Medicare spending for drugs covered under Part B, including beneficiary cost sharing, has grown at an average rate of nearly 10 percent per year since 2009. Part B covers drugs that patients typically do not administer themselves but are instead administered by a clinician in physician offices and hospital outpatient departments, such as chemotherapy drugs and injections for rheumatoid arthritis. This policy would improve the accuracy of Medicare’s payments and protect beneficiaries and taxpayers from paying higher prices. In 2017, MedPAC recommended a policy that requires all Part B drug manufacturers to report ASP data and gives the Secretary the authority to apply penalties to manufacturers who do not report required data.
When Medicare lacks ASP data for a product, it typically sets the payment rate using list prices that are generally higher than ASP, resulting in higher than warranted Medicare payments.
CMS relies on pharmaceutical manufacturers to submit their average sales price (ASP) data to calculate Medicare’s payment rates for Part B drugs, but not all manufacturers are required to report such data.
