ADAP costs rise; Office of AIDS outlines estimate and loan repayment schedule to Legislature

The Office of AIDS briefed the Assembly Budget Subcommittee on Health on the AIDS Drug Assistance Program (ADAP) estimate and on recent loans the program made to the state general fund.

Joseph Grama, branch chief of the ADAP Branch in CDPH's Office of AIDS, presented the fiscal estimate and identified both revenue and expenditure drivers. "For 2024–25, the Office of AIDS estimates the ADAP budget authority need will be about $392.5 million, including roughly $277.3 million from the ADAP rebate fund and $115.2 million from the federal trust fund," Grama said. For 2025–26 the office estimated total needs rising to about $462.3 million, driven by program enhancements and expanded eligibility.

Loan repayment schedule: Grama told the subcommittee that two loans from the ADAP rebate fund were scheduled for repayment: a $400 million loan from 2023–24 planned for repayment in 2027–28 and a $500 million loan from the current year planned for repayment in 2028–29. He said there were no planned delays at the time of the hearing but that the budget act allows earlier repayment if program need requires it.

Drivers of cost increases: Grama and department staff attributed higher ADAP expenditures to a set of legislative and stakeholder-driven changes included in the 2024 governor's budget or enacted legislation. These changes include expansion of financial eligibility (from 500% to 600% of the federal poverty level), a move from a closed to an open drug formulary, and increases to insurance premium assistance caps — all of which add to ADAP program costs. Grama warned that if program enhancements are extended or the ADAP rebate fund is used to cover additional non‑ADAP medication services, the expenditure–revenue gap could grow.

Committee concerns and context: Committee members asked whether ADAP would be sustainable without further loans to the general fund and about projections comparing annual revenues (rebates) to expenditures. Grama said that prior to the recent enhancements, annual revenues historically exceeded expenditures and that the program had accumulated a substantial fund balance; the recent increases and the timing of multi-year enhancements had changed those projections. The Office of AIDS said it would refine its projections as more recent data become available.

Public comment: Speakers from AIDS service organizations and coalitions urged the Legislature to ensure ADAP loan repayments are returned to HIV services and prevention programs and to protect the program's long-term solvency.