Drug Pricing and Reimbursement
This webpage pulls together the Office of Inspector General's (OIG) body of work since 2010 plus several older relevant items that relate to drug pricing and reimbursement in HHS programs. It features planned work, completed reports, industry guidance, and enforcement actions. It does not cover OIG's body of work focused on questionable or fraudulent billing for prescription drugs. The webpage on drug pricing and reimbursement will be updated periodically.
Enforcement
OIG has the authority to seek civil monetary penalties (CMP), assessments, and exclusion against an individual or entity on the basis of a wide variety of prohibited conduct, including that related to the Medicaid Drug Rebate Program. This program requires drug manufacturers to submit pricing information to HHS and to pay a rebate to State Medicaid programs for each unit of the covered drug that State Medicaid programs reimburse. Manufacturers with Medicaid drug rebate agreements are also required to report price information that is used to set average sales price (ASP), the reimbursement metric for most drugs covered by Medicare Part B.
Given the importance of timely and accurate submission of pricing information, OIG may seek a CMP against a drug manufacturer that fails to report in a timely manner the required information or that knowingly submits false information. In September 2010, OIG issued a Special Advisory Bulletin, "Average Manufacturer Price and Average Sales Price Reporting Requirements," that notified drug manufacturers that OIG intended to pursue enforcement actions against manufacturers that failed to submit timely and accurate data necessary for the effective operation of the Medicaid Drug Rebate Program, the 340B program, the Federal Upper Limit Program, and the Medicare Part B outpatient prescription drug benefit. See below for recent cases.
U.S. Pharmaceutical Corporation Settles Case Involving Drug Price Reporting
On July 19, 2019, U.S. Pharmaceutical Corporation (USPC), Decatur, Georgia, entered into a $380,142.05 settlement agreement with OIG. The settlement agreement resolves allegations that USPC failed to submit timely certified monthly and quarterly Average Manufacturer's Price (AMP) data to the Centers for Medicare and Medicaid Services (CMS) for certain months and quarters in 2012, 2015, 2016, and 2017. The Medicaid Drug Rebate Program requires manufacturers to enter into and have in effect a national rebate agreement with the Secretary of Health and Human Services in order for Medicaid payments to be available for the manufacturer's covered outpatient drugs. Companies with such rebate agreements are required to submit certain drug pricing information to CMS, including quarterly and monthly AMP data. Senior Counsel Mary Riordan represented OIG with the assistance of Program Analyst Mariel Filtz.
Stratus Pharmaceuticals Inc. Settles Case Involving Drug Price Reporting
On August 31, 2017, Stratus Pharmaceuticals Inc. (Stratus), Florida, entered into a $40,000 settlement agreement with OIG. The settlement agreement resolves allegations that Stratus failed to submit certified monthly and quarterly Average Manufacturer's Price (AMP) data to the Centers for Medicare and Medicaid Services (CMS) for certain months and quarters in 2014 and 2015. The Medicaid Drug Rebate Program requires pharmaceutical companies to enter into and have in effect a national rebate agreement with the Secretary of Health and Human Services in order for Medicaid payments to be available for the pharmaceutical company's covered drugs. Companies with such rebate agreements are required to submit certain drug pricing information to CMS, including quarterly and monthly AMP data. Senior Counsel Mary Riordan represented OIG.
Nephron Pharmaceuticals Corporation Settles Case Involving Drug Price Reporting
On July 20, 2016, Nephron Pharmaceuticals Corporation (Nephron), Florida, entered into a $60,000 settlement agreement with OIG. The settlement agreement resolves allegations that Nephron failed to submit certified monthly and quarterly average manufacturer price (AMP) data to the Centers for Medicare & Medicaid Services (CMS) for certain months and quarters in 2013, 2014, and 2015. The Medicaid Drug Rebate Program requires pharmaceutical companies to enter into and have in effect a national rebate agreement with the Secretary of Health and Human Services in order for Medicaid payments to be available for the pharmaceutical company's covered drugs. Companies with such rebate agreements are required to submit certain drug pricing information to CMS, including quarterly and monthly AMP data.
