New ASP Reporting Requirement for Manufacturers without a Medicaid Drug Rebate Agreement

Buried in the 2,124-page Consolidated Appropriations Act, 2021 (the Act), which was signed by Donald Trump yesterday, was a brief provision requiring the reporting of average sales price (ASP) by manufacturers that do not have a Medicaid Drug Rebate Agreement.  ASP is used by CMS to set the payment rate for drugs and biologicals that are separately reimbursed under Medicare Part B.  Part B covers drugs that patients typically do not administer themselves but are instead administered in physicians’ offices and hospital outpatient departments.  Currently, only manufacturers that have entered into a Medicaid Drug Rebate Agreement with HHS are required to calculate and report ASP.  See 42 U.S.C. § 1396r-8(b)(3)(A)(iii).  Because not every manufacturer of drugs covered under Part B has such an Agreement, there are no ASPs reported for some Part B drugs.  In those cases, the Part B payment rate is based on published wholesaler acquisition cost (WAC) or average wholesale price (AWP), or sometimes the invoice price, which result in payment rates generally higher than a payment rate based on ASP would be.

Under Section 401 of the Act, a manufacturer of drugs or biologicals separately payable under Medicare Part B that does not have a Medicaid Drug Rebate Agreement will be required to report ASP, WAC, and sales made at a nominal price.  This reporting requirement goes into effect for calendar quarters beginning January 1, 2022.  The information is to be reported in a time and manner to be specified by CMS.  At some point prior to the effective date, we would expect to see the current electronic ASP reporting procedures extended to include this new category of manufacturers.  Audit and enforcement provisions currently applicable to ASP reporters will apply to the new category of ASP reporters.  HHS will be authorized to audit reporting manufacturers and survey wholesalers and manufacturers to verify reported information. Failure to report ASP for these drugs or biologicals may result in civil money penalties in the same manner as the failure to report ASP by manufacturers with Medicaid Drug Rebate Agreements.