Department of Health and Human Services

OFFICE OF 

INSPECTOR GENERAL 

I I
NTRAVENOUS  MMUNE 

G :  M
LOBULIN EDICARE 

P A
AYMENT AND  VAILABILITY

Daniel R. Levinson

Inspector General 

April 2007

OEI-03-05-00404
 Office of Inspector General 

http://oig.hhs.gov 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, 
as amended, is to protect the integrity of the Department of Health and Human Services 
(HHS) programs, as well as the health and welfare of beneficiaries served by those 
programs.  This statutory mission is carried out through a nationwide network of audits, 
investigations, and inspections conducted by the following operating components: 
Office of Audit Services 
The Office of Audit Services (OAS) provides all auditing services for HHS, either by 
conducting audits with its own audit resources or by overseeing audit work done by others. 
Audits examine the performance of HHS programs and/or its grantees and contractors 
in carrying out their respective responsibilities and are intended to provide independent 
assessments of HHS programs and operations.  These assessments help reduce waste, 
abuse, and mismanagement and promote economy and efficiency throughout HHS. 
Office of Evaluation and Inspections 
The Office of Evaluation and Inspections (OEI) conducts national evaluations to provide 
HHS, Congress, and the public with timely, useful, and reliable information on 
significant issues.  Specifically, these evaluations focus on preventing fraud, waste, or 
abuse and promoting economy, efficiency, and effectiveness in departmental programs.  
To promote impact, the reports also present practical recommendations for improving 
program operations. 
Office of Investigations 
The Office of Investigations (OI) conducts criminal, civil, and administrative 
investigations of allegations of wrongdoing in HHS programs or to HHS beneficiaries 
and of unjust enrichment by providers.  The investigative efforts of OI lead to criminal 
convictions, administrative sanctions, or civil monetary penalties. 
Office of Counsel to the Inspector General 
The Office of Counsel to the Inspector General (OCIG) provides general legal services to 
OIG, rendering advice and opinions on HHS programs and operations and providing all 
legal support in OIG's internal operations. OCIG imposes program exclusions and civil 
monetary penalties on health care providers and litigates those actions within HHS. 
OCIG also represents OIG in the global settlement of cases arising under the Civil False 
Claims Act, develops and monitors corporate integrity agreements, develops compliance 
program guidances, renders advisory opinions on OIG sanctions to the health care 
community, and issues fraud alerts and other industry guidance.    E X E C U T I V E   S U M M A R Y  

OBJECTIVE 
1.	 To determine whether hospitals and physicians could purchase 
intravenous immune globulin (IVIG) at prices below the Medicare 
payment amounts in 2005 and 2006. 
2.	 To determine whether IVIG was readily available to physicians and 
distributors in 2005 and 2006.  
BACKGROUND 
Members of the congressional subcommittees on Health within the 
Energy and Commerce and Ways and Means Committees requested 
that the Office of Inspector General (OIG) examine the current state of 
pricing and supply of IVIG.  IVIG is a collection of antibodies derived 
from blood plasma fractionation and administered by infusion to 
patients with poorly functioning immune systems.  Preliminary claims 
data indicate that Medicare and its beneficiaries paid approximately 
$74 million for IVIG administered in physicians offices and home 
settings in 2006.  Medicare paid an additional $130 million for IVIG 
administered in hospital outpatient settings based on claims processed 
from January through October 2006. 
The Medicare Prescription Drug, Improvement, and Modernization Act 
of 2003 changed the payment basis for most Part B prescription drugs, 
including IVIG, from the average wholesale price (AWP) to the average 
sales price (ASP) for physicians in 2005 and for hospitals in 2006.  As a 
result, physician payment amounts fell 14 percent for powder and liquid 
IVIG between the fourth quarter of 2004 (the last quarter of AWP-based 
physician payments) and first quarter of 2005 (the first quarter of  
ASP-based physician payments). The Medicare payment amounts to 
hospitals fell 45 percent for powder IVIG and 30 percent for liquid IVIG 
between the fourth quarter of 2005 (the last quarter of AWP-based 
hospital payments) and first quarter of 2006. 
The Centers for Medicare & Medicaid Services (CMS) established a 
temporary preadministration-related service payment (for both 
hospitals and physicians offices) of approximately $70 per day of 
infusion during 2006 in response to concerns about beneficiary access 
and Medicare payment for IVIG.  CMS recently stated that it would 
continue the add-on payment throughout 2007.  In addition to the 
temporary add-on payment, the ASP-based Medicare payment during 
  OEI-03-05-00404  INTRAVENOUS IMMUNE GLOBULIN:  MEDICARE PAYMENT AND AVAILABILITY  i  EE XX EE CC UU TT II VV EE    SS UU MM MM AA RR YY
the fourth quarter of 2006 was 17 percent higher for powder IVIG and 
8 percent higher for liquid IVIG than it was at the close of 2005. 
We conducted a review to examine IVIG availability and Medicare 
payment from the perspectives of: (1) manufacturers of IVIG, 
(2) distributors and group purchasing organizations (GPO) identified by 
the manufacturers as involved in the sale and distribution of IVIG, and 
(3) randomly selected physicians who billed Medicare for IVIG. 
It is important to note that IVIG is a unique pharmaceutical product 
that presents payment and cost-related issues that may not be typical of 
other Part B-covered drugs (such as oral anticancer drugs and 
immunosuppressive drugs, drugs used in conjunction with durable 
medical equipment, and some vaccines). IVIG is a blood plasma 
derivative; the amount produced is dependent upon plasma collection 
and there is a finite amount of raw material. Therefore, the results of 
this review are applicable only to IVIG. 
FINDINGS 
In the third quarter of 2006, just over half of IVIG sales to hospitals 
and physicians were at prices below Medicare payment amounts, 
which represents a substantial increase over the previous three 
quarters. During the third quarter of 2006, 56 percent of IVIG sales to 
hospitals and 59 percent of IVIG sales to physicians by the three largest 
distributors occurred at prices below the Medicare payment amounts. 
This represents a dramatic shift from the previous three quarters, when 
the percentage of IVIG sold at prices below the Medicare payment 
amounts was as low as 23 percent for hospitals and 4 percent for 
physicians. 
The substantial increase in sales below the Medicare payment amounts 
appears to be the result of manufacturer price increases in January 
2006 that were not reflected in increased Medicare payments until the 
third quarter of 2006. 
Most physicians and distributors reported problems with IVIG 
availability in 2005 and the first quarter of 2006. The majority 
(57 percent) of responding physicians reported that they were unable to 
provide patients with adequate amounts of IVIG during the first 
quarter of 2006. In addition, distributors responding to our survey also 
reported problems with IVIG availability in 2005. According to their 
responses, none of the distributors were able to fulfill all customer 
requests for IVIG, and all responding distributors have asked 
OEI-03-05-00404  INTRAVENOUS IMMUNE GLOBULIN:  MEDICARE PAYMENT AND AVAILABILITY  ii  EEE XXX EEE CCC UUU TTT III VVV EEE     SSS UUU MMM MMM AAA RRR YYY
manufacturers for additional product. These respondents stated that 
problems with availability are typically related to Medicare payment. 
CONCLUSION 
Based on the data presented in this report, just over half of IVIG sales 
to hospitals and physicians were at prices below the Medicare payment 
amounts in the third quarter of 2006, a substantial increase over 
previous quarters. Distributors and physicians also reported problems 
with IVIG availability. 
The interaction of manufacturer pricing decisions and certain 
ASP-related issues could partially explain our findings regarding IVIG 
pricing and availability. Because manufacturer price increases for IVIG 
in early 2006 were not reflected in Medicare reimbursement until the 
middle of that year, hospitals and physicians were initially charged 
more for IVIG without a corresponding increase in payment. If 
manufacturers were to implement another across-the-board price 
increase, hospitals and physicians might face issues similar to those 
that they faced in the first two quarters of 2006. 
It is important to note that additional factors, including off-label use, 
coding, and plasma industry economics, may drive the difficulties with 
IVIG pricing and availability. Reported recent increases in the use of 
IVIG for off-label indications may strain the tight supply of this product. 
Each IVIG product is a unique brand drug, yet Medicare payment is 
based on a weighted average price of all products. The production of 
IVIG requires substantial resources not typically associated with other 
pharmaceutical products. However, this review did not include an 
in-depth examination of these factors. 
AGENCY COMMENTS 
CMS commented that this report provides initial information on the 
availability and pricing for IVIG and sets the stage for further review of 
certain issues (e.g., off-label use, payment lags, and distributor 
markups) that can bring greater understanding of how the marketplace 
operates for this unique product. CMS also noted that the time lag is a 
feature of the ASP system and applies to all Part B drugs and 
biologicals. CMS stated that the substantial increase in the percentage 
of IVIG sold to hospitals and physicians at prices below the Medicare 
payment amounts is an important development and noted that these 
findings indicate that Medicare payment has adjusted to increases in 
OEI-03-05-00404  INTRAVENOUS IMMUNE GLOBULIN:  MEDICARE PAYMENT AND AVAILABILITY  iii  E X E C U T I V E   S U M M A R Y  
IVIG market prices over time.  CMS stated, We will carefully consider 
this report as we continue our dialogue with manufacturers, patient 
groups, and stakeholders to better understand marketplace 
developments and issues impacting beneficiary access to quality care. 
We strongly encourage the OIG to further study some of the issues 
raised [in CMSs comments to the draft report]. 
  OEI-03-05-00404  INTRAVENOUS IMMUNE GLOBULIN:  MEDICARE PAYMENT AND AVAILABILITY  iv    T A B L E   O F   C O N T E N T S  

EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i

I N T RO DUC T IO N  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  1

F I N D IN G S  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9  

Increase in IVIG sales at prices below Medicarepayment . . . . . . . 9
 
Physicians and distributors report problems with availability. . .  12 

CONC LUSION  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  15

  AgencyComments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  16

APPENDIXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  17

A:  DetailedScope andMethodology  . . . . . . . . . . . . . . . . . . . . . . .  17

B:  AgencyComments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  21

A C K NO WL E D G M E N T S  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  24
   I N T R O D U C T I O N  

OBJECTIVE 
1.	 To determine whether hospitals and physicians could purchase 
intravenous immune globulin (IVIG) at prices below the Medicare 
payment amounts in 2005 and 2006. 
2.	 To determine whether IVIG was readily available to physicians and 
distributors in 2005 and 2006. 
BACKGROUND 
Sections 1847A (d) (1) and (2) of the Social Security Act (the Act), as 
added by the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (MMA) (Public Law 108-173), directs the 
Office of Inspector General (OIG) to undertake pricing studies and 
compare average sales prices (ASPs) with widely available market 
prices.  Related to these provisions, members of the congressional 
subcommittees on Health within the Energy and Commerce and Ways 
and Means committees requested that OIG determine the current 
market prices for IVIG and investigate the current state of IVIG pricing 
and supply.  We previously provided the congressional requestors with 
the results of our work. 
Intravenous Immune Globulin 
Patients with poorly functioning immune systems receive IVIG 
infusions to temporarily replace missing antibodies, thus helping to 
protect them against infectious agents that cause various diseases. 
IVIG is produced in both powder and liquid form through fractionation 
of human blood plasma.  Fractionation is the process whereby plasma 
proteins are separated in a purified and concentrated form.  Each IVIG 
product has a distinct brand name. 
The Food and Drug Administration (FDA) has approved IVIG to treat 
several conditions.  One condition is primary immune deficiency 
disease, a group of disorders in which the immune system fails to 
produce enough antibodies, thereby predisposing individuals to 
increased risk of infection.  Additional FDA-approved indications for 
IVIG use are acute and chronic idiopathic thrombocytopenia purpura, 
B-cell chronic lymphocytic leukemia, Kawasaki syndrome, pediatric 
  OEI-03-05-00404  INTRAVENOUS IMMUNE GLOBULIN:  MEDICARE PAYMENT AND AVAILABILITY  1  II NN TT RR OO DD UU CC TT II OO NN
human immunodeficiency virus, and bone marrow transplantation.1 
Some providers have reported that the majority of their IVIG use is for 
off-label (non-FDA-approved) indications (e.g., multiple sclerosis, 
rheumatoid arthritis, infections in low-birth-weight newborns). 
Off-label use may have increased, contributing to rising demand.2 
IVIG is a unique pharmaceutical product; as a blood plasma derivative, 
the amount produced is dependent upon plasma collection. Production 
increases require substantial time and resources not generally 
associated with other drug products. 
Sources of IVIG 
Physicians, hospitals, and other providers purchase IVIG through 
distributors, group purchasing organizations (GPO), and directly from 
manufacturers. 
Manufacturers establish relationships with distributors to sell IVIG to 
providers. Distributors purchase IVIG from manufacturers and then 
independently resell IVIG to providers or work in conjunction with 
GPOs to provide IVIG to GPO members. 
GPOs generally provide their members with access to lower-cost 
products by negotiating prices for specific drugs from manufacturers. 
GPOs do not purchase drugs themselves; rather, they enter into group 
purchasing contracts with manufacturers on behalf of their members. 
The contracts prescribe the prices, conditions, and terms under which 
GPO members can purchase drug products. GPO members then 
purchase drugs from distributors or manufacturers at the price specified 
in the GPO contracts. Distributors do not determine GPO contract 
prices; they only provide drugs to GPO members at the contract prices. 
Medicare Payment for IVIG 
According to Medicare claims data, Part B and its beneficiaries paid 
approximately $74 million for IVIG administered in physicians offices 
and patients homes in 2006.3 Medicare paid an additional $130 million 
1 Department of Health and Human Services Advisory Committee on Blood Safety and 
Availability, Status of Immune Globulin Intravenous (IVIG) Products. Available online at 
http://www.hhs.gov/bloodsafety/igiv.html. Accessed April 24, 2006. 
2 Ibid. 
3 Medicare Part B Extract and Summary System, updated through December 2006 
(90 percent of claims reported), accessed March 26, 2007. 
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for IVIG administered in hospital outpatient settings from January 
through October 2006.4 
The MMA changed the basis of physician payment for most Medicare 
Part B prescription drugs, including IVIG, to ASP, effective 
January 1, 2005. 5  There is a two-quarter lag between the time 
manufacturers report ASPs to CMS and the time those prices become 
the basis for Medicare payment. For example, first-quarter 2006 ASP 
submissions from manufacturers served as the basis for third-quarter 
2006 Medicare payment for most covered drugs.  Prior to 2005, 
Medicare generally used the average wholesale price (AWP) as the basis 
for Part B payment for prescription drugs.  Numerous reports by OIG 
and the Government Accountability Office found that the AWP is often 
significantly higher for Part B drugs than the prices that drug 
manufacturers, wholesalers, and similar entities actually charge the 
physicians who purchase these drugs.  
Medicare continued to use AWPs to pay hospitals for outpatient drugs 
in 2005. However, since January 1, 2006, Medicare payment for most 
drugs and biologicals, including IVIG, administered in hospital 
outpatient departments has been based on 106 percent of the 
manufacturers ASP, an amount identical to the physician payment 
amount.6 
A previous OIG review examined the adequacy of Medicares new 
payment methodology among certain specialties (hematology, 
hematology/oncology, and medical oncology).  This review determined 
that physician practices in these specialties could generally purchase 
drugs, including IVIG, at less than the MMA-established payment 
