Los Angeles Lawyer, Vol. 11, No. 6, September 1998, p.30
John K. Van de Kamp, Attorney General of the State of California

The costs of the disease, in human and monetary terms, are profoundly staggering. The loss of life in California alone from those already infected, assuming 1.5 million people now infected in the U.S., could approach 375,000.

For the year 1991, the potential medical cost of treating AIDS patients in California alone is between $2 and $4 billion. And the potential combined costs attributed to AIDS in 1991 (including treatment of those infected with the HIV virus and ARC patients, and loss of wages, future earnings and future productive accomplishments) may be more than $16 billion.

The challenge is clear. This article presents the available figures regarding the spread of the disease, the best estimates as to the future course of the epidemic, and some ideas for turning it around.

One urgent issue now facing those already infected with the HIV virus is the speed of medical progress in developing drugs that may arrest or prevent the development of AIDS. Last year the California legislature enacted a law, which I sponsored as attorney general, establishing an innovative procedure for speeding the clinical testing of AIDS-related drugs in humans. This year, I am sponsoring additional legislation to establish a grant and loan program to help fund the costs of those tests. The last portion of this article discusses those legislative efforts.

FUTURE COURSE

The estimates of the future course of the AIDS epidemic are significant for the planning of health care, public health measures and research. The validity of those projections, however, is complicated by numerous factors. Most are based on the assumption that past trends, such as the distribution of cases by age, sex, geographic location and risk groups, will not change significantly over time. Since the disease was only first identified in 1981, the study of the disease and the spread covers a short period of time. Further clouding the crystal ball is that clinical manifestations of the disease may not occur until long after actual infection.

With those qualifications, the best available current estimates appear to be those from the National Academy of Sciences, published in October 1986 in Confronting AIDS. Directions for Public Health, Health Care and Research (hereinafter referred to as the National Academy Report. These estimates show:

· Between 1 to 1.5 million people in the U.S. probably are infected with the virus that causes AIDS. Since California has roughly one-quarter of the total reported AIDS cases thus far, this may mean that up to 375,000 Californians are already infected.

· By the end of 1991, the cumulative total AIDS cases in the U.S. will total more than 270,000, with more than 74,000 of those diagnosed for the first time in 1991. If these figures are correct, California could have 67,500 total AIDS cases by 1991, with 18,500 having been diagnosed in that year.

· By the end of 1991, there will have been a cumulative total of 179,000 deaths from AIDS in the U.S. This could mean almost 45,000 deaths in California alone by that time.

· Because the typical time between infection with HIV and the development of clinical AIDS is four or more years, most of the persons who will develop AIDS by 1991 are already infected.

· The vast majority of AIDS cases will continue to come from the currently recognized high-risk groups.

· New AIDS cases in men and women acquired through heterosexual contact will increase by sevenfold by 1991.

· Pediatric AIDS cases will increase by almost tenfold by 1991.

The National Academy of Sciences figures are by no means definitive; the literature shows a broad range of projections. The National Academy Report itself notes that "[o]pinions provided to the committee by members of the Epidemiology Working Group ranged from the estimate of HIV infection as a minor problem among heterosexuals to an estimate that perhaps millions of heterosexuals who have multiple sex partners or who patronize prostitutes will ultimately be affected."[1]

The projections by the State of California of reported AIDS cases have changed over time. In 1986, the California Department of Health Services (DHS) published its report, Acquired Immune Deficiency Syndrome in California. A Prescription for Meeting the Needs of 1990 (hereinafter the DHS 1986 Report). That report stated, "for planning purposes, the Department of Health Services is projecting a cumulative total of AIDS cases in California in 1990 of about 30,000."[2] This figure represented a compromise between a "best case" scenario of 18,000 cases by 1990 and a "worst case" scenario of 40,000.

In April 1987, however, DHS revised its estimate. Using the same methodology used by the National Academy of Sciences, DHS projected that "the cumulative number of AIDS cases in California will exceed 50,000 within the next five years."[3]

Even federal figures may significantly underestimate the number of persons who may eventually progress from HIV infection to AIDS. The National Academy Report states that "[i]t is not known what proportion of individuals who are seropositive for HIV antibodies will ultimately develop clinical AIDS."[4] The principal difficulty in formulating such an estimate is that there are now only seven years of observations on which to base a prediction.