Cipher Pharmaceuticals US LLC Settles Case Involving Drug Price Reporting
On July 20, 2016, Cipher Pharmaceuticals US LLC (Cipher), South Carolina, entered into a $60,000 settlement agreement with OIG. The settlement agreement resolves allegations that Cipher failed to submit certified monthly and quarterly average manufacturer price (AMP) data to the Centers for Medicare & Medicaid Services (CMS) for certain months and quarters in 2014, 2015, and 2016. The Medicaid Drug Rebate Program requires pharmaceutical companies to enter into and have in effect a national rebate agreement with the Secretary of Health and Human Services in order for Medicaid payments to be available for the pharmaceutical company's covered drugs. Companies with such rebate agreements are required to submit certain drug pricing information to CMS, including quarterly and monthly AMP data.
Coloplast Corp. Settles Case Involving Drug Price Reporting
On May 6, 2016, Coloplast Corp. (Coloplast), Minnesota, entered into a $600,000 settlement agreement with OIG. The settlement agreement resolves allegations that Coloplast failed to submit certified monthly and quarterly average manufacturer price (AMP) data to the Centers for Medicare & Medicaid Services (CMS) for certain months and quarters in 2013, 2014, and 2015. The Medicaid Drug Rebate Program requires pharmaceutical companies to enter into and have in effect a national rebate agreement with the Secretary of Health and Human Services in order for Medicaid payments to be available for the pharmaceutical company's covered drugs. Companies with such rebate agreements are required to submit certain drug pricing information to CMS, including quarterly and monthly AMP data.
Ascend Laboratories, LLC Settles Case Involving Drug Price Reporting
On October 7, 2015, Ascend Laboratories, LLC (Ascend), New Jersey, entered into a $1,287,000 settlement agreement with OIG. The settlement agreement resolves allegations that Ascend failed to submit monthly and quarterly average manufacturer price (AMP) data to the Centers for Medicare & Medicaid Services (CMS) for certain months and quarters in 2013 and 2014. The Medicaid Drug Rebate Program requires pharmaceutical companies to enter into and have in effect a national rebate agreement with the Secretary of Health and Human Services in order for Medicaid payments to be available for the pharmaceutical company's covered drugs. Companies with such rebate agreements are required to submit certain drug pricing information to CMS, including quarterly and monthly AMP data.
Glenmark Pharmaceuticals, Inc. USA Settles Case Involving Drug Price Reporting
On August 31, 2015, Glenmark Pharmaceuticals, Inc. USA (Glenmark), New Jersey, entered into a $2,887,300 settlement agreement with OIG. The settlement agreement resolves allegations that Glenmark failed to submit in a timely manner monthly and quarterly average manufacturer price (AMP) data to the Centers for Medicare & Medicaid Services (CMS) for certain months and quarters in 2013 and 2014. The Medicaid Drug Rebate Program requires pharmaceutical companies to enter into and have in effect a national rebate agreement with the Secretary of Health and Human Services in order for Medicaid payments to be available for the pharmaceutical company's covered drugs. Companies with such rebate agreements are required to submit certain drug pricing information to CMS, including quarterly and monthly AMP data.
B.F. Ascher & Company, Inc. Settles Case Involving Drug Price Reporting
On May 8, 2015, B.F. Ascher & Company, Inc. (B.F. Ascher), a Kansas pharmaceutical manufacturer, entered into a $178,000 settlement agreement with OIG. The settlement agreement resolves allegations that B.F. Ascher failed to submit in a timely manner certified monthly and quarterly average manufacturer price (AMP) data to the Centers for Medicare & Medicaid Services (CMS) for certain months and quarters from 2012 to 2014. The Medicaid Drug Rebate Program requires pharmaceutical companies to enter into and have in effect a national rebate agreement with the Secretary of Health and Human Services in order for Medicaid payments to be available for the pharmaceutical company's covered drugs. Companies with such rebate agreements are required to submit certain drug pricing information to CMS, including quarterly and monthly AMP data.