4 This figure is based on hospital claims processed from January through October 27, 
2006. This figure includes Medicare and beneficiary payments.  
5 Pursuant to section 1847A (c) of the Act, the ASP is defined as a manufacturers sales of 
a drug to all purchasers in the United States (with certain exceptions) in a calendar quarter 
divided by the total number of units of the drug sold by the manufacturer in that same 
quarter.  The ASP is net of any price concessions, such as volume, prompt pay, and cash 
discounts; free goods contingent on purchase requirements; chargebacks; and rebates other 
than those obtained through the Medicaid drug rebate program. 
6 Medicare Announces Payment Rates and Policy Changes for Hospital Outpatient 
Services in 2006.  Available online at 
http://www.cms.hhs.gov/apps/media/press/release.asp?Counter=1711. Accessed 
April 24, 2006. 
  OEI-03-05-00404  INTRAVENOUS IMMUNE GLOBULIN:  MEDICARE PAYMENT AND AVAILABILITY  3  II NN TT RR OO DD UU CC TT II OO NN
rates.7 An additional review conducted by the Medicare Payment 
Advisory Commission similarly found that oncologists could purchase 
most drugs at prices below Medicares payment amount.8 
Concerns Over Medicare Payment and Product Availability 
Medicare payment for IVIG. After the MMA changed the basis of 
physician drug payment from AWPs to ASPs, patient advocacy groups 
and physicians expressed concerns over Medicares reduced payment 
amount for IVIG.9 Their concerns centered on the claim that, under the 
new payment methodology, the cost for physicians to acquire IVIG 
would exceed Medicares payment amount. As a result of changes to 
Medicares payment methodology, the physician payment amounts fell 
14 percent for powder and liquid IVIG between the fourth quarter of 
2004 (the last quarter of AWP-based physician payments) and the first 
quarter of 2005 (the first quarter of ASP-based physician payments).10 
In addition, manufacturers expressed concern over the fact that the 
codes used for Medicare payment are based on a weighted average of all 
liquid or all powder IVIG products. 
Similarly, hospital payments also decreased as a result of the shift to 
ASPs in January 2006. The Medicare payment amounts to hospitals fell 
45 percent for powder IVIG and 30 percent for liquid IVIG between the 
fourth quarter of 2005 (the last quarter of AWP-based hospital 
payments) and the first quarter of 2006. 
IVIG availability. In addition to issues with pricing, it has been reported 
in the media that there is an inadequate supply of IVIG.11 FDAs 
Center for Biologics Evaluation and Research, which has procedures for 
determining and reporting a shortage, indicates on its Web site that 
along with other HHS [Department of Health and Human Services] 
agencies, the FDA has received reports from stakeholders, patients, and 
health care providers regarding difficulty in obtaining [IVIG] products. 
7 Adequacy of Medicare Part B Drug Reimbursement to Physician Practices for the 
Treatment of Cancer Patients. Department of Health and Human Services, OIG 
(A-06-05-00024). September 2005. 
8 Effects of Medicare Payment Changes on Oncology Services. Medicare Payment 
Advisory Commission. January 2006. 
9 Law Impedes Flow of Immunity in a Vial. New York Times. July 19, 2005. 
10 The Medicare physician payment amounts were identical for powder and liquid IVIG 
in the fourth quarter of 2004 as well as in the first quarter of 2005. 
11 Law Impedes Flow of Immunity in a Vial. New York Times. July 19, 2005. IVIG 
Shortage Driving Patients to Hospitals. Drug Topics. August 22, 2005. 
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From discussions with manufacturers, distributors, providers, and 
consumers, it is clear that availability and treatment patterns have 
shifted; but we did not find clear evidence that there is currently a 
shortage. This is a multi-faceted and fluid situation.12  Further, HHS 
officials have told Congress that, among other factors, because IVIG is 
derived from human plasma, it takes significant startup time to 
increase supply, and supply has historically been cyclical.13 
This is not the first time patient advocacy groups and physicians have 
expressed concern over IVIG availability.  According to a media report, 
as well as an OIG interview with a manufacturer, there was a shortage 
of IVIG in the late 1990s after two companies halted production in their 
factories to make changes in order to meet new quality standards.14 
When the factories came back online, production increased, leading to 
excess product and reduced prices.  At that time, three manufacturers 
left the business.  Other issues with IVIG availability surfaced in 2003 
when one manufacturer, while staying in business, reportedly closed 
dozens of plasma collection centers.15 
Recent Increases in Medicare Payment for IVIG 
In response to concerns about beneficiary access to IVIG and Medicare 
payment, CMS established a temporary preadministration-related 
service payment (for both hospitals and physician offices) of 
approximately $70 per day of infusion during calendar year 2006.  This 
additional payment covers the preadministration-related services 
required to locate and acquire adequate IVIG product and prepare for 
an infusion of IVIG.   
In a press release dated November 2, 2005, CMS stated that the 
pricing for IVIG is accurate, and that there is no overall product 
shortage. However, in the face of such factors as increasing IVIG 
demand . . . physician office staff has to expend extra resources on 
locating and obtaining appropriate IVIG products and scheduling 
patient infusions.  CMS went on to state that for calendar year 2006 
12 Biological Product Shortages.  Available online at 
http://www.fda.gov/cber/shortage/shortage.htm.  Accessed February 6, 2007.   
13 Testimony of Herb B. Kuhn, CMS, before the Subcommittee on Health of the House 
Committee on Ways and Means, July 13, 2006.  Available online at 
http://waysandmeans.house.gov/hearings.asp?formmode=view&id=5108. Accessed 
November 28, 2006.    
14 Law Impedes Flow of Immunity in a Vial.  New York Times. July 19, 2005. 
15 Ibid. 
  OEI-03-05-00404  INTRAVENOUS IMMUNE GLOBULIN:  MEDICARE PAYMENT AND AVAILABILITY  5  I N T R O D U C T I O N  
only, physicians and hospitals will be permitted to bill this add-on code 
to compensate for the administrative burdens associated with IVIG 
administration during this time of some volatility in IVIG product 
availability. 16  CMS recently stated that it will maintain the add-on 
payment for IVIG in 2007 to help ensure appropriate patient access to 
IVIG.17 
In addition to the temporary add-on payment, the Medicare payment 
