OIG Enforcement Initiative Regarding AMP and ASP Reporting

September 29, 2010

By Michelle L. Butler

Yesterday, the Office of the Inspector General (“OIG”) of the Department of Health and Human Services (“HHS”) issued a Special Advisory Bulletin regarding a new enforcement initiative to promote increased compliance by manufacturers with regard to reporting of average manufacturer prices (“AMPs”) and average sales prices (“ASPs”).  This was based at least in part on a report the OIG issued simultaneously regarding noncompliance by drug manufacturers with AMP reporting requirements.

The Medicaid Drug Rebate Program and the 340B program both rely on timely and accurate submission of AMPs by manufacturers in order to calculate rebates to be paid to the state Medicaid programs by manufacturers and statutory prices to 340B entities, respectively.  The federal upper limit (“FUL”) program for reimbursement of Medicaid drugs has also been directed by statute to rely on AMPs for the calculation of the reimbursement rate for such drugs.  Similarly, the Medicare Part B drug benefit relies on timely and accurate submission of ASPs by manufacturers to determine the reimbursement rate for Medicare Part B drugs.  A number of reviews conducted by the OIG over the years have shown that a large number of manufacturers have failed to report AMPs and ASPs in a timely manner. 

The OIG report regarding noncompliance with AMP reporting requirements that was issued with the Special Advisory Bulletin found that, in 2008, more than half of the manufacturers that were required to submit and certify quarterly AMP failed to comply with requirements in at least one quarter and more than three-fourths of manufacturers failed to comply with monthly AMP reporting requirements.  See OIG, Drug Manufacturers’ Noncompliance with Average Manufacturer Price Reporting Requirements, OEI-03-09-00060, at 10-13 (Sept. 2010).  The OIG report also found that CMS took action against some manufacturers for failure to comply with quarterly AMP reporting requirements (e.g., referral to OIG for civil money penalty (“CMP”) consideration, termination of the manufacturer’s Medicaid Drug Rebate Agreement, or both) but took no action for failure to comply with monthly reporting requirements.  Id. at 14.  In addition, with regard to the quarterly AMP data, CMS was more likely to take action against manufacturers with no AMP data reported in at least one quarter and manufacturers with late AMP data for multiple quarters.  Id. at 14-15.  Due to resource issues, CMS was much less likely to take action against manufacturers with incomplete quarterly data.  Id.  The OIG therefore recommended in its report that CMS take action against manufacturers that submit incomplete quarterly AMP data and manufacturers that fail to submit monthly AMP data in a timely manner.  Id. at 18-19.  CMS concurred with the OIG’s recommendations and stated that it intends to begin referring manufacturers that submit incomplete AMP data to the OIG for CMP consideration.  Id. at 19, 26-27.  CMS also indicated that it “will be able to begin providing the OIG with a report of manufacturers with incomplete quarterly and monthly AMP submissions in the near future.”  Id. at 27.

In addition, the Special Advisory Bulletin cited a February 2010 report regarding ASPs, which noted that the failure of manufacturers to meet deadlines for reporting ASPs introduced the potential for inefficiency and error in payments for drugs covered by Medicare Part B.  See Special Advisory Bulletin, at 3. 

The Special Advisory Bulletin concluded that “HHS’s past approach of promoting voluntary compliance has not been fully effective.”  Id. at 4.  Accordingly, in order to promote increased compliance with the reporting requirements related to the Medicaid Drug Rebate Program, the 340B program, the FUL program, and the Medicare Part B benefit, the OIG has announced a new enforcement program regarding AMP and ASP reporting.  The statute provides for CMPs in the amount of $10,000 per day for manufacturers that fail to certify and provide timely information.  See 42 U.S.C. § 1396r-8(b)(3)(C).  According to the bulletin, the “OIG will now impose CMPs on manufacturers that fail to comply with their drug product and price reporting obligations.  OIG and CMS are working together to identify and penalize noncompliant manufacturers through the CMP process.”  Id.  This is generally consistent with statements made by a CMS official at a recent industry conference, though the speaker (who gave the standard government employee caveat that she was not speaking on behalf of CMS) indicated that it was possible that the OIG might not seek CMPs for one-off problems manufacturers may have with regard to data submitted.

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