by Matthew S. Bajko

AIDS agencies across the state are reeling from the news that Governor Arnold Schwarzenegger is seeking $11 million in cuts to HIV/AIDS programs as he grapples with a $14 billion state deficit.

The funding plan calls for a $7 million reduction to the AIDS Drug Assistance Program; a $3.6 million cut for local HIV prevention and housing programs; and a 10 percent reduction in Medi-Cal provider reimbursement rates as well as elimination of several Medi-Cal benefits such as optometry, podiatry, psychology, and adult dental care.

"I would say people are very distressed by these cuts," said Anne Donnelly, Project Inform's director of health care policy. "In all fairness, this is a difficult year. Both the Legislature and governor have been very supportive of HIV programs in general. This is a structural deficit and everyone is taking a cut in this environment."

"On the other hand, this budget cannot be balanced based on cuts. These cuts are incredibly problematic," added Donnelly. "These are cuts that will really hurt people."

The chair of the state Assembly's budget committee, openly gay state Assemblyman John Laird (D-Santa Cruz), will preside over a hearing on the proposed budget today (Thursday, January 17) in Sacramento. Laird will face a gauntlet of special interests all fighting against particular cuts in state programs, from closures of state parks to reductions in Social Security benefits and education spending.

"He is proposing draconian cuts to every piece of state services," Laird said of Schwarzenegger's funding plan. "I think HIV advocates are going to have to band together with advocates for education, parks, health care in general and try for a global solution that helps everybody."

Nevertheless, Laird said, "The message is – and I am speaking for myself – I am going to fight to make sure nobody is negatively impacted who has HIV by this budget."

Laird assailed what he saw as the governor's "cut and borrow" approach to the budget.

"I really am looking for something that's not a cuts or borrow only strategy to get us through this. The budget strategy for the last five years has been cutting and borrowing, and we can't do it anymore," said Laird. "We can't survive that way. If you borrow, you are cutting future services."

Members of the California HIV Alliance, a coalition of seven AIDS agencies from across the state, held a conference call Monday, January 14 to begin mapping out a strategy on how to beat back the cuts.

Along with meeting with state lawmakers, alliance members may hold a lobbying day at the Capitol sometime in March. Those who participated in the phone call said the group remains optimistic that the HIV cuts will not be as drastic by the time a final budget is passed sometime this summer.

"The mood is a little bit disheartened. We're committed to fighting these cuts and feel we can make a pretty strong case why these cuts will be particularly hurtful to people with HIV and AIDS," said Courtney Mulhern-Pearson, a science and public policy analyst at the San Francisco AIDS Foundation, in a phone interview Monday afternoon. "We have a lot of allies on the Assembly and Senate budget committees."

The group is also seeking a meeting with Dr. Michelle Roland, the bisexual woman and former UCSF AIDS doctor whom the governor appointed as chief of the state Office of AIDS last summer.

As someone who served on ADAP's Medical Advisory Committee and was a founding member of San Francisco's ACT UP chapter, Roland is seen as a fierce advocate for AIDS programs.

Donnelly said, "I am sure it is helpful that she does clinical care and has some very good ideas, if the worse case scenario does happen, where we can save some money to offset some of these cuts."

In an interview with the Bay Area Reporter this week, Roland said she could not predict if there would be a reduction in cuts to her office's budget. The budget cut is only 6 percent of her total funding, "substantially less" than the 10 percent cut most other state agencies are grappling with, noted Roland.

"I know the governor is really struggling with a huge budget deficit and asking all programs to contribute to solving that," said Roland. "I don't have any way of knowing what the final budget will look like. There is a legislative process but I think it is wise for all of us to assume this is close to what the final budget will look like."

A main priority for AIDS advocates will be restoring the funding to ADAP. While the cuts to ADAP will not affect the formulary of antiretroviral treatments, it will reduce the availability of drugs for co-morbidities and opportunistic infections.

"We want lawmakers to restore that money," said Mulhern-Pearson. "If the state takes away medications necessary to keep HIV-positive individuals healthy while on antiretrovirals, and reduces reimbursements to their health care providers, many low-income individuals living with HIV will face new illnesses and have no choice but to turn to hospital emergency rooms."

