price could directly lower the "best price" benchmark that determines ADAP rebate revenue on the very drug that anchors most clients' treatment.
Layer on the PBM reform provisions signed into law in February 2026 requiring 100% rebate pass-through in Medicare Part D starting in 2028, plus manufacturer restrictions on 340B contract pharmacies that 54% of ADAPs report are creating payment challenges, and the picture is clear: the revenue stream funding more than half the HIV safety net is being squeezed from multiple directions, all at once, and the pressure is increasing.
Each of these policies may have merit on its own terms. But none were designed with a safety net impact assessment in mind, and the cumulative downstream effect on ADAP financing is significant and remains unaddressed.
The Demand Surge
While revenue contracts, demand is set to spike. H.R. 1, signed July 4, 2025, enacts the largest Medicaid cuts in the program's history. The Congressional Budget Office (CBO) estimates $911 billion in federal Medicaid spending reductions over a decade. KFF notes that more than 10.3 million people are likely to lose Medicaid. A Center for American Progress analysis found the bill's approximately $1 trillion in Medicaid cuts is roughly matched by approximately $1 trillion in tax reductions directed to the top 1% of earners. The priorities embedded in that budget math deserve scrutiny, to put it mildly.
And then the enhanced ACA premium tax credits expired at the end of 2025 without extension. Approximately 22 million people received those credits last year, and the average recipient has seen premiums more than double. The Urban Institute estimates roughly 5 million people may drop coverage and go uninsured, with the impact falling disproportionately on Black and low-income communities in metro areas like Houston and Atlanta, per the Economic Policy Institute. When the CBPP tallies all coverage losses, the total reaches roughly 15 million people newly uninsured by 2034.
For people living with HIV, these numbers carry specific weight. Medicaid is the single largest source of coverage for adults living with HIV at an estimated 40%, with 42% of those enrollees qualifying through the ACA expansion pathway H.R. 1's work requirements directly target. People living with HIV also rely on ACA Marketplace plans at higher rates than the general population; at least 40,000 ADAP clients were enrolled in Marketplace plans as of 2023. KFF estimates the premium tax credit expiration alone will cost state ADAPs an estimated $83.7 million in additional premium costs, with ADAPs in non-expansion states facing the steepest increases. If ADAPs cannot absorb those costs, KFF outlines the consequences: reduced income eligibility, restricted formularies, increased utilization management, and the possible return of waiting lists for the first time since 2012.
We don't have to speculate about what this looks like. On January 8, 2026, the Florida Department of Health announced sweeping changes to its ADAP, effective March 1: slashing income eligibility from 400% FPL to 130% FPL, eliminating insurance premium assistance, and removing Biktarvy from the formulary. NASTAD estimates more than 16,000 people will lose ADAP coverage. Florida cited rising premiums and the premium tax credit expiration, yet has not released an ADAP budget in over a year and bypassed the stakeholder engagement required under federal Ryan White guidelines. Every structural vulnerability the NASTAD report identifies played out in a single state in a matter of weeks.
What We Should Be Doing
The NASTAD report warns that H.R. 1 and the premium tax credit expiration threaten to "unravel the coverage gains" it documents. ADAPs serve 23% of all people living with diagnosed HIV. The Ending the HIV Epidemic (EHE) initiative depends on sustained viral suppression, which depends on treatment access, which depends on these programs remaining solvent. The data demands specific action. Short of reversing the policies of H.R. 1 and actually insuring poor people as a just and moral society might choose to do, several targeted measures could prevent the worst outcomes.
Congress should increase the federal ADAP earmark to reflect documented enrollment growth and the surge H.R. 1 will drive, and pursue RWHAP reauthorization to replace the year-to-year appropriations the program has relied on since its authorization lapsed in 2013. Flat funding in the face of 30% enrollment growth is a policy choice with consequences measured in lives.
Congress should reinstate and make permanent the enhanced ACA premium tax credits. For people already navigating the social determinants of health that create barriers to care, losing insurance coverage removes one of the few reliable pathways to sustained treatment access and viral suppression. Future drug pricing legislation should include safety net impact assessments to identify and offset downstream revenue effects on programs like ADAPs before those effects become crises.
States need targeted investment in ADAP administrative infrastructure to manage the coming enrollment wave. 60% of ADAPs already report maintaining client eligibility as challenging and 38% report difficulties implementing long-acting injectables and provider-administered drugs. The 30% enrollment surge during unwinding stretched existing capacity. What H.R. 1 delivers will be larger and longer-lasting.
The 2026 NASTAD report documents a system that works. An 87% viral suppression rate among a low-income population, achieved through sophisticated fiscal management and a decades-long commitment to keeping people in care, is a public health accomplishment we should be protecting. The question is whether we will defend the infrastructure that makes it possible, or let it collapse under the weight of policy decisions that were never designed to account for it.
