Kickas.org Forums Ankylosing Spondylitis General Discussion #1 AS Web Support Group What to do about healthcare? Can it be fixed?

OK, so here is some more information about rx drug pricing. Below is a synopsis of the rule that was put into place by the Office of the Inspector General (OIG) because companies were intentionally manipulating their product prices in different "lists" and "marketing the spread".....

OIG Integrity of Data and Government Reimbursement

The Guidance warns pharmaceutical companies against directly or indirectly manipulating sales and price data. The Guidance suggests that pharmaceutical manufacturers may be held responsible for the average wholesale prices (AWP) reported by private publishers such as the Red Book, the Blue Book or Medispan, whose listings are based on price data furnished by manufacturers. Because the U.S. Centers for Medicare and Medicaid Services (CMS) uses this published data to set federal reimbursement rates, manipulation of pricing information furnished to private publishers can inappropriately increase government health care spending. CMS also relies on pharmaceutical manufacturers to report the average manufacturer price (AMP) and Medicaid best price (MBP) for each drug for purposes of the Medicaid Drug Rebate program. The AMP is the average price at which a manufacturer sells a product, other than to federal purchasers and state drug assistance programs. The MBP is the lowest price paid by a manufacturer’s customers, excluding certain specified purchasers. CMS uses AMP and BMP data to calculate the 15.1 percent rebates that manufacturers must pay to state Medicaid programs under the Medicaid Drug Rebate Act. Moreover, many Medicaid programs and commercial insurance companies use the reported AWPs as a benchmark in setting pharmaceutical reimbursement rates.

To avoid liability under the False Claims Act and federal Anti-Kickback Statute for AWP or AMP manipulation, the Guidance indicates that reported prices should reflect actual wholesale price transactions adjusted to account for all forms of purchasing concessions. These concessions may take the form of price reductions, discounts, rebates, up-front payments, free or discounted "bundled" goods or services, grants, coupons or other items of value.

As in the draft guidance, the final Guidance expresses concern regarding active marketing of the "spread" by pharmaceutical companies. The "spread" is the difference between the wholesale price of the manufacturer and the reimbursement rate recoverable by the purchaser. "Marketing the spread" refers to the practice of encouraging product purchases based on the potential profit that customers can realize from the spread in relation to similar margins on competing brand-name or generic drugs. AWP manipulation in conjunction with marketing the spread (i.e., acting to inflate profits to drug purchasers) would appear to be particularly suspect conduct in the view of the OIG. The Guidance describes it as evidence of "unlawful intent."

The Guidance also indicates that the federal Anti-Kickback Statute is potentially implicated when manufacturers manipulate the AWP to increase customer profits from federal drug reimbursement programs. The Guidance, however, does not clarify how to accurately calculate an AWP, an issue of debate within the industry. In addition, though the Guidance states that "marketing considerations" should not "inappropriately" influence AWP reporting by manufacturers, it is not clear what "inappropriately" means in this context. Manufacturers by definition must consider marketing and profitability in the course of setting prices. On the other hand, inaccurate reporting of wholesale price sales for purposes of manipulating AWP is clearly improper in the view of the OIG. What is not entirely clear is whether the OIG views marketing the spread alone, in the absence of AWP manipulation by the manufacturer, as potentially involving the offering of illegal "remuneration" under the Anti-Kickback statute.