amounts for IVIG rose in 2006. The ASP-based payment during the 
fourth quarter of 2006 was 17 percent higher for powder IVIG and     
8 percent higher for liquid IVIG than it was at the close of 2005.18 
SCOPE AND METHODOLOGY 
Scope 
We conducted this review to examine the pricing and availability of 
IVIG from the perspectives of:  (1) manufacturers of IVIG,  
(2) distributors and GPOs identified by the manufacturers as involved 
in the sale and distribution of IVIG, and (3) randomly selected 
physicians who billed Medicare for IVIG.   
IVIG is a unique pharmaceutical product that presents payment-related 
issues that may not be typical of other Part B-covered drugs.19 IVIG is a 
blood plasma derivative; the amount produced is dependent upon 
plasma collection and there is a finite amount of raw material.  
Therefore, the results of this review are applicable only to IVIG.  This 
review did not examine the availability of or Medicare payment for any 
other drug products. 
16 The full text of the press release is located on CMSs Web site:  
http://new.cms.hhs.gov/apps/media/press/release.asp?Counter=1709. Accessed 
February 9, 2006. 
17 Final Rule, 71 Federal Register 69624, 69679 (December 1, 2006).   
18 In the fourth quarter of 2005, the Medicare physician payment amounts were $43.10 
per gram of powder IVIG and $56.30 per gram of liquid IVIG.  For the same quarter, the 
Medicare hospital payment amounts were $80.68 per gram of liquid and powder IVIG.  In 
the fourth quarter of 2006, the Medicare payment amounts were $50.53 per gram of powder 
IVIG and $60.65 per gram of liquid IVIG. 
19 Medicare Part B covers only a limited number of outpatient prescription drugs. 
Covered drugs include injectable drugs administered by a physician; certain   
self-administered drugs, such as oral anticancer drugs and immunosuppressive drugs; 
drugs used in conjunction with durable medical equipment; and some vaccines. 
  OEI-03-05-00404  INTRAVENOUS IMMUNE GLOBULIN:  MEDICARE PAYMENT AND AVAILABILITY  6  IIII NNNN TTTT RRRR OOOO DDDD UUUU CCCC TTTT IIII OOOO NNNN
Methodology: Data Sources and Sample 
Manufacturers. We collected 2005 sales prices, sales volume, and 
production volume from the five IVIG manufacturers producing IVIG at 
the time of the review (December 2005). These manufacturers also 
completed a written survey on IVIG pricing and availability. 
Distributors. From August to October 2006, we collected sales and 
pricing data from the three largest distributors for the first three 
quarters of 2006 to gather IVIG sales prices to hospitals and 
physicians.20  In addition, between January and April 2006, we collected 
sales prices and sales volume for 2005 from 13 distributors (including 
the 3 largest distributors) identified by IVIG manufacturers.21 
Physicians. In April 2006, we sent written surveys on pricing and 
availability to 255 randomly selected physicians who billed Medicare for 
IVIG. We asked the physicians how much they paid for IVIG during the 
first quarter of CY 2006, taking into account discounts and rebates. We 
also asked them to submit invoices to document all IVIG purchases. 
Between May and August 2006, 157 physicians (62 percent) responded 
to our written survey and 100 physicians (39 percent) provided their 
purchase volume and acquisition costs for IVIG. 
Data Analysis: Pricing and Sales Data From 2006 
Distributors. We examined 2006 sales and pricing data from the three 
largest IVIG distributors for the first three quarters of 2006. We 
calculated the percentage of IVIG sales to hospitals and physicians at 
prices above and below the Medicare payment amounts for the first 
three quarters of 2006. 
Physicians. Based on the information provided by responding 
physicians, we calculated the percentage of IVIG purchased at prices 
above and below the first-quarter 2006 Medicare physician payment 
amounts. We also determined the percentage of IVIG purchased by 
physicians that was subject to discounts and rebates and examined 
physician responses to our written survey. 
20 Based on data obtained from all distributors, OIG determined that the three largest 
IVIG distributors accounted for approximately 90 percent of distributor-reported sales in 
the fourth quarter of 2005. 
21 The sales volume and pricing data presented were provided by distributors and 
include IVIG sales and prices to GPO and non-GPO members. 
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Pricing and Sales Data From 2005 
Manufacturers. Based on the information provided by the five 
manufacturers, we identified the amount of IVIG sold in 2005 to each 
type of customer. In addition, we analyzed manufacturer responses to 
the written survey on pricing and availability. 
Distributors and group purchasing organizations. For the 13 distributors 
that provided pricing and sales data, we identified the amount of IVIG 
sold in the fourth quarter of 2005 to each type of customer and at 
contract and noncontract prices. For sales to hospitals, we determined 
the percentage of IVIG sold at prices above and below both the Medicare 
outpatient hospital payment amount and the Medicare physician 
payment amount for the fourth quarter of 2005 (the new hospital 
reimbursement amount for the following quarter). For physicians, sales 
prices were compared to the fourth-quarter 2005 physician payment 
amounts only. We calculated the percentage of sales to hospitals and 
physicians at contract and noncontract prices.22  We also examined 
distributor and GPO responses to the written survey on pricing and 
availability. See Appendix A for a detailed description of our 
methodology. 
Limitations 
The findings presented are based only on self-reported data received 
from manufacturers, distributors, GPOs, and physicians. We did not 
verify the data or invoices that we received from manufacturers, 
distributors, GPOs, or physicians. In addition, this analysis applies 
only to responding physicians from our sample; we were unable to make 
projections to the universe of all physicians who billed Medicare for 
IVIG because of the response rate. 
Standards 
This study was conducted in accordance with the Quality Standards for 
Inspections issued by the President=s Council on Integrity and 
Efficiency and the Executive Council on Integrity and Efficiency. 
22 For the purposes of this review, IVIG sales to GPO members by distributors at the 
contract prices are considered contract sales. The independent resale of IVIG by 
distributors to providers is considered a noncontract sale. Distributors typically mark up 
manufacturer sales prices prior to reselling noncontract IVIG directly to customers. 
OEI-03-05-00404  INTRAVENOUS IMMUNE GLOBULIN:  MEDICARE PAYMENT AND AVAILABILITY  8    F I N D I N G S