How the IRA's Price Controls Could Backfire on Patients
For millions of Americans, health insurance offers a false promise. Despite paying premiums, deductibles, and copays, many still find themselves struggling to afford essential healthcare. In fact, a recent survey found that a staggering 43% of adults with employer-sponsored insurance—often considered the gold standard of coverage—find healthcare difficult to afford. This affordability crisis is poised to worsen, as the latest National Health Expenditure projections from the Centers for Medicare & Medicaid Services (CMS) reveal a troubling trend: while government spending on prescription drugs is projected to decrease, patient out-of-pocket costs are expected to rise. The projections forecast an 8.9% increase in hospital expenditures, coupled with a 1.4% decrease in retail prescription drug spending. This shift, driven in part by the Inflation Reduction Act's (IRA) price control provisions, threatens to undermine the law's intended goal of affordable healthcare and exacerbate existing health inequities. While the IRA aims to lower drug costs, its focus on price controls, rather than comprehensive patient protection mechanisms, is creating misaligned incentives that could backfire on the very people it aims to help.
The IRA's Price Controls: A Double-Edged Sword
The IRA's approach to lowering drug costs centers on empowering the government to directly negotiate prices with pharmaceutical companies. This change tackles a provision in the Medicare Part D program known as the "non-interference" clause, which previously prevented the government from directly negotiating drug prices. As a Kaiser Family Foundation (KFF) issue brief explains, "The Part D non-interference clause has been a longstanding target for some policymakers because it has limited the ability of the federal government to leverage lower prices, particularly for high-priced drugs without competitors." While this "non-interference" clause has long been a target for reform, the IRA's implementation creates a ripple effect that extends beyond simply lowering the sticker price of medications. The Congressional Budget Office (CBO) estimates that these drug pricing provisions will reduce the federal deficit by $237 billion over 10 years, suggesting a significant shift in spending away from the government. However, this shift comes at a cost. The IRA's emphasis on price controls, rather than comprehensive patient protection mechanisms, disrupts existing rebate structures that have been crucial in expanding access to medications, particularly for low-income patients and those with chronic conditions.
Programs like 340B and Medicaid rely on a system of manufacturer rebates to make medications more affordable. In essence, drug companies provide rebates to these programs in exchange for having their drugs included on formularies and made available to a large pool of patients. These rebates help offset the cost of medications, allowing safety-net providers to stretch their limited resources and serve more patients. However, the IRA's price controls could disrupt this delicate balance. By directly negotiating lower prices with manufacturers, the government might inadvertently reduce the incentive for companies to offer substantial rebates to programs like 340B and Medicaid. This could lead to higher costs for these programs and ultimately limit access to medications for vulnerable populations.
This means that programs like 340B and Medicaid, which rely on manufacturer rebates to offset costs and provide affordable medications to vulnerable populations, could be significantly undermined by the IRA's price control measures.
Further complicating the issue is the potential for pharmaceutical companies to adapt to the IRA's price controls by strategically setting higher launch prices for new drugs. This tactic allows them to recoup potential losses from negotiated prices in the future, effectively shifting the cost burden onto other payers, including patients. The CBO projects that this trend of higher launch prices would disproportionately impact Medicaid spending, placing a greater strain on a program already facing significant enrollment fluctuations and budgetary pressures. The KFF brief warns that, "Drug manufacturers may respond to the inflation rebates by increasing launch prices for drugs that come to market in the future." This means that while the IRA might appear to lower drug costs in the short term, it could inadvertently fuel a long-term trend of rising prices for new medications, ultimately impacting patient affordability and access to innovative therapies.
Hospitals: Benefiting from the System While Patients Pay the Price
The CMS projections forecast an alarming 8.9% increase in hospital expenditures, raising questions about the drivers of this unsustainable growth. A closer look reveals a troubling connection between this trend and the 340B Drug Pricing Program, a federal initiative designed to help safety-net hospitals provide affordable medications to low-income patients. The CBO's analysis of 340B spending reveals an explosive 19% average annual growth from 2010 to 2021, significantly outpacing overall healthcare spending growth. This dramatic increase is largely attributed to hospitals, particularly those specializing in oncology, which are increasingly purchasing high-priced specialty drugs through the program. As the CBO presentation states, "340B facilities benefit from the program because the difference between the acquisition cost and the amount they are paid (often called the 'spread') is larger for drugs acquired through the 340B program." This suggests that hospitals are capitalizing on the 340B program's discounts to acquire expensive medications, potentially driving up their overall spending. But are these savings being passed on to patients? Evidence suggests otherwise.
