Medicare Average Sales Price

HDMA’s Position:
HDMA believes customary prompt pay discounts extended by manufacturers to distributors should be excluded when the Centers for Medicare and Medicaid Services (CMS) calculates average sales price (ASP) for purposes of reimbursement for Part B drugs and biologics. Excluding prompt pay discount from the calculation of ASP is consistent with Congressional intent to match Part B drug reimbursement with prices actually available in the marketplace to physicians and other Part B providers. Prompt pay discounts are paid to the distributor, not to the physician’s office that is reimbursed for Part B products they administer to patients. This approach aligns Medicare reimbursement with current Medicaid reimbursement methodology, which requires the exclusion of prompt pay discounts from the calculation of Average Manufacturers Price (AMP).

HDMA therefore supports legislative efforts to exclude customary prompt pay discounts from the calculation of ASP.

Issue:
ASP as the reimbursement metric for drugs reimbursed under Medicare Part B. In the 2006 Physician Fee Schedule (PFS) (CMS-1321-FC), CMS interpreted the MMA definition of ASP to include prompt pay in the calculation of ASP. CMS maintains that since the statute includes the words “prompt pay” discount, it has no choice but to include prompt pay discount when calculating ASP.

HDMA disagrees with this interpretation and believes CMS should consider context when interpreting the statute, taking into account its overall design and purpose. HDMA continues to believe Congress was clear in its enactment of the MMA that Part B drug reimbursement should reflect drug acquisition costs available to physicians in the marketplace. HDMA further believes CMS has the statutory authority to instruct manufacturers to exclude customary prompt pay discounts paid to distributors when they calculate ASP. CMS has, in fact, already exercised this authority when it published an earlier regulation to decrease variability in ASP reporting. Given CMS’ interpretation, however, it is necessary for Congress to amend the statute and clarify that customary prompt pay discounts should be excluded from the calculation of ASP.

About HDMA
HDMA is the national association representing primary healthcare distributors, the vital link in the healthcare system. Each business day, HDMA member companies ensure that more than nine million prescription medicines and healthcare products are delivered safely and efficiently to more than 164,000 pharmacies, hospitals, nursing homes, clinics and others nationwide. HDMA and its members work daily to provide value and contain costs, saving the nation's healthcare system an estimated $32 billion per year.