The Real World of Health Policy

GAO Concludes the Selection of Antiretroviral Medications Provided Under the President's Emergency Plan for AIDS Relief Is Limited

This is an abstract of GAO Report (GAO-05-133) on "Global HIV/AIDS Epidemic: Selection of Antiretroviral Medications Provided Under U.S. Emergency Plan Is Limited", issued on January 11, 2005.

In developing countries, only about 7 percent of people with HIV/AIDS receive treatment. In 2003, the Congress authorized the President's Emergency Plan for AIDS Relief, a 5-year, $15 billion initiative under the Office of the U.S. Global AIDS Coordinator. The Emergency Plan focuses on 15 developing countries, with a goal of supporting treatment for 2 million people. Treatment regimens use multiple antiretroviral medications (ARV), which can be original or generic. Fixed-dose combinations (FDC) combine two or three ARVs into one pill. Questions have been raised about whether the plan is providing ARVs preferred by the focus countries at reasonable prices. GAO compared the selection of ARVs provided under the plan with that provided under other major treatment initiatives, compared the prices of those selections, and determined what the Coordinator's Office is doing to expand the plan's selection of quality-assured lower-priced ARVs.

The Emergency Plan provides a smaller selection of recommended first-line ARVs than other major HIV/AIDS treatment initiatives in developing countries. The plan's selection includes six original ARV products—the only ARVs that have met the plan's quality assurance requirement—and does not include some FDCs that are preferred by most of the focus countries because they can simplify treatment. In contrast, the other initiatives provide a selection that in addition to the six original ARVs includes generic ARVs and more of the preferred FDCs. The original ARVs provided under the plan are generally higher in price than the generic ARVs provided under the other initiatives. The differences in the prices, quoted to GAO during June and July 2004 by 13 manufacturers, ranged from $11 less to $328 more per person per year for original ARVs than for the lowest-priced corresponding generic ARVs provided under the other initiatives. At these prices, three of the four first-line regimens recommended by the World Health Organization could be built for less—from $40 to $368 less depending on the regimen—with the generic ARVs provided under the other initiatives than with the original ARVs provided under the plan. Such differences in price per person per year could translate into hundreds of millions of dollars of additional expense when considered on the scale ofthe plan's goal of treating 2 million people by the end of 2008. The Coordinator's Office has worked to expand the selection of quality-assured ARVs—including FDCs and lower-priced generics—that it provides to the focus countries under the plan. The selection of ARVs available under the plan is primarily limited by its quality assurance requirement. The Coordinator's Office is working with manufacturers to take the steps necessary for more ARVs to meet this requirement. However, if generic ARVs meet the plan's quality assurance requirement, a statutory prohibition on the purchase of any medication manufactured outside the United States if the manufacture of that medication in the United States would be covered by a valid U.S. patent could become a barrier to expansion because all ARVs are currently under U.S. patents. Unless the patent holders for ARVs that have met the plan's quality requirement give permission or the Coordinator's Office exercises its authority to purchase these products notwithstanding the patent requirement, the selection of ARVs provided under the Emergency Plan may not expand rapidly enough to address the AIDS emergency.

SOURCE: Reprinted from Government Accountability Office. 2005. Global HIV/AIDS Epidemic: Selection of Antiretroviral Medications Provided Under U.S. Emergency Plan Is Limited. Report no. GA0-05-133. [Onine report; retrieved 2/22/05.]

Because GAO must maintain the ability to conduct a wide range of policy analyses, its staff is drawn from a variety of disciplines, including accounting, law, public and business administration, economics, and the social and physical sciences. Their work is organized so that staff members concentrate on specific subject areas, facilitating the development of expertise and in-depth knowledge. When an analytical assignment requires specialized experience not available within GAO, outside experts can be used to assist the permanent staff. Reflecting the organization's need to attract and maintain a highly capable professional staff, the GAO Human Capital Reform Act of 2004 (P. L. 108-271) made a number of significant changes to how GAO operates (

• It decouples GAO from the federal employee pay system.

• It establishes a compensation system that places greater emphasis on job performance while protecting the purchasing power of employees who are performing acceptably.

• It gives GAO permanent authority to offer voluntary early retirement opportunities and voluntary separation payments (buy-outs).

• It provides greater flexibility for reimbursing employees for relocation benefits.

• It allows certain employees and officers with less than three years of federal service to earn increased amounts of annual leave.

• It authorizes an exchange program with private-sector organizations.

OMB plays a crucial analytical role: Its predominant mission is to assist the president in overseeing the preparation of the federal budget and to supervise its administration in executive branch agencies. In helping to formulate the president's spending plans, OMB evaluates the effectiveness of agency programs, policies, and procedures; assesses competing funding demands among agencies; and sets funding priorities.