During the third quarter of 2006, 
In the third quarter of 2006, just over half of IVIG 
56 percent of IVIG sales to hospitals 
sales to hospitals and physicians were at prices 
and 59 percent of IVIG sales to 
below Medicare payment amounts, which 
physicians by the three largest 
represents a substantial increase over the  distributors occurred at prices below 
previous three quarters   the Medicare payment amounts.23 
This represents a dramatic shift 
from the previous three quarters, when the percentage of IVIG sold at 
prices below the Medicare payment amounts was as low as 23 percent 
for hospitals and 4 percent for physicians.  As Tables 1 and 2 illustrate, 
the percentage of IVIG sold at prices at least 10 percent above the 
Medicare reimbursement amount declined substantially in the third 
quarter of 2006 as well. 
Table 1. Distributor Sales to Hospitals From Fourth Quarter of 2005 to Third Quarter of 2006 
4th Quarter  1st Quarter  2nd Quarter  3rd Quarter 
IVIG Price Range  2005  2006  2006  2006 
Below Medicare payment  37.3%  25.5%  22.8%  56.0% 
0.01%5.00% greater than Medicare payment  51.2%  30.7%  31.4%  6.1% 
5.01%10.00% greater than Medicare payment  2.7%  11.5%  9.6%  33.6% 
10.01%20.00% greater than Medicare payment  6.5%  5.1%  5.2%  3.2% 
20.01%25.00% greater than Medicare payment  0.4%  25.1%  29.7%  0.7% 
More than 25.01% greater than Medicare payment  1.9%  2.1%  1.4%  0.5% 
Source: IVIG pricing and sales data from the three largest distributors. 
Note: Totals may not add because of rounding.  
Table 2. Distributor Sales to Physicians From Fourth Quarter of 2005 to Third Quarter of 2006 
4th Quarter  1st Quarter  2nd Quarter  3rd Quarter 
IVIG Price Range  2005  2006  2006*  2006 
At or below Medicare payment*  33.0%  10.5%  3.5%  58.6% 
0.01%5.00% greater than Medicare payment  48.5%  44.4%  53.9%  8.3% 
5.01%10.00% greater than Medicare payment  0.1%  7.0%  0.9%  14.0% 
10.01%20.00% greater than Medicare payment  11.0%  11.6%  18.8%  15.8% 
20.01%25.00% greater than Medicare payment  1.2%  18.0%  15.4%  2.4% 
More than 25.01% greater than Medicare payment  6.3%  8.4%  7.6%  1.0% 
Source:  IVIG pricing and sales data from the three largest distributors. 