Seton Pharmaceuticals Settles Case Involving Drug Price Reporting
On May 6, 2015, Seton Pharmaceuticals (Seton), a New Jersey specialty generic pharmaceutical company, entered into a $91,800 settlement agreement with OIG. The settlement agreement resolves allegations that Seton failed to submit in a timely manner certified monthly and quarterly average manufacturer price (AMP) data to the Centers for Medicare & Medicaid Services (CMS) for certain months and quarters in 2012 and 2013. The Medicaid Drug Rebate Program requires pharmaceutical companies to enter into and have in effect a national rebate agreement with the Secretary of Health and Human Services in order for Medicaid payments to be available for the pharmaceutical company's covered drugs. Companies with such rebate agreements are required to submit certain drug pricing information to CMS, including quarterly and monthly AMP data.
Sandoz, Inc. Settles Case Involving Misrepresenting Drug Pricing Data to Medicare
On March 11, 2015, Sandoz, Inc. (Sandoz), a New Jersey manufacturer of generic pharmaceuticals, entered into a $12,640,000 settlement agreement with OIG. The settlement agreement resolves allegations that Sandoz misrepresented drug pricing data to Medicare. Federal law requires drug makers to report both accurate and timely ASP data to the Centers for Medicare & Medicaid Services (CMS). CMS uses this information to set payment amounts for most drugs covered under Medicare Part B. Inaccurate pricing information can cause Medicare to overpay for these drugs. News Release
West-Ward Pharmaceuticals Settles Case Involving Drug Price Reporting
On May 10, 2012, West-Ward Pharmaceutical Corp. (West-Ward), a manufacturer of generic pharmaceuticals, entered into a $10,000 settlement agreement with OIG to resolve CMP liability under the Medicaid Drug Rebate Program. This settlement resolved allegations that between January 2004 and December 2010, West-Ward failed to submit in a timely manner its monthly and quarterly average manufacturer price (AMP) and ASP data. The Medicaid Drug Rebate Program requires drug manufacturers to submit pricing information to the Centers for Medicare and Medicaid Services (CMS) and to pay a rebate to the state Medicaid programs for each unit of the covered drug that the state Medicaid programs reimburse. Manufacturers with Medicaid Drug Rebate Program agreements are also required to report price information that is used to set ASP, the reimbursement metric for drugs covered by Medicare Part B.
Sandoz, Inc. Settles Case Involving Drug Price Reporting
On December 12, 2011, Sandoz Inc. (Sandoz), a New Jersey manufacturer of generic pharmaceuticals, entered into a $230,000 settlement agreement with OIG to resolve CMP liability under the Medicaid Drug Rebate Program. This settlement resolves allegations that between October 2009 and March 2011, Sandoz failed to submit in a timely manner monthly and quarterly average manufacturer price (AMP) information and ASP information. The Medicaid Drug Rebate Program requires drug manufacturers to submit pricing information to the Centers for Medicare & Medicaid Services (CMS and to pay a rebate to the State Medicaid programs for each unit of the covered drug that the State Medicaid programs reimburse. Manufacturers with Medicaid Drug Rebate Program agreements are also required to report price information that is used to set ASP, the reimbursement metric for drugs covered by Medicare Part B.
Savient Pharmaceuticals Settles Case Involving Drug Price Reporting
On August 9, 2011, Savient Pharmaceuticals, Inc. (Savient), entered into a $100,000 settlement agreement with OIG to resolve CMP liability under the Medicaid Drug Rebate Program. This settlement resolves allegations that between October 2009 and March 2011, Savient failed to submit in a timely manner monthly and quarterly average manufacturer price (AMP) data. The Medicaid Drug Rebate Program requires drug manufacturers to submit pricing information to the Centers for Medicare & Medicaid Services (CMS) and to pay a rebate to the State Medicaid programs for each unit of the covered drug that the State Medicaid programs reimburse.
In each CMP case resolved through a settlement agreement, the settling party has contested OIG's allegations and denied any liability. No CMP judgment or finding of liability has been made against the settling party.
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