MEDICARE PART B

CMS Should Take 

Additional Steps to 

Verify Accuracy of 

Data Used to Set 

Payment Rates for 

Drugs

Report to the Ranking Member, 

Committee on Ways and Means, House 

of Representatives

July 2016

GAO-16-594

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-16-594, a report to the 

Ranking Member, Committee on Ways and 

Means, House of Representatives

July 2016

MEDICARE PART B

CMS Should Take Additional Steps to Verify Accuracy 

of Data Used to Set Payment Rates for Drugs

Why GAO Did This Study

Medicare Part B covers drugs typically 

administered by a physician. Medicare 

pays physicians and other providers for 

these drugs at an amount generally 

equal to the ASP of the drug plus a 

fixed percentage. These payment rates

are calculated quarterly by CMS based 

on price and volume data reported by 

drug manufacturers. Members of 

Congress and others have questioned

the amount that both Medicare and its 

beneficiaries spend on Part B drugs.

GAO was asked to examine Medicare 

spending for and utilization of Part B 

drugs and the accuracy of the sales 

price data reported by drug 

manufacturers. This report (1) 

describes Medicare spending and 

utilization for Part B drugs that are paid 

based on ASP, including variations in

spending and utilization by provider 

and drug characteristics, and (2) 

examines the steps CMS takes to 

ensure the accuracy of the sales price 

data reported by drug manufacturers.

To describe Medicare spending and 

utilization for Part B ASP drugs, GAO 

analyzed 2014 Medicare claims data. 

To examine the accuracy of ASP data, 

GAO interviewed CMS, the HHS Office 

of Inspector General, and drug 

manufacturers and reviewed related 

documentation. 

What GAO Recommends

Congress should consider requiring all 

manufacturers of drugs paid at ASP to 

submit sales price data to CMS. 

Further, CMS should periodically verify

the data submitted by a sample of drug 

manufacturers by requesting source 

documentation. HHS agreed with 

GAO’s recommendation and stated 

that CMS would take action as 

warranted.

What GAO Found

In 2014, the most recent year for which data were available, the Medicare 

program and its beneficiaries spent about $21 billion on approximately 46 million 

administrations of 551 Part B drugs paid based on average sales price (ASP). 

Six drugs—each exceeding $1 billion in expenditures—accounted for 36 percent 

of all expenditures on Part B ASP drugs, while a different 10 drugs—each 

administered over 1 million times—accounted for 37 percent of all 

administrations. Biologics (drugs made from living entities), drugs without generic 

versions available, and drugs made by a single manufacturer were associated 

with the vast majority of expenditures on Part B ASP drugs. In contrast,

synthetics (drugs produced from chemical ingredients), drugs with generic 

versions available, and drugs with multiple manufacturers were associated with

the vast majority of administrations. Compared with other types of providers,

hematology oncologists were associated with the highest percentage of drug

expenditures and administrations.

Drug Characteristics Associated with the Highest Percentage of Expenditures on and 

Administrations of Part B Drugs Paid Based on Average Sales Price (ASP) (2014)

Drug characteristic

Expenditures Administrations

Characteristic

Percentage 

of total Characteristic

Percentage of 

total 

Drug composition Biologic 68 Synthetic 76

Brand/generic status Brand only 89 Generic available 66

Single-source/multisource statusSingle-source 81 Multi-source 74

Source: GAO analysis of Centers for Medicare & Medicaid Services, Food and Drug Administration, and RED 

BOOK data. | GAO-16-594

Note: Expenditures reflect the total amount spent by the Medicare fee-for-service program and its 

beneficiaries, and administrations reflect the number of claim line items for a drug. Both measures 

include only those for claim line items that Medicare paid based on ASP.

The Centers for Medicare & Medicaid Services (CMS), an agency within the 

Department of Health and Human Services (HHS), performs several electronic 

data checks on the sales price data reported by drug manufacturers each 

quarter, including checking for missing data or incorrect product information. 

However, CMS does not routinely verify the underlying data, which is 

inconsistent with federal internal control standards that call for management to 

use quality information to achieve its objectives. Without additional verification of 

the ASP data received from manufacturers, it is possible for the data to be 

inaccurate, which could result in inaccurate Medicare payment rates. In addition,

CMS is unable to use or assess the accuracy of all sales price data because, as 

directed by statute, only manufacturers with Medicaid drug rebate agreements 

are required to submit sales price data to CMS. Unless all manufacturers without 

rebate agreements choose to voluntarily submit sales price data, the payment 

rates for some drugs will be based on incomplete ASP data or will not be set 

based on ASP.

View GAO-16-594. For more information, 

contact James Cosgrove at (202) 512-7114 or 

cosgrovej@gao.gov.
Page i GAO-16-594 Medicare Part B Drugs

Letter 1

Background 5

Medicare Expenditures on and Administrations of Part B ASP 

Drugs Were Concentrated in a Small Number of Drugs in 2014 10

CMS Checks Reported Sales Prices for Potential Data Errors, but 

Does Not Routinely Verify the Underlying Data or Receive All 

Relevant Data 18

Conclusions 22

Matter for Congressional Consideration 23

Recommendation for Executive Action 23

Agency Comments and Our Evaluation 24

Appendix I Characteristics Associated with the Part B Drugs Paid Based on 

ASP with the Highest Expenditures and Highest Number of 

Administrations (2014) 25

Appendix II Comments from the Department of Health and Human Services 32

Appendix III GAO Contact and Staff Acknowledgments 34

Related GAO Products 35

Tables

Table 1: The Six Part B Drugs Paid Based on ASP with Over $1 

Billion in Medicare Expenditures in 2014 12

Table 2: The 10 Part B Drugs Paid Based on ASP with Over 1 

Million Administrations in 2014 14

Table 3: Drug Characteristics Associated with the Highest 

Percentage of Expenditures and Administrations for Part 

B Drugs Paid Based on ASP (2014) 16

Table 4: Spending and Utilization Characteristics Associated with 

the Highest Percentage of Expenditures and 

Administrations for Part B Drugs Paid Based on ASP 

(2014) 17

Contents
Page ii GAO-16-594 Medicare Part B Drugs

Table 5: Provider Characteristics Associated with the Highest 

Percentage of Expenditures and Administrations for Part 

B Drugs Paid Based on ASP (2014) 18

Table 6: Drug Characteristics Associated with the 6 Part B Drugs 

Paid Based on ASP with Over $1 Billion in Expenditures 

and the 10 Drugs with Over 1 Million Administrations 

(2014) 25

Table 7: 50 Part B Drugs Paid Based on ASP with the Highest 

Expenditures (2014) 26

Table 8: Spending and Utilization Characteristics Associated with 

the 6 Part B Drugs Paid Based on ASP with Over $1 

Billion in Expenditures and the 10 Drugs with Over 1 

Million Administrations (2014) 28

Table 9: 50 Part B Drugs Paid Based on ASP with the Highest 

Number of Administrations (2014) 29

Figures

Figure 1: Medicare Expenditures on and Administrations of Part B 

Drugs, by Payment Methodology (2014) 7

Figure 2: