At Last, Generic HIV Prevention Drugs Promise Savings And Access—But Also Reveal Precarious Financing - Health Affairs

Pre-exposure prophylaxis or "PrEP," a once-daily pill that prevents HIV transmission, has been a game changer for HIV and has helped put the United States on a path to end new HIV infections nationwide. However, PrEP has also exposed the instability of HIV public health financing and its outsized reliance on pharmaceutical manufacturers to prop up not only medication access programs but the basic fabric of the HIV workforce. 

The first anti-retroviral medication for the prevention of HIV was approved by the Food and Drug Administration (FDA) in 2012. It is sold under the brand name Truvada and manufactured by the pharmaceutical behemoth, Gilead Sciences. As the patent end date for a key ingredient in Truvada approached, Gilead won FDA approval for a second formulation for PrEP, Descovy, in late 2019. Descovy's greatest clinical potential is for a small subset of individuals who cannot tolerate Truvada. Both drugs are safe and highly effective when used as recommended, with list prices hovering around $1,800 per month.  

In October 2020, pursuant to an agreement with Gilead Sciences, Teva Pharmaceuticals became the first manufacturer to offer a generic version of Truvada (TDF/FTC). Following a six-month exclusivity period, multiple generic manufacturers began offering generic versions of TDF/FTC beginning in April 2021, with list prices as low as $30 per month. The availability of generics for PrEP should have been an unequivocally positive development and a much-heralded game changer in access. To be sure, there are other factors contributing to low PrEP uptake—stigma, awareness, and provider willingness to prescribe PrEP chief among them. But what generic availability has exposed is a house of cards of HIV prevention financing and the precariousness of the country's HIV prevention system, not to mention the country's ambitious plan to end new HIV infections by 2030.

340B Drug Pricing Program

At the heart of the issue is the 340B Drug Pricing Program. Section 340B of the Public Health Service Act requires pharmaceutical manufacturers participating in Medicaid to sell outpatient drugs at discounted prices to qualified entities that see a disproportionate amount of uninsured and low-income patients. These entities include community health centers, Ryan White HIV/AIDS Program grantees, sexually transmitted disease (STD) clinics, as well as certain types of hospitals. The 340B Program is both the lifeblood of HIV service infrastructure in this country and the source of its financial precariousness.

In addition to allowing these entities to more affordably provide pharmaceuticals to their uninsured and low-income patients—340B prices for Truvada and Descovy are still between $400 and $500 a month—these across-the-board discounts also generate "savings" or "program income" for 340B entities, when they serve insured patients. For these patients, the 340B entity still purchases drugs at a significantly discounted price but is reimbursed by many issuers at a "usual and customary" rate, which is usually much closer to list price. This isn't a loophole; this is how the program is intended to work. 340B entities have always been able to invest those savings into their programs; indeed, given the chronic underfunding of public and community health, these savings aren't a windfall, they are what undergird the system and keep the lights on at many community-based clinics.

A Perverse Incentive

But here's the rub: The amount of savings that can be reinvested in programs remains high when list prices remain high—that is, when the spread between what a clinic pays for the (heavily discounted) drug and commercial insurers' usual and customary reimbursement is steepest. This situation creates a perverse incentive for clinics to prefer high-cost drugs, and we are seeing that play out in real time as clinics and providers—in the midst of a full-court marketing press by Gilead Sciences and a need for funding to support innovative HIV prevention programs—make decisions about whether to prescribe Descovy or generic TDF/FTC. Despite little clinical evidence suggesting Descovy is the necessary, most cost-effective PrEP option for most patients, in the first nine months following its FDA approval, 30 percent of all prescriptions for PrEP were for Descovy.

In a functioning market, low-cost generic versions of PrEP would be deemed vital to the country's PrEP response, allowing for broad distribution (including through health departments and other providers not currently eligible for 340B discounts for PrEP) and a reduced need for manufacturer-run copayment assistance and patient assistance programs. But this hasn't happened. Instead, the perverse incentives that are, at least in part, driving 340B providers to prioritize Descovy, including for uninsured individuals via Gilead Sciences' patient assistance program, are diminishing generic TDF/FTC's perceived value as an important addition to the prevention armamentarium for people vulnerable to HIV infection.

Any downward pull on 340B savings leaves clinics in potential financial freefall and would be detrimental to programs that have been established to not only provide affordable PrEP but also address many of the other structural barriers to prevention services in the US. And yet, high list prices are resulting in tensions elsewhere in the health care system, including commercial plan formulary restrictions, Medicaid preferred drug list restrictions, and prohibitive out-of-pocket costs in which prescription drug cost sharing associated with commercial insurance plans or Medicare coverage is often a percentage of the list price and can't always be offset by manufacturer copay assistance programs. Indeed, the need for lower-cost medicines for the prevention and management of HIV is only growing. Our health care and public health systems are inextricably linked. It is simply not tenable to sacrifice sustainable drug affordability and access in one system to ensure the sustainability of critical revenue in the other.

The Next Battle

We are also on the precipice of yet another congressional battle over how to curb drug prices, and it remains to be seen how far Democrats are willing to go on this issue, with only the slimmest of majorities in the Senate. If there are steps to bring down list prices via direct federal negotiation, which will have an impact on 340B revenue generation, there must also be consideration of the impact on public and community health programs and a concerted investment in a sustainability pathway that is far less dependent on the temperaments of the pharmaceutical and insurance industries. These are the same health programs we have relied heavily on to step up in the face of a global pandemic over the past year, and ensuring their sustainability should be at the heart of any federal infrastructure investment.

The federal government and foundations should be investing in pilots and innovative grant-making that more intentionally seek to identify and scale up models with diverse, dependable, and robust funding streams. This is particularly important in states without Medicaid expansion and with already strained systems of HIV care and prevention (that is, the South) who are sure to feel lost 340B savings more acutely and whose patients will suffer if a more sustainable path isn't identified. Moreover, closing the Medicaid gap in the 12 states that have not yet expanded the program under the Affordable Care Act must also be a priority and would go a long way to take pressure off of 340B safety-net systems in those states.

No less concerning are other threats to 340B financing, including attacks by manufacturers seeking to curb the size of the 340B Drug Pricing Program and the types of entities able to reap the benefit of discounted drugs. Commercial insurance companies, never an intended beneficiary of the program, are engaging in discriminatory reimbursement practices involving drugs subject to 340B discounting. And in several states, the transition of Medicaid pharmacy benefits from managed care to fee-for-service, which effectively prohibits 340B program savings generation, has been a significant source of concern for many community programs providing essential medical and support services. 

There are no easy answers, but it is no longer tenable to cling to a status quo that is so inherently unstable. Until we reckon with the broken system, we will forever undercut bold and innovative programs that accelerate access to HIV prevention for those who need it most. If policy makers are serious about ending new HIV infections, they must ensure robust and sustainable funding pathways for essential health care programs to exist and expand.

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