OMPARING AVERAGE SALES PRICES AND AVERAGE MANUFACTURER PRICES FOR MEDICARE PART B DRUGS: AN OVERVIEW OF 2012

HHS:  3/12/14

WHY WE DID THIS STUDY

When Congress established average sales prices (ASPs) as the primary basis for Medicare Part B drug reimbursement, it also mandated that the Office of Inspector General (OIG) compare ASPs with average manufacturer prices (AMPs) and directed the Centers for Medicare & Medicaid Services (CMS) to substitute payment amounts for drugs with ASPs that exceed AMPs by a threshold of 5 percent. To comply with its statutory mandate, OIG has completed 29 quarterly pricing comparisons since the ASP reimbursement methodology for Part B drugs was implemented in January 2005. CMS began substituting payment amounts in April 2013 in accordance with its published price substitution policy, which currently applies to only certain codes with complete AMP data.

HOW WE DID THIS STUDY

We identified (1) drug codes that would have been eligible for price substitution on the basis of data from one or more quarters of 2012, (2) the codes for which CMS actually substituted prices, and (3) the codes that would not have been eligible for price substitution because they did not meet one or more of CMS’s substitution criteria. We also estimated savings for each of the drug codes that exceeded the 5-percent threshold in a given quarter of 2012.  Read More