Other predictions, however, are much more negative: the director of the American Medical Association AIDS Task Force has stated that it may be "very likely" that almost all of those now infected with the virus will develop clinical AIDS and eventually die as a result of it. As the number of people infected with the virus continues to grow, and as understanding of the disease grows, the projections of future death figures will likely change.

STAGGERING COSTS

Estimates of the costs associated with AIDS have varied. One cost estimate study which appears to be widely accepted was done by Anne Scitovsky and Dorothy Rice, through the Palo Alto Medical Foundation/Research Institute under contract to the Centers for Disease Control (CDC).[5] Scitovsky and Rice estimate that personal medical care costs of treating AIDS patients throughout the U.S. will rise from $630 million in 1985 to $8.5 billion in 1991, assuming the validity of the statistics published by the CDC. Costs for research, screening, education and general support services are estimated to rise from $319 million in 1985 to $2.3 billion in 1991. Indirect costs attributable to loss of productivity and premature mortality are estimated to rise from $3.9 billion in 1985 to $55.6 billion in 1991.[6]

Staggering as they are, even these figures may be low. The National Public Health Service has estimated that the direct cost of medical care for AIDS patients during the year 1991 alone could be between $8 and $16 billion. Since California has approximately 25 percent of the AIDS patients in the U.S.; accepting either the Scitovsky and Rice or the National Public Health Services projections, the cost to California for that care could be between $2 and $4 billion.

Moreover, even the federal figures have been criticized as "significantly underestimating" the total cost of the AIDS epidemic: "Because this estimate does not include the care of ARC patients and seropositive individuals, and because it does not take into account the costs associated with experimental therapies or lengthened survival times, it significantly underestimates the total annual direct costs for HIV infection in that year."[7] This same criticism was echoed in a report published last summer by the United States Congress Office of Technology Assessment.[8]

Scitovsky and Rice have estimated that "only medical expenses of victims of automobile accidents will exceed the medical care costs of AIDS patients in 1991."[9] They also predicted that the total indirect costs of AIDS in 1991 will "represent close to 12 percent of the estimated total indirect costs of all illness."[10]

These figures are higher than those published by the DHS. The DHS 1986 Report estimated that the total medical care expenditures for all AIDS cases in California occurring through 1990 would amount to $3.5 billion, with a total of $270 million coming from the Medi-Cal program. In the DHS 1987 Report, the department concluded that "[t]he total cost of AIDS (Medi-Cal and non Medi-Cal) in California in calendar year 1989 is projected to be $312 million ..." and that Medi-Cal costs "for AIDS should reach $40 million in FY 88/89."[11]

These figures should be contrasted with those of Scitovsky and Rice, which indicate that the direct medical care cost of AIDS in California in 1991 alone could be between $2 and $4 billion. Should the Scitovsky and Rice or the National Public Health Service projections prove to be correct, California could be found with substantial but as yet unanticipated costs.

The California DHS projections appear unduly conservative. The department's estimate is based on the assumption that "the proportion of cases covered by Medi-Cal stays constant at current levels, with no major changes in treatment or patient longevity ..."[12] However the percentage of AIDS patients receiving MediCal benefits jumped from 12 percent to 20 percent between 1986 and 1987 while the use of AZT has already resulted in reports of increases in patient longevity.

The projected costs of AIDS raises other financially related issues. The National Academy Report notes:

"Nationally, by 1991, AIDS cases alone will probably require more than 1 percent of all available hospital beds and amount to more than 3 percent of total hospital costs ... In absolute terms. the 145, 000 AIDS cases expected to be alive in 1991 . . . will use 4.6 million hospital bed days . . . This total is in excess of the number of bed days devoted to lung cancer (3.36 million) or motor vehicle accidents (3.54 million) in 1980. In San Francisco, AIDS cases will use 9.5 percent of available hospital beds, with 19 cents of every dollar spent on inpatient and outpatient treatment going to the care of AIDS patients . . . For San Francisco the projected use of hospital beds and total hospital treatment costs for 1991 are nearly five times the present requirements."[13]

AIDS is expected to have widespread impact. As of October 1986, "40 percent of the national total of approximately 24,500 AIDS cases [had] occurred in New York City and San Francisco ... However, the Public Health Service has estimated that by 1991, 80 percent of the cumulative total of 270,000 AIDS cases will be outside these two cities."'4 As a result, the severe health care costs which have until now been faced only by a small number of urban areas (principally San Francisco, Los Angeles and New York) will likely spread to other areas of the state and the country, in a very short time.

