1.) Medicare Expenditures on and Administrations of Part B ASP Drugs Were Concentrated in a Small Number of Drugs in 2014 Expenditures on and Administrations of Part B ASP Drugs Were Each Concentrated in a Small Number of Drugs, with Few Drugs among Highest in Both

Medicare expenditures were concentrated in a small number of the 551  Part B drugs that were paid based on ASP in 2014. 2.) In  particular, 6 drugs each had expenditures of over $1 billion and  collectively accounted for 36 percent of all expenditures on Part B ASP  drugs that year. Beyond the 10 drugs with the highest  number of administrations, an additional 75 drugs were each  administered between 100,000 and 1 million times, and collectively  accounted for an additional 51 percent of all administrations of Part B  drugs paid based on ASP. Drug Characteristics Associated with the Highest Percentage of Expenditures Generally Differed from Those Associated with the Highest Percentage of Administrations

The characteristics of drugs associated with the majority of expenditures  on Part B ASP drugs tended to differ from the characteristics of drugs  associated with the majority of administrations. CMS Checks Reported Sales Prices for Potential Data Errors, but Does Not Routinely Verify the Underlying Data or Receive All Relevant Data

		CMS Performs Several Electronic Data Checks on Manufacturer-Reported Sales Price Data, but these Checks Do Not Verify the Accuracy of the Underlying Data

CMS takes three main steps to validate that the sales price data reported  by drug manufacturers are complete and accurate. CMS’s data checks include  checking for missing data or duplicate entries,  checking for incorrect product information, and  comparing submissions to those of previous quarters. However, CMS does not take sufficient steps to verify the accuracy of the  data. CMS Is Unable to Assess the Accuracy of All Sales Price Data because Not All Manufacturers Submit Sales Price Data

CMS is unable to assess the accuracy of all drug manufacturers’ sales  price data because not all drug manufacturers submit these data to CMS. As stated previously, only drug manufacturers with Medicaid drug rebate  agreements are required to submit ASP data on a quarterly basis. This is inconsistent with federal  standards for internal control, which call for management to use quality  information to achieve objectives. These officials stated that providers prefer to  use drugs with published Medicare payment rates because they know  what they will be paid. In contrast, CMS officials told us  if a manufacturer did not submit ASP data for a drug that is manufactured  by multiple sources, the sales price would still be based on ASP data  submitted by the other manufacturers of the drug. Conclusions

In 2014, Medicare spent approximately $21 billion on Part B drugs paid  based on ASP. The substantial expenditures for Part B ASP drugs  underscore how important it is that CMS ensure that the data on which  the agency bases Medicare’s payment rates for these drugs are accurate. Matter for Congressional Consideration

To help the Department of Health and Human Services ensure accuracy  in Part B drug payment rates, Congress should consider requiring all  manufacturers of Part B drugs paid at ASP, not only those with Medicaid  drug rebate agreements, to submit sales price data to CMS, and ensure  that CMS has authority to request source documentation to periodically  validate all such data. Recommendation for Executive Action

CMS should periodically verify the sales price data submitted by a sample  of drug manufacturers by requesting source documentation from  manufacturers to corroborate the reported data, either directly or by  working with OIG as necessary. In its comments, HHS agreed with our recommendation. GAO-16-12.
Why GAO Did This Study

Medicare Part B covers drugs typically administered by a physician. Medicare pays physicians and other providers for these drugs at an amount generally equal to the ASP of the drug plus a fixed percentage. These payment rates are calculated quarterly by CMS based on price and volume data reported by drug manufacturers. Members of Congress and others have questioned the amount that both Medicare and its beneficiaries spend on Part B drugs.
GAO was asked to examine Medicare spending for and utilization of Part B drugs and the accuracy of the sales price data reported by drug manufacturers. This report (1) describes Medicare spending and utilization for Part B drugs that are paid based on ASP, including variations in spending and utilization by provider and drug characteristics, and (2) examines the steps CMS takes to ensure the accuracy of the sales price data reported by drug manufacturers. To describe Medicare spending and utilization for Part B ASP drugs, GAO analyzed 2014 Medicare claims data. To examine the accuracy of ASP data, GAO interviewed CMS, the HHS Office of Inspector General, and drug manufacturers and reviewed related documentation.

What GAO Found

In 2014, the most recent year for which data were available, the Medicare program and its beneficiaries spent about $21 billion on approximately 46 million administrations of 551 Part B drugs paid based on average sales price (ASP). Six drugs—each exceeding $1 billion in expenditures—accounted for 36 percent of all expenditures on Part B ASP drugs, while a different 10 drugs—each administered over 1 million times—accounted for 37 percent of all administrations. Biologics (drugs made from living entities), drugs without generic versions available, and drugs made by a single manufacturer were associated with the vast majority of expenditures on Part B ASP drugs. In contrast, synthetics (drugs produced from chemical ingredients), drugs with generic versions available, and drugs with multiple manufacturers were associated with the vast majority of administrations. Compared with other types of providers, hematology oncologists were associated with the highest percentage of drug expenditures and administrations.
Source: GAO analysis of Centers for Medicare & Medicaid Services, Food and Drug Administration, and RED BOOK data. | GAO-16-594
The Centers for Medicare & Medicaid Services (CMS), an agency within the Department of Health and Human Services (HHS), performs several electronic data checks on the sales price data reported by drug manufacturers each quarter, including checking for missing data or incorrect product information. However, CMS does not routinely verify the underlying data, which is inconsistent with federal internal control standards that call for management to use quality information to achieve its objectives. Without additional verification of the ASP data received from manufacturers, it is possible for the data to be inaccurate, which could result in inaccurate Medicare payment rates. In addition, CMS is unable to use or assess the accuracy of all sales price data because, as directed by statute, only manufacturers with Medicaid drug rebate agreements are required to submit sales price data to CMS. Unless all manufacturers without rebate agreements choose to voluntarily submit sales price data, the payment rates for some drugs will be based on incomplete ASP data or will not be set based on ASP.

What GAO Recommends

Congress should consider requiring all manufacturers of drugs paid at ASP to submit sales price data to CMS. Further, CMS should periodically verify the data submitted by a sample of drug manufacturers by requesting source documentation. HHS agreed with GAO's recommendation and stated that CMS would take action as warranted.