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Medicare Part B Drug Payments: Impact of Price Substitutions Based on 2016 Average Sales Prices

When Congress established average sales price (ASP) as the basis for Medicare Part B drug reimbursement, it also provided a mechanism for monitoring market prices and limiting potentially excessive Medicare payment amounts. The Social Security Act mandates that the Office of Inspector General (OIG) compare ASPs with average manufacturer prices (AMPs). If OIG finds that the ASP for a drug exceeds the AMP by 5 percent in the two previous quarters or three of the previous four quarters, the Secretary of Health and Human Services may substitute the reimbursement amount with a lower calculated rate. Over the last decade, OIG has produced annual reports aggregating the results of our mandated quarterly ASP to AMP comparisons. This annual report will quantify the savings to Medicare and its beneficiaries that are a direct result of CMS's price substitution policy based on 2016 ASPs and may offer recommendations for Medicare to achieve additional savings.

OIG updated this work plan item to clarify that the annual report is a summary of four published quarterly reports that provide CMS with timely information to make price substitutions for certain drugs covered by Part B.

Announced or Revised Agency Title Component Report Number(s) Expected Issue Date (FY)
Completed Centers for Medicare & Medicaid Services Medicare Part B Drug Payments: Impact of Price Substitutions Based on 2016 Average Sales Prices Office of Evaluation and Inspections OEI-03-18-00120 2018