Reducing access to ADAP drugs will only cost the state more in future medical bills, argued Mulhern-Pearson.

"The governor is cutting our ounce of prevention. Later we'll have to pay for pounds of cure," she said in a statement released last week.

AIDS Healthcare Foundation President Michael Weinstein has suggested rather than cutting drugs from the ADAP formulary, the governor and state lawmakers should reduce reimbursements to drug companies and pursue purchasing drugs for ADAP and other state programs at federal pricing levels.

 "Those price savings alone could result in a 15 percent savings to the state," stated Weinstein.

But Roland disagreed and said the state already receives two sets of rebates from pharmaceutical companies. Asked if therefore there is little room for negotiating lower prices, she said, "That is correct. The model we use is significantly the most cost effective model."

Drug price hike

ADAP programs across the country were dealt a funding blow by the announcement this week that Bristol Myers Squibb would increase prices between 6.9 percent and 9 percent for all of its HIV products.

According to the Fair Pricing Coalition, the company markets four HIV drugs: Zerit, a 15-year-old drug whose sales have plummeted in recent years because of side effects; Sustiva, a popular drug the company acquired well after it was a already a success in the marketplace and its development costs recovered; Atripla, a top selling drug that combines Sustiva in a single pill with a two-drug combination made by another company (Gilead); and Reyataz, a popular drug sold to patients at all stages of HIV disease and the only good-selling drug for HIV developed by Bristol alone.

"The last thing we need right now is a round of excessive price increases for these drugs, which are already extremely expensive and burdening the health care system," stated Paul Dalton of the FPC and Project Inform. "Even though the increase to government payers is limited to the increases in the Consumer Price Index, these increases affect the co-pays that patients must pay out of pocket. The price hikes also put pressure on other companies to levy similar increases, triggering round after round of price escalation."

In California the dual news about cuts in ADAP and drug price increases is "a double hit," said Donnelly. "Certainly, a price increase is never good."

The state's AIDS funding cuts are included in the governor's 2008-09 $3.1 billion budget for California's Department of Public Health. Only $368.9 million of the department's funds come from the state's general fund.

The general fund reduction proposed in the CDPH budget is $26 million. The state Office of AIDS receives the largest share of the department's general fund dollars.

According AHF, the overall budget represents a $246.2 million decrease from the revised 2007-08 budget, including the $26 million general fund reduction. AHF officials have questioned a $300,000 cut to the state's therapeutic monitoring program (TMP), which covers viral load, genotype, and phenotype testing. The tests monitor whether AIDS medicines – many paid for through the state's ADAP program – are benefiting patients.

In early 2007, AIDS advocates statewide lobbied to restore a previous $4 million budget cut to the program and successfully restored the $4 million to the overall $8 million program. However, the additional $4 million is not included in the new budget released last week.

"This cut, announced today as a $300,000 cut, is in fact really a $4.3 million cut to TMP, and increases the overall cut in AIDS services to $15 million," said Joey Terrill, AHF's acting director of public affairs, in a statement.

Project Inform raised concerns about the proposed cut to funding for HIV counseling and testing programs. The agency worries if enacted, the cut could potentially harm efforts to identify the estimated 20 percent of HIV-positive Californians who are unaware of their HIV status.

Donnelly said she is also concerned about the proposed 10 percent reduction in Medi-Cal provider reimbursement rates.

"Provider rates are already low in California. It could cause additional access issues," she said.

Compared to previous years where AIDS advocates were able to stave off funding cuts, Donnelly said this year they may not be as successful if lawmakers do not find a way to increase state revenues.

"California has definitely placed a priority on health care in the past, at least for people with HIV and AIDS. I am always hopeful we will find a way to rectify this," she said. "For me, this year looks particularly problematic due to the apparent lack of willingness to raise revenues. I think there are less obvious solutions on the table this year."

Anyone interested in receiving updates on the budget should e-mail SFAF's Mulhern-Pearson at mailto:cpearson@sfaf.org.