In assisting the administration in formulating its annual budget plans, OMB evaluates the effectiveness of executive branch organizations' operating decisions and assesses competing funding demands among these organizations. These assessments help establish the administration's funding priorities, which then guide the development of the budget. See the earlier discussion of budget and performance integration in The Real World of Health Policy: The President's Management Agenda (PMA) for additional information on how this connection between performance and funding occurs in the Bush administration, including the role of the Program Assessment Rating Tool (PART) (See Figure 9.2). PART requires programs to ask whether they have a clear definition of success, use strong management practices, and produce results. This tool drives improvements in the quality of performance information and makes agencies more accountable for the performance of their programs.

A key principle of PMA is that performance should significantly influence policy making. PART provides valuable performance information that informs decisions about how to invest limited budgetary resources. All programs receive close scrutiny. Low-priority and low-performing programs are generally proposed for reduction or elimination, and their funding is redirected to higher-performing alternatives.

In its role of supervising the various executive branch organizations through its administration of the federal budget, OMB ensures that the organizations' reports, rules, testimony, and proposed legislation are consistent with the administration's preferences. In addition, OMB oversees and coordinates the administration's procurement, financial management, and information practices and procedures. In each of these areas, OMB's role is to help improve the management of policy implementation, which, as was discussed in Chapters 7 and 8, is largely the responsibility of executive branch organizations.

Office of Management and Budget (OMB) (www .whitehouse .gov/omb)

Figure 9.2

Program Assessment Rating Tool (PART)

What Is the PART and How Is It Used?

The Program Assessment Rating Tool (PART) is designed to help assess the management and performance of individual programs. The PART evaluates a program's purpose, design, planning, management, results, and accountability to determine its overall effectiveness. Recommendations are then made to improve program results.

To reflect that Federal programs deliver goods and services using different mechanisms, the PART is customized by program category. The seven PART categories are: Direct Federal, Competitive Grant, Block/Formula Grant, Research and Development, Capital Assets and Aquisition, Credit, and Regulatory. The PART types apply to both discretionary and mandatory programs.

Each PART includes 25 basic questions and some additonal questions tailored to the program type all divided up into four sections. The first section of questions gauges whether a program's design and purpose are clear and defensible. The second section involves strategic planning, and weighs whether the agency establishes valid annual and long-term goals for its programs. The third section rates the management of an agency's program, including financial oversight and program improvement efforts. The fourth section of questions focuses on results that programs can report with accuracy and consistency.

The answers to questions in each of the four sections result in a numerical score for each section from 0 to 100 (100 being the best score). Because reporting a single weighted numerical rating could suggest false precision, or draw attention away from the very areas most in need of improvement, numerical scores are translated into qualitative ratings. The bands and associated ratings are as follows:





Moderately Effective






Regardless of overall score, programs that do not have acceptable performance measures or have not yet collected performance data generally receive a rating of "Results Not Demonstrated."

PART ratings do not result in automatic decisions about funding. Clearly, over time, funding should be targeted to programs that can prove they achieve measurable results. In some cases, a PART rating of "Ineffective" or "Results Not Demonstrated" may suggest that greater funding is necessary to overcome identified shortcomings, while a program rated "Effective" may be in line for a proposed funding decrease if it is not a priority or has completed its mission. However, most of the time, an "Effective" is an indication that the program is using its funding well and that major changes may not be needed.

CBO was created by the Congressional Budget and Impoundment Control Act of 1974. The agency's mission is to provide Congress with the objective, timely, nonpartisan analyses needed for economic and budget decisions and with the information and estimates required for the congressional budget process. Compared with the missions ofCongress's other support agencies—the Congressional Research Service and the Government Accountability Office— CBO's mission is narrow and focused. Even so, given the wide array of activities that the federal budget covers, the agency is involved in wide-ranging health policy activity.

The Budget Act requires CBO to produce a cost estimate for every bill "reported out" (approved) by a Congressional committee. CBO's cost estimates show how the legislation would affect spending or revenues over the subsequent five years or more. Those written estimates provide information about the proposal and explain how CBO prepared the estimate. The Real World of Health Policy: CBO Issues a Cost Estimate is an example of the work CBO does in estimating the cost of a proposed policy. This example is straightforward, as are many of CBO's estimates. However, on occasion, the estimates become extremely complicated, as they did in CBO's estimates of the projected costs of adding a prescription drug benefit to the Medicare program.

S. 306 would prohibit the use of genetic information (including results of genetic tests and family history of disease) by employers in employment decisions and by health insurers and health plans in making enrollment determinations and setting insurance premiums.

CBO estimates that enacting the bill would increase the number of individuals who obtain insurance by about 1,000 people per year, nearly all of whom would obtain insurance in the individual market. The bill would affect federal revenues because some of the premiums paid by those newly insured individuals would be tax-deductible. CBO estimates that enacting S. 306 would decrease revenues by less than $500,000 in each year from 2006 through 2015.

Congressional Budget Office (CBO)

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