NEED FOR STATE ACTION

There has been widespread criticism of the slowness with which the federal Food and Drug Administration (FDA) has responded to the AIDS epidemic. Although there are many promising avenues of research, many companies have reported difficulty in receiving investigative new drug approval. The process typically takes years. Only recently has the FDA taken steps to expedite the process for AIDS-related drugs.

The relationship between the FDA and the National Institutes of Health (NIH), which conducts clinical trials of some drugs, has been criticized. The FDA has been accused of reacting more favorably and quickly to NIH-sponsored drugs than to other promising drugs coming from other sponsors. Criticism has also been lodged that the FDA's attitude toward consideration of new drug applications is adversarial rather than cooperative.

Because of the delays in finding and approving treatment(s) for HIV infection, many infected with the virus are experimenting with drugs lacking FDA approval. Some go abroad to Mexico and Western Europe in search of a cure. Not unexpectedly, many of those infected will try anything that offers hope. Some have had positive results, others have been mercilessly defrauded by charlatans. In any event, when such underground channels are used, the ability to study the impact of promising drugs in a systematic way is lost.

Given the crisis (this is one time when the word is not abused), the lack of progress in developing AIDS drugs and the underground market, I decided to see what we might do in California to speed up the clinical testing of AIDS-related drugs. What I found surprised me, for I had long assumed that the federal government had preempted the field.

EXISTING DRUG TESTING PROCEDURES

Under federal law,[15] no person may introduce any new drug or component thereof into interstate commerce without the approval of the FDA. Under the FDA process, if a drug company can demonstrate, through laboratory evaluation, that a drug appears safe, it will apply for an exemption from the requirements for investigative new drug use (IND); if the FDA does not object, the manufacturer will then follow a protocol agreed to by the FDA for clinical evaluation of the drug in human testing.

Where successful, the results of those clinical tests and investigations will then be submitted to the FDA in a new drug application (NDA) for the final necessary approval for interstate sale. Many possible avenues for treatment of HIV infection are currently being researched and some are in clinical testing, but only one drug, AZT, has been approved for sale in the U.S. under the FDA process.

State law governs the introduction of new drugs into use in California. Health and Safety Code Sections 26670, et seq., provide that no person may test or sell a new drug in California unless it has been approved for testing or sale by DHS, or it has been approved under federal law.

Thus, FDA IND approval exempts the manufacturer from necessary state approval for investigational testing, and a drug that is approved for testing under federal law can be used in tests in California without state approval. Likewise, a drug approved by the FDA needs no further California regulatory approval to be sold in California.

As a result of these federal and state requirements, virtually all drug manufacturers go through the federal FDA process, since final federal approval allows sale in all states. Approval by a single state, on the other hand, would allow only sale or testing in that state. A manufacturer may nonetheless pursue approvals for testing and sale in a single state under state law without complying with the federal law requirements, so long as the drug is manufactured and distributed only in that state. In those circumstances, the drug is not introduced "into interstate commerce" under federal law. and the federal FDA requirements do not govern.

It was with this in mind that the California Attorney General's Office turned to Assemblyman Bill Filante in 1987 and asked him to author Assembly Bill 1952.

THE CALIFORNIA PLAN

AB 1952, now codified at Health and Safety Code Sections 199.57, 199.59 and 26679.5, is a simple bill: it mandates the director of DHS to implement the drug testing and sale authority that he had under existing law, for the purpose of approving the testing and sale either of an AIDS vaccine, or of new drugs that offer a reasonable possibility of treating people who have been infected with the AIDS virus.

The bill expanded the authority of the AIDS Vaccine Research and Development Advisory Committee, created in 1986, to authorize the committee to review drug applications submitted for testing or sale under this program, in order to provide the director with the best expert advice available when he makes his decision whether to authorize testing or sale of new drugs. Alternatively, the director may contract out for advice and review when applications are submitted, so long as the people chosen are medical doctors who have significant experience in treating AIDS patients or others who have significant experience in either reviewing or conducting drug tests. The bill also appropriated $500,000 to the department for initial operations of this program.

AB 1952 contained extensive findings and declarations relating to the extent of AIDS and HIV infection. Among them were that California has not only an interest in expediting the testing of AIDS-related drugs, but also in ensuring that those tests are performed only under carefully considered, developed and recognized medical protocols.

