ADAP shortfall relief - pennsylvania allocates all ryan white part B (RWPB) grant funds to the aids drug assistance program (ADAP)

The Health Resources and Services Administration awarded the Pennsylvania Department of Health $4.462 million on April 1, 2026, under the HIV Care Formula Grants program (CFDA 93.917) to provide AIDS Drug Assistance Program shortfall relief through March 31, 2027.

Pennsylvania allocates all Ryan White Part B grant funds to its ADAP, then applies 340B pharmaceutical rebates collected on purchased prescriptions to fund additional ADAP clients and all Ryan White Part B programming, which includes seven regional grantees. The program has experienced sustained cost pressures: Medicaid unwinding has driven record enrollment and increased uninsured clients (who generate lower rebate value per medication dollar spent), medication claims per person have increased steadily, and per-medication costs have risen. These factors combined have eroded the program's historical capacity to generate $80 million annually in 340B rebates. Ryan White formula funding has remained level while medication expenditures have outpaced rebate revenue growth, creating a structural shortfall in ADAP resources.

The award funds ADAP shortfall relief activities to sustain the program's ability to serve low-income people with HIV across Pennsylvania. Place of performance is Pennsylvania. The Pennsylvania Department of Health is a subsidiary of the Commonwealth of Pennsylvania and acts as the prime recipient for this award.

We then use the 340B rebates that we collect on the purchased prescriptions to fund additional ADAP clients and all our RWPB programing- which includes seven regional grantees. The program has experienced several factors over the past few years that has resulted in the program being overspent. Historically the program collects over $80 million each year in 340B rebates. This combined with our grant funds creates a total program budget of around $140 million. The ryan white program is a needs-based program with specific allowable services. With such a large budget we were charged with actively pursuing ways to spend down funding each year. This caused US to create broad eligibility criteria, challenge our regional grantees to expand services, providers, and do additional outreach and education. The difficulty expending funds during and after the covid pandemic combined with a large rebate deposit late in FY21, meant we were unable to spend the rebates in the time remaining, causing US to spend no formula grant funds in FY22. We were only able to negotiate receiving $14 million in carryover, resulting in $25 million being returned to hrsa. Medicaid unwinding has also had an impact on the ADAP program. There are a record number of individuals enrolled and are assisting an increased number of uninsured clients. Uninsured clients cost the program more money for medication purchases, which diminishes/eliminates the benefit of a 340B rebate. There has also been a steady increase in medication claims per person and an increase in the costs per medication. As program costs have increased, the ryan white formula grant funding has remained level. Our 340B rebate earnings have increased, but not comparable to the increase in medication expenditures. All these factors have created a situation where our rebate funds cannot keep up with the current expenses. In october 2025, we reduced ADAP and part B eligibility from 500% fpig to 350% fpig due to our budgetary issues. We have also implemented more structured eligibility verification requirements and have provided clearer guidance about the completion of medicaid (MA) applications for MA eligible clients to ensure ADAP resources are being utilized by individuals who have the greatest need. All these efforts are working towards preventing an ADAP waiting list. Pennsylvania utilizes all ryan white part B grant funding (less minority aids initiative and emerging community funds) to fund ADAP. 340B rebate funding is also primarily reinvested into ADAP, except for funding used for other ryan white part B allowable expenditures. To utilize more 340B rebate funding within ADAP, our part B regional contracts have been reduced by 25% and other expenditures have been moved to other funding sources as identified and allowed. ADAP ERF would be used to continue our current ADAP programing. This funding would supplement the current funding (RWPB base and ADAP grants) that is fully allocated to the ADAP. With additional funding we will be able to reduce the likelihood of further eligibility decreases, caps, and waitlists.