Note: Totals may not add because of rounding. 

*Less than 1 percent of sales to physicians during this quarter were at the same price as the Medicare payment amount. 

23 The three largest IVIG distributors accounted for approximately 90 percent of 
distributor-reported sales in the fourth quarter of 2005, including 97 percent of sales to 
hospitals and 66 percent of sales to physicians.  Because these distributors account for 
almost all hospital purchases, these data are representative of hospital costs.  Most sales by 
these distributors were to GPO members at contract prices.  Virtually no IVIG sold by the 
remaining 10 distributors was subject to GPO contracts.  However, 34 percent of physician 
purchases came from smaller distributors at noncontract prices, and the percentages in 
Table 2 may overestimate actual amounts of IVIG sales below Medicare payment amounts. 
  OEI-03-05-00404  INTRAVENOUS IMMUNE GLOBULIN:  MEDICARE PAYMENT AND AVAILABILITY  9  F I N D I N G S  
Purchase prices and invoices supplied by responding physicians for the 
first quarter of 2006 corroborate the distributor data presented in  
Table 2. The pricing data illustrate that approximately 10 percent of 
physician purchases (after subtracting discounts and rebates) were 
made at prices below the Medicare physician payment amounts in the 
first quarter of 2006.24 
The substantial increase in sales below the Medicare payment amounts 
appears to be the result of manufacturer price increases in January 2006 
that were not reflected in increased Medicare payments until the third 
quarter of 2006   
According to data provided by manufacturers, all planned to increase 
IVIG prices at the beginning of 2006. The data provided by distributors 
indicate that these price increases were then passed on to customers. 
However, Medicare payment amounts in the first two quarters of 2006 
were still based on older sales prices from 2005.  Therefore, even though 
hospitals and physicians had to pay more for IVIG in early 2006, their 
Medicare payment did not increase at the same time.  It appears that 
payment amounts for IVIG started to catch up with actual sales prices 
during the third quarter of 2006, and this is reflected in the increase in 
the percentage of sales at prices below the Medicare payment amounts 
shown in Tables 1 and 2.  Table 3 below illustrates that Medicare 
payment amounts for IVIG have risen over the last four quarters.  The 
largest increase in Medicare payments occurred between the second and 
third quarters of 2006, reflecting manufacturer price increases from two 
quarters prior. 
Table 3. Medicare Payment for IVIG From the Fourth Quarter of 2005 to the Third Quarter of 2006 
IVIG Form   4th Quarter 200525  1st Quarter 2006  2nd Quarter 2006  3rd Quarter 2006 
Liquid IVIG (1 gram)  $56.30  $56.72  $58.18  $60.23 
Powder IVIG (1 gram)  $43.10  $44.44  $44.52  $49.80 
Source:  CMS 2005 and 2006 ASP drug pricing files. 
24 Approximately 90 percent of physician-reported purchases were at prices above the 
Medicare payment amount in the first quarter of 2006.  In addition, 133 of 157 responding 
physicians (85 percent) reported that they could not purchase either liquid or powder IVIG 
at a price below the Medicare payment amount for that quarter. 
25 These are the Medicare physician payment amounts for the fourth quarter of 2005.  
The Medicare hospital payment amount for this quarter was $80.68 per gram.  
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In the fourth quarter of 2005, IVIG obtained by hospitals and physicians 
through GPO contracts was more likely to be sold at prices below the 
Medicare payment amounts than IVIG not obtained through GPO contracts. 
Physicians are less likely than hospitals to obtain IVIG through GPO 
contracts. Most distributor sales to hospitals (87 percent) were at 
contract prices in the fourth quarter of 2005; however, a much smaller 
portion of distributor sales to physicians (44 percent) were at contract 
prices during the same quarter.26 
According to sales data collected from 13 distributors (including the 
3 largest IVIG distributors), 39 percent of contract sales were at prices 
below the Medicare payment amounts during the fourth quarter of 2005 
(see Table 4 on the next page). In contrast, only 2 percent of 
noncontract IVIG was sold at prices below the Medicare physician 
payment amounts during the same quarter. Furthermore, almost 
one-third of noncontract sales exceeded Medicare payment amounts by 
at least 20 percent. Less than 1 percent of contract sales exceeded the 
Medicare payment amounts by that amount. 
Noncontract prices may be higher than contract prices because they are 
subject to additional distributor markups.27 Distributors typically mark 
up manufacturer sales prices prior to reselling IVIG to customers, such 
as physicians or hospitals. Distributor markups have a greater effect on 
noncontract prices because contract prices are set, prenegotiated prices 
between the GPO and manufacturers. Distributors do not determine 
these prices, and any markup is limited by the terms of the contracts. 
The markup limitations do not typically apply to IVIG sold outside of a 
GPO contract, although some manufacturers place limits on distributor 
markups. In the fourth quarter of 2005, distributor markups for 
noncontract sales ranged from 5 to 49 percent. 
26 For the purposes of this review, IVIG sales to GPO members at the contract prices by 
distributors are considered contract sales. Not all sales by distributors are subject to GPO 
contracts. In contrast to the contract sales, sales of IVIG by distributors to providers are 
considered noncontract sales. Distributors typically mark up manufacturer sales prices 
prior to reselling noncontract IVIG directly to customers, such as physicians or hospitals. 
27 We are defining markup as the difference between how much a distributor pays the 
manufacturer for IVIG and how much the distributor charges customers for IVIG. 
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Table 4. Contract and Noncontract Sales Prices for IVIG in the Fourth Quarter of 2005 
Percentage of Contract  Percentage of 
IVIG Price Range  Sales  Noncontract Sales 
Below Medicare physician reimbursement  39.2%  1.7% 
0.01%5.00% greater than Medicare physician reimbursement  55.9%  24.6% 
5.01%20.00% greater than Medicare physician reimbursement  4.7%  40.5% 
20.01%50.00% greater than Medicare physician reimbursement  0.2%  24.9% 
More than 50.01% greater than Medicare physician reimbursement  0.0%  8.3% 
Source: IVIG pricing and sales data from distributors. 
Note: Totals may not add because of rounding. 
The majority (57 percent) of 
Most physicians and distributors reported 
responding physicians reported that 
problems with IVIG availability in 2005 and 
they were unable to provide patients 
the first quarter of 2006  with adequate amounts of IVIG 
during the first quarter of 2006. 
These physicians stated that problems with IVIG availability were 
typically related to Medicare payment. 
A small number of responding physicians said that they had stopped 
providing IVIG to Medicare beneficiaries altogether. One responding 
physician stated that payment issues led him to turn patients away: 
The reimbursement from Medicare does not cover the cost of 
medication. We are unable to provide care for new patients. Another 
physician added: We can no longer treat [Medicare] patients with IVIG 
due to losing hundreds of dollars each time. A third physician cited 
supply issues for the inability to treat patients: Due to insufficient 
supply, we are forced to turn away patients requiring IVIG. 
All 13 distributors responding to our January 2006 survey also reported 
problems with IVIG availability. One summarized the situation by 
stating: Customers have requested more product, but we are unable to 
obtain the extra product needed from the manufacturer. According to 
their responses, none of the distributors were able to fulfill all customer 
requests for IVIG, and all distributors have asked manufacturers for 
additional product. Most distributors reported that manufacturers were 
unable to provide them with additional IVIG. 
One important reason distributors are unable to obtain additional IVIG 
from manufacturers is that manufacturers are contractually obligated 
to fulfill their GPO allocations first, and, when additional product is 
available, manufacturers reportedly provide it to GPO members first (at 
a noncontract price). Therefore, hospitals and physicians who are not 
GPO members do not have the same access to IVIG products. 
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 SS  
Manufacturers, distributors, and physicians reported that patients were 
being shifted from physicians offices to hospitals to receive IVIG 
Manufacturers responded that they received reports in 2005 of some 
patients being moved from physicians offices to hospitals for IVIG 
