Recent OIG Report Finds No Pricing Data on 8% of Drugs

Sarasota, FL (WorkersCompensation.com) – With rates that change every quarter, sometimes drastically, drug pricing can feel like hitting a moving target. According to a recent report from the U.S. Department of Health and Humana Services, you may not be alone. 

CMS utilizes average sale prices (ASPs) reported by manufacturers to determine the price for drugs that are covered by Medicare. The ASP pricing is based on the manufacturer’s actual quarterly drug sales. With the initiation of the Consolidated Appropriations Act, 2021, the OIG was called to closely monitor ASP data. As a result, the OIG did a full assessment of their pricing practices, reviewing their operating procedure,s as well as interviewing CMS staff to gain input. Additionally, the OIG audited 5 years’ worth of drug reimbursements from 2016 to 2020.

While CMS does have system edits in place for drugs, the report states they do not have a process or logic in place to review the accuracy of their process to determine correct pricing based on the ASP data. Additionally, the report stated that they do not leverage the ASP data that could be used to create analytical reports that would monitor the accuracy of the pricing and maximize its oversight capabilities. 

As CMS pricing is fully dependent on reporting from manufacturers, there were several instances in which CMS miscalculated or was unable to accurately calculate rates. The report states that between 2016 and 2020, CMS was not able to calculate an ASP-based payment amount for 8 percent of drug codes at least one time. The reasons given was that the manufacturer reported negative sales or ASP value, or the manufacturer stated they had no sales for that quarter. 

When no information is available for pricing, the result is often an inflated reimbursement due to a lack of perimeters. The OIG found that in total, 24 percent of drug codes were missing ASP data for one or more specific drugs within the code for at least one quarter between 2016 and 2020.

It is interesting to note that the report states CMS reported that late ASP data from the manufacturers greatly hindered its ability to conduct effective oversight. While the only recommendation listed was to come up with a strategy to strengthen internal controls to ensure accuracy, the OIG released another report addressing their findings of how manufacturers are calculating their ASP data. 

The report found some inconsistencies in what drug sales were being used in the ASP calculation, such as exclusion of Tricare drug sales. Additionally the OIG found inconsistencies among payments to third parties that were excluded due to being considered a “bona fide service fee”. Manufacturers also called for clearer guidance regarding rebates, and global calculation of ASP data. 

Overall, the OIG recommended a review of current guidance available for manufacturers. Additionally, the OIG noted 9 areas where additional guidance may improve consistency and accuracy of ASP reporting by manufacturers. 

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