These findings served three purposes: they first recognize the FDA process, and the fact that California should not operate a system that is in conflict with the FDA or federal law. They also reflect the position that coordination between California and the federal government, in the long run, offers the best hope for the development of effective AIDS-related drugs. Finally, they also reflect that there are numerous valid medical and ethical considerations which compel the use only of carefully developed and monitored drug test trials; that California should not seek to shorten or approve tests less rigorous than are scientifically appropriate; and that the results of any tests conducted under the California statute should be usable to the maximum extent possible in related FDA proceedings.

Implicit in the bill is a cooperative regulatory atmosphere: the bill was intended to provide a regulatory system under which California would work cooperatively with applicants for approval for clinical testing of AIDS-related drugs, and would take all steps appropriate to expedite the regulatory process in order to increase the number of drugs in clinical tests. Unlike the FDA process of evaluating thousands of drugs for thousands of purposes, the bill establishes a streamlined, single-purpose approach to the single problem of curing AIDS.

AB 1952 was a bipartisan bill which moved through the legislature with astonishing speed: introduced on September 1, it passed both the Assembly and the Senate by unanimous votes, and was signed into law by the governor on September 28, 1987.

Investigational drug testing is now underway in California. One of the first drugs to be tested under the plan's auspices is the promising new drug developed by Dr. Jonas Salk.

More needs to be done. This year, I have sponsored legislation establishing a program of grants or loans to physicians or manufacturers to finance drug development or clinical trials. AB 3281, authored by assemblymen Filante and John Vasconcellos, would establish a grant and loan program under the direction of DHS, with funding available to California manufacturers or qualified investigators, to assist in underwriting the costs of the development or clinical testing of AIDS-related drugs. The state budget currently includes $6 million for the first year of operation. The legislature also has expressed its intent to provide additional funds in future years.

A LEADERSHIP ROLE

The AIDS crisis is real. California can make a significant contribution to the efforts already underway to deal with it. California has both the resources and the need to play a leadership role in this effort. California is now the sixth richest economy on earth. It is a world leader in medical and biotechnical research as well as in manufacturing.

If a cure for AIDS is not found, thousands of contributing Californians will lose their lives. Their loss in human terms is beyond measure. And for those concerned about the dollar costs, there is plenty of reason to do all we can to beat back the projection of future AIDS-related costs that will affect every taxpayer in the state. Californians must do all within their power to stop the spread of this disease and to find treatment and hope for those afflicted.

Footnotes:

John Van de Kamp is the attorney general of the State of California.

1. NATIONAL ACADEMy OF SCIENCES. CONFRONTING AIDS: DIRECTIONS FOR PUBLIC HEALTH. HEALTH CARE AND RESEARCH (Oct. 1986). at 90 (hereinafter NATIONAL ACADEMY REPORT).

2. CALIFORNIA DEPARTMENT OF HEALTH SERVICES. ACQUIRED IMMUNE DEFICIENCY SYNDROME IN CALIFORNIA: A PRESCRIPTION FOR MEETING THE NEEDS OF 1990 ( 1986). at 4 (hereinafter DHS 1986 REPORT).

3. CALIFORNIA DEPARTMENT OF HEALTH SERVICES. AN UPDATED QUANTITATIVE ANALYSIS OF AIDS IN CALIFORNIA (Apr. 1987). at 12 (hereinafter DHS 1987 REPORT).

4. NATIONAL ACADEMY REPORT, supra n. 1, at 45.

5. Scitovsky and Rice. Estimates of the Direct and Indirect Costs of Acquired Immune Deficiency Syndrome in the United States, 1985, 1986, and 1991. PUBLIC HEALTH REPORTS, Vol. 102, No. 1 (Jan.-Feb. 1987)(hereinafter Scitovsky and Rice).

6. Id. at 7.

7. NATIONAL ACADEMY REPORT, supra n. 1, at 21.

8. Sisk. The Cost of AIDS: A Review of the Estimates, HEALTH AFFAIRS (Summer 1987).

9. Scitovsky and Rice, supra n.5 at 15.

10. Id.

11. DHS 1987 REPORT, supra n.3, at 13.

12. Id. at i and 13.

13. NATIONAL ACADEMY REPORT, supra n. I, at 160.

14. Id. at 164.

15. 21 U.S.C. Section 355.

Copyright (c) 1988, Los Angeles Lawyer. Permission for noncommercial reproduction granted.

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