treatment because of payment differentials between the settings at that 
time. Similarly, in responses to our January 2006 survey, a majority of 
the distributors noted that patients were being moved from physicians 
offices to hospitals to receive IVIG treatment because of changes in 
Medicares physician payment amounts. Physicians also noted in their 
response to our April 2006 survey that an increasing number of patients 
were receiving IVIG treatment in hospitals. Sixty-one percent of 
responding physicians indicated that they had sent patients to hospitals 
for IVIG treatment because of their inability to acquire adequate 
amounts of IVIG or problems with Medicare payment. The most 
common explanation for the shift to hospitals was Medicare payment, 
specifically the inability of physicians to purchase IVIG at prices below 
the Medicare payment amounts. 
Distributor sales data support this claim and indicate that hospitals 
received more IVIG in the fourth quarter of 2005 than in the fourth 
quarter of 2004, while sales to physicians decreased. At that time, 
prices to hospitals were generally lower than prices to physicians, while 
Medicare payment to hospitals for IVIG administered in an outpatient 
setting was substantially higher than Medicare payment to physicians 
in 2005.28 In keeping with the payment reforms in the MMA, CMS 
began paying for most Part B drugs and biologicals administered in 
hospital outpatient departments based on 106 percent of the 
manufacturers ASP on January 1, 2006.29 Despite the reduction in 
hospital payments following the change in payment methodology, data 
from the three largest distributors indicate that total sales to hospitals 
continued to increase through the first half of 2006. 
The priority given to GPO contract customers is related to the shift in 
patients to hospitals, because the GPO market comprises primarily 
28 In 2005, CMS reimbursed hospitals for outpatient drugs at 83 percent of the AWP. 
The CMS hospital payment for both powder and liquid IVIG was $80.68 per gram in the 
fourth quarter of 2005, compared to 56.30 (liquid IVIG) and $43.10 (powder IVIG) for 
physicians. 
29 Medicare Announces Payment Rates and Policy Changes for Hospital Outpatient 
Services in 2006. Available online at 
http://www.cms.hhs.gov/apps/media/press/release.asp?Counter=1711. Accessed 
April 24, 2006. 
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hospitals and nursing homes (although some physicians can purchase 
IVIG through GPOs). According to distributor data, most hospitals 
receive IVIG through their GPO memberships and, as previously stated, 
contract prices are generally lower than noncontract prices. One 
distributor summarized the potential problems with hospitals acquiring 
larger portions of available IVIG by stating: The product [IVIG] 
allocation is normally based on historical usage data. To meet the new 
increased demands in the hospital outpatient setting, [the distributor] 
used noncontract product to meet those needs. This decreased the 
amount of IVIG available to the noncontract market (e.g., physicians, 
home care and pharmacies). 
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Based on the data presented in this report, just over half of IVIG sales 
to hospitals and physicians were at prices below the Medicare payment 
amounts in the third quarter of 2006, a substantial increase over 
previous quarters.  Distributors and physicians also reported problems 
with IVIG availability. 
The interaction of manufacturer pricing decisions and certain 
ASP-related issues could partially explain our findings regarding IVIG 
pricing and availability. For example, the results of this review indicate 
that the two-quarter lag between manufacturer price increases and 
corresponding increases in Medicare payment amounts may have 
played a major role in substantially increasing the percentage of IVIG 
sales at prices below the Medicare payment amounts in the third 
quarter of 2006.   
Because manufacturer price increases for IVIG in early 2006 were not 
reflected in Medicare reimbursement until the middle of that year, 
hospitals and physicians were initially being charged more for IVIG 
without a corresponding increase in payment.  If manufacturers were to 
implement another across-the-board price increase, hospitals and 
physicians might face issues similar to those that they faced in the first 
two quarters of 2006. 
Furthermore, ASPs include manufacturer sales to all classes of trade 
and do not explicitly include distributor markup, which may cause the 
actual acquisition cost of IVIG to exceed the Medicare payment amount 
(especially in a time when increased demand creates incentives for 
distributors to increase markups on noncontracted sales).  In the case of 
IVIG, the combination of the two-quarter lag and distributor markups 
could result in a gap between provider acquisition costs and Medicare 
payment amounts, which could lead providers to shift patients to other 
sites of service.  When this occurs, beneficiaries may have difficulty 
obtaining treatment in their preferred settings. 
It is important to note that additional factors, including off-label use, 
coding, and plasma industry economics, may drive the difficulties with 
IVIG pricing and availability.  Reported recent increases in the use of 
IVIG for off-label indications may strain the tight supply of this product. 
Each IVIG product is a unique brand drug, yet Medicare payment is 
based on a weighted average price of all products.  The production of 
  OEI-03-05-00404  INTRAVENOUS IMMUNE GLOBULIN:  MEDICARE PAYMENT AND AVAILABILITY  15  C O N C L U S I O N  
IVIG requires substantial resources not typically associated with other 
pharmaceutical products.  However, this review did not include an   
in-depth examination of these factors.  
AGENCY COMMENTS  
CMS commented that this report provides initial information on the 
availability and pricing of IVIG and sets the stage for further review of 
certain issues (e.g., off-label use, payment lags, and distributor 
markups) that can bring greater understanding of how the marketplace 
operates for this unique product.  CMS also noted that the time lag is a 
feature of the ASP system and applies to all Part B drugs and 
biologicals. CMS stated that the substantial increase in the percentage 
of IVIG sold to hospitals and physicians at prices below the Medicare 
payment amounts is an important development and noted that these 
findings indicate that Medicare payment has adjusted to increases in 
IVIG market prices over time.  CMS stated, We will carefully consider 
this report as we continue our dialogue with manufacturers, patient 
groups, and stakeholders to better understand marketplace 
developments and issues impacting beneficiary access to quality care. 
We strongly encourage the OIG to further study some of the issues 
raised [in CMSs comments to the draft report]. 
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DETAILED SCOPE AND METHODOLOGY 
Detailed Scope 
We conducted a multiphase review to examine the pricing and 
availability of intravenous immune globulin (IVIG) from the 
perspectives of:  (1) the manufacturers of IVIG, (2) distributors and 
group purchasing organizations (GPOs) identified by the manufacturers 
as involved in the sale and distribution of IVIG, and (3) randomly 
selected physicians who billed Medicare for IVIG.  
Manufacturers. We collected data from the five IVIG manufacturers 
producing IVIG at the time of the survey (December 2005).  We did not 
include the American Red Cross in this study because it announced its 
exit from the plasma therapeutics business in July 2005.   
Distributors and group purchasing organizations. Based on information 
collected from the 5 IVIG manufacturers, we identified 17 distributors 
and 7 GPOs involved with the sale and distribution of IVIG.  We 
collected data only from distributors and GPOs identified by the 
manufacturers. IVIG manufacturers identified four additional 
companies as distributors in their responses to the Office of Inspector 
General (OIG).  We did not include three of these in our analysis 
because these companies do not consider themselves distributors, as 
none of them resells IVIG.  The fourth company identified itself as a 
small independent distributor and was not set up to breakout the 
kind of information [OIG] is requesting.   
For the three largest IVIG distributors, we collected sales and pricing 
data for the first three quarters of 2006.  We did not collect any 2006 
sales and pricing data from smaller distributors, who tend to charge 
customers more for IVIG. 
Physicians. We randomly selected physicians who billed Medicare for 
two IVIG procedure codes during the third quarter of 2005.  The 
procedure codes are: Q9941injection, immune globulin, intravenous, 
lyophilized (powder), 1 gram; and Q9943injection, immune globulin, 
