October 13, 2011—The Department of Health and Human Services Office of Inspector General (OIG) plans to take a second look this coming year at drug manufacturers’ reporting of their average manufacturer prices (AMPs) after concluding last year that more than half had recently missed at least one quarterly reporting deadline.
OIG also says in its fiscal year 2012 work plan that it will launch studies on whether prices for Medicare Part D brand-name drugs are rising faster than inflation; whether Part D plan sponsors are getting big-box retailers’ bargain prices on generics; whether drug manufacturers are paying additional Medicaid rebates on new formulations of existing drugs; and whether the federal government is getting all of the new Medicaid rebate revenue it is due under health care reform.
The Inspector General’s annual work plan outlines new and ongoing reviews that the office intends to pursue during the next 12 months. For the first time in several years, OIG disclosed no new studies or works in progress specifically related to the 340B drug discount program.
Its decision to revisit the timeliness of AMP reporting has implications for 340B, however. A drug’s 340B ceiling price is either its best price (BP) or its quarterly AMP minus its unit rebate amount (URA), whichever is lower.
In September 2010, OIG reported that more than half of all manufacturers did not fully comply with quarterly requirements for reporting AMP data and more than three-fourths did not fully comply with monthly AMP submission requirements. Without timely reports, it said, the Health Resources and Services Administration (HRSA) cannot establish accurate 340B ceiling prices and the Centers for Medicare and Medicaid Services (CMS) cannot calculate Medicaid rebate and federal upper limit (FUL) amounts. It noted in a special advisory bulletin to manufacturers that it has the authority to levy penalties of $10,000 per day against those found out of compliance.
Other topics that OIG will address include:
- Medicaid managed care rebates. The Affordable Care Act extended Medicaid rebates to drug used by Medicaid managed care organization (MCO) enrollees. OIG will determine whether state Medicaid agencies are getting the utilization data they need to collect the rebates.
- Part D coverage gap one-time payments and discounts. OIG will review the accuracy of data used to determine whether beneficiaries in the donut hole were eligible for a one-time $250 rebate last year and are eligible for discounts on their drugs now.
- Off-label and off-compendia drug use. OIG will study the extent of off-label and off-compendia use of Medicare- and Medicaid-funded prescription drugs, and the extent to which specified compendia provide support for coverage.