This suspicion of hospitals leveraging the 340B program for profit is further reinforced by a UC Berkeley School of Public Health study which found that hospitals are charging insurers exorbitant markups for infused specialty drugs, many of which are likely acquired through 340B. The study reveals that hospitals eligible for 340B discounts charge insurers a staggering 300% more for these drugs than their acquisition costs, effectively pocketing a substantial profit margin. This practice raises serious concerns about whether the 340B program, designed to help vulnerable patients access affordable medications, is instead being exploited by hospitals to boost their bottom line. As Christopher Whaley, a co-author of the UC Berkeley study, aptly points out, "It is ironic that some hospitals earn more from administering drugs than do drug firms for developing and manufacturing those drugs. At least drug firms invest part of their revenues in innovation; hospitals invest nothing." This highlights a perverse incentive structure where hospitals benefit financially from a program intended to help patients, while those same patients are often left facing inflated prices for essential medications and crippling medical debt.
The Affordability Crisis: A Broken Promise for Patients
This concerning trend of rising healthcare costs and shifting burdens is not limited to those reliant on safety-net programs. The Commonwealth Fund's 2023 Health Care Affordability Survey paints a bleak picture of the widespread affordability crisis facing Americans across all insurance types. The survey found that 43% of adults with employer coverage find healthcare difficult to afford, shattering the illusion that employer-sponsored insurance guarantees financial protection. These findings challenge the fundamental assumption that health insurance in the United States equates to affordable access to care. As the survey report states, "While having health insurance is always better than not having it, the survey findings challenge the implicit assumption that health insurance in the United States buys affordable access to care." This sentiment is echoed by millions of Americans who, despite having insurance, are forced to make difficult choices between their health and their financial well-being.
Even the IRA's lauded out-of-pocket (OOP) cap on Part D drug costs, while offering some relief, fails to address the root causes of this affordability crisis. An analysis by Avalere reveals that even with the cap in place, a significant number of Medicare beneficiaries will continue to face high healthcare costs, particularly those with lower incomes or specific health conditions. The analysis projects that 182,000 beneficiaries will spend over 10% of their income on Part D drug costs in 2025, despite the OOP cap. This sobering statistic underscores the limitations of focusing solely on OOP costs without addressing the underlying drivers of high drug prices and healthcare spending. As the Avalere analysis cautions, "High OOP costs are expected to result in many enrollees still facing affordability challenges in 2025." The findings from both the Avalere analysis and the Commonwealth Fund survey highlight a critical gap in the IRA's approach: it fails to adequately protect the most vulnerable patients from the financial burden of healthcare.
A Call for Patient-Centered Solutions
The CMS projections, alongside independent analyses of the pharmaceutical market and patient affordability, paint a clear picture: the current trajectory of US healthcare spending is unsustainable and inequitable. The IRA's price control provisions, while well-intentioned, risk exacerbating the affordability crisis by disrupting existing rebate structures, incentivizing higher launch prices for new drugs, and shifting costs onto patients. This shift is further compounded by unchecked hospital spending, particularly on high-priced specialty medications acquired through the 340B program. The result is a system where hospitals and pharmaceutical companies benefit, while patients—especially those with lower incomes or chronic conditions—are left struggling to afford essential care.
To be sure, the IRA includes provisions aimed at directly helping patients, such as the out-of-pocket cap on Part D drug costs and the expansion of subsidies for marketplace plans. These are positive steps towards easing the financial burden of healthcare for many Americans. However, the law's broader focus on price controls, without sufficient attention to patient protection mechanisms and the potential for unintended consequences, threatens to undermine these gains and create new challenges for those who rely on safety-net programs like 340B and Medicaid.
It's time for a fundamental shift in our approach to healthcare reform. Policymakers must move beyond a narrow focus on price controls and embrace a patient-centered approach that prioritizes affordability, access, and equity. This requires a multi-pronged strategy that includes:
Reassessing the IRA's reliance on price controls: Instead of simply dictating prices, policymakers should explore alternative approaches that strengthen patient protections, preserve rebate structures that support broader access, and address the potential for cost-shifting onto patients.
Tackling hospital pricing practices: Increased transparency and accountability in hospital pricing, particularly for inpatient medications, is necessary to ensure that safety-net programs like 340B are truly benefiting patients and not being exploited for profit.
Investing in alternative care models: Promoting value-based care and investing in primary and preventive care can reduce reliance on expensive hospital stays, improve health outcomes, and make healthcare more affordable for everyone.
The promise of affordable, accessible healthcare for all Americans remains unfulfilled. We must demand a healthcare system that puts patients first, not profits. Only then can we ensure that everyone has the opportunity to live a healthy and fulfilling life, regardless of their income or health status.