intravenous, nonlyophilized (liquid), 1 gram.  These two codes accounted 
for the majority of Medicare payment for IVIG during the last three 
quarters of 2005 (the effective dates of these codes).  There were two 
additional IVIG procedure codes in effect during 2005:  Q9942 and 
Q9944, which were 10-milligram doses of powder and liquid IVIG, 
respectively.  We did not include these two codes in our analysis.  
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Effective January 1, 2006, CMS replaced these four procedure codes 
with two new codes: J1566 and J1567.   
Detailed Methodology:  Data Sources and Sample 
Manufacturers. The five manufacturers producing IVIG at the time of 
the survey (December 2005) provided OIG with 2005 IVIG sales prices 
and sales volume. In addition, we asked manufacturers to complete a 
written survey about IVIG access and availability, distribution methods, 
resale policies, customers, and future production plans.   
Distributors and GPOs. Manufacturers identified 17 distributors and 
7 GPOs involved with the sale and distribution of IVIG.  Between 
January and April 2006, 14 distributors and 6 GPOs completed a 
written survey concerning IVIG.  Two of the seventeen distributors 
submitted survey responses after the deadline for data collection. The 
remaining distributor and one GPO did not complete the survey or 
provide sales and pricing data. Based on manufacturer sales data, 
these nonrespondents made up a very small portion of IVIG sales.  
Thirteen of these distributors also provided us with their sales prices 
and sales volume for 2005.  The sales volume and pricing data were 
provided by distributors and include IVIG sales and prices to GPO and 
non-GPO members. 
Based on distributor-reported data, we determined that the three 
largest IVIG distributors accounted for approximately 90 percent of 
distributor-reported sales in the fourth quarter of 2005.  We collected 
sales and pricing data from these three largest distributors for the first 
three quarters of 2006. 
Physicians.  We extracted all paid Medicare Part B physician claims for 
two IVIG procedure codes from CMSs 2005 National Claims History 
File with dates of service in the third quarter of 2005 (the most recent 
claims data available at the time we selected our sample).  We 
summarized the claims by the physicians Unique Physician 
Identification Number (UPIN) and profiling identification number.  
After we summarized third-quarter 2005 claims data by UPIN and 
profiling identification number, there were 1,111 observations for Q9941 
and 1,350 observations for Q9943. 
We then selected a simple random sample of 130 physicians for each of 
the two procedure codes.  OIG investigative concerns prevented us from 
contacting a small number of physicians; we excluded these physicians 
from our sample.  The final sample contained 129 physicians for 
  OEI-03-05-00404  INTRAVENOUS IMMUNE GLOBULIN:  MEDICARE PAYMENT AND AVAILABILITY  18  AA PP PP EE NN DD II XX ~~ AA  
procedure code Q9941 and 126 physicians for procedure code Q9943, for 
a total of 255 physicians. 
In April 2006, we sent written surveys on pricing and availability to the 
255 randomly selected physicians in our sample. We asked physicians 
how much they paid for IVIG during the first quarter of 2006, taking 
into account all discounts and rebates. We asked physicians to submit 
invoices to document all IVIG purchases. We also asked physicians how 
available and accessible IVIG is, what happens when they are unable to 
provide patients with adequate amounts of IVIG, and from what sources 
they purchase IVIG products. 
Between May and August 2006, 157 physicians (62 percent) responded 
to our written survey and 100 physicians (39 percent) provided their 
purchase volume and acquisition costs for IVIG. Some respondents 
reported IVIG purchases and purchase prices for individual physicians 
in our sample, while others provided IVIG purchases and prices for 
physicians group practices. We could not identify fundamental 
differences between responding and nonresponding physicians. 
Data Analysis: Pricing and Sales Data From 2006 
Distributors. We examined sales and pricing data for the first three 
quarters of 2006 from the three largest IVIG distributors. We 
calculated the percentage of IVIG sales to hospitals and physicians at 
prices above and below the Medicare payment amounts and identified 
trends in IVIG availability related to increases in IVIG purchase prices 
and Medicare payment. 
Physicians. Based on the information provided by the responding 
physicians, we calculated the percentage of IVIG purchased by 
responding physicians at prices above and below the first-quarter 2006 
Medicare physician payment amounts, which were based on average 
sales prices reflecting manufacturer sales from July through September 
2005. For this analysis, we compared physician-reported prices that 
take into account discounts and rebates with the Medicare physician 
payment amounts. We also determined the percentage of IVIG 
purchased by physicians that was subject to discounts and rebates. We 
examined physician responses to our survey to identify what product 
availability issues exist, what concerns physicians have about Medicare 
payment, from what sources physicians purchase IVIG products, how 
physicians use IVIG, and any other specified issues. 
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Pricing and Sales Data From 2005 
Manufacturers. Based on the information provided by the five 
manufacturers, we identified the amount of IVIG sold in 2005 to each 
type of customer (e.g., distributor, GPO member, direct customer, and 
home care company).  In addition, we analyzed manufacturer responses 
to questions about IVIG access and availability, distribution methods, 
resale policies, customers, future prices, and future production plans. 
Distributors and GPOs. We identified the amount of IVIG sold in the 
fourth quarter of 2005 to each type of customer (e.g., hospital, physician, 
clinic, home care company, etc.). For sales to hospitals, we determined 
the percentage of IVIG sold at prices above and below both the Medicare 
outpatient hospital payment amount and the Medicare physician 
payment amount for the fourth quarter of 2005. We also calculated the 
percentage of sales to hospitals and physicians at contract and 
noncontract prices. For physicians, sales prices were compared only to 
the fourth-quarter 2005 physician payment amounts. 
We identified the amount of IVIG sold in the fourth quarter of 2005 at 
contract and noncontract prices, regardless of customer type. For the 
purposes of this review, IVIG sales to GPO members at the contract 
prices by distributors are considered contract (encumbered) sales. 
One distributor that works extensively with GPO members summarized 
the relationship in the following way: The GPO sends [distributor] the 
allocation spreadsheets that list their members along with the IVIG 
allotment that is agreed upon between the provider and the GPO . . . 
The GPO members call to order their IVIG and [the distributor] ships 
product to the GPO members based on the allocation spreadsheets. 
Not all sales by distributors are subject to GPO contracts. In contrast to 
the contract sales described above, sales of IVIG that distributors 
independently resell to providers are considered noncontract 
(unencumbered) sales. Distributors typically markup manufacturer 
sales prices prior to reselling noncontract IVIG directly to customers, 
such as physicians or pharmacies. Each manufacturer allows 
distributors to sell a portion of their IVIG at noncontract prices. 
We also examined distributor and GPO responses to the pricing and 
availability survey to identify distribution methods, manufacturer 
relationships, resale policies, product availability, pricing, and other 
specified issues. 
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 A P P E N D I X ~ B  
 
Agency Comments 
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A P P E N D I X   ~   B  
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A P P E N D I X   ~   B  
 
  OEI-03-05-00404  INTRAVENOUS IMMUNE GLOBULIN:  MEDICARE PAYMENT AND AVAILABILITY  23    A C K N O W L E D G M E N T S  

This report was prepared under the direction of Robert A. Vito, Regional 
Inspector General for Evaluation and Inspections in the Philadelphia 
regional office, and David E. Tawes, Director, Prescription Drug Pricing 
Unit. 
Edward K. Burley served as the team leader for this study.  Other 
principal Office of Evaluation and Inspections staff from the 
Philadelphia regional office who contributed to this report include 
Roman Strakovsky and Kriti Sehgal; other central office staff who 
contributed include Linda B. Abbott, Scott Horning, and Barbara 
Tedesco. 
  OEI-03-05-00404  INTRAVENOUS IMMUNE GLOBULIN:  MEDICARE PAYMENT AND AVAILABILITY  24