OIG report suggests lower drug reimbursement

Sunday, September 30, 2007

WASHINGTON - If reimbursement for DuoNeb was based on average manufacturer price (AMP) rather than average sales price (ASP), Medicare would have saved $7 million during the third quarter of 2007, says a new report from the OIG.

The report compared the ASP with the AMP of 371 Part B drugs and found 34 with ASPs that exceeded AMPs by at least 5% during the first quarter of 2007. Medicare typically reimburses 106% of the ASP. The Department of Human Services can disregard the ASP if it exceeds the AMP by 5%. If that happens, CMS reimburses providers 103% of the AMP.

"That's typical of the government to assume if they dropped it down to where it was below your cost, you would still dispense it," said Mickey Letson, president of Decatur, Ala.-based Letco Companies. "How many people would be in business if we all sold our products at what it costs to make them? It's ludicrous."

The other 33 drugs combined would have garnered an additional savings of $2 million, the OIG reported.

The idea of adjusting future reimbursement for DuoNeb according to its AMP is not only unlikely, but also a moot point, said Letson. With generic versions of DuoNeb hitting the market this year, reimbursement for the drug is expected to drop.

"They've been quoting AMP forever," said Letson. "I'm not sure what the relevance is."