OIG Releases Report on ASP Pricing

June 28, 2006 - The Department of Health and Human Services Office of Inspector General (OIG) released a report on June 28 finding that the Average Sales Price (ASP) exceeded the widely available market price by at least five percent for five procedure codes. OIG did not take discounts into account when determining market prices.

Differences in ASP and widely available market price for codes J9045 (Carboplatin), J1100 (Dexamethasone sodium phosphate), J1260 (Dolasetron mesylate), J9390 (Vinorelbine tartrate), and J1626 (Granisetron HCl) triggered the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) mandate that OIG notify HHS if the ASP for a particular drug exceeds the widely available market price by a threshold of five percent. J9045 exceeded the threshold by 185 percent; J1626 exceeded the threshold by 17 percent, with the rest falling in between. The OIG reports that lowering the reimbursement amounts on these drugs to the widely available market price could reduce Medicare spending by $67 million in 2006.

The MMA mandates that the HHS secretary reduce reimbursement of drugs in cases where the ASP exceeds the five percent threshold over widely available market prices. The Centers for Medicare and Medicaid Services (CMS) notes that OIG calculations are based on fourth quarter 2005 data and do not reflect current trends in Medicare reimbursement for some of the drugs. The OIG recognized CMS concerns; however, noted that four of the five drugs still meet the threshold criteria, including J9045 (Carboplatin). It is not clear at this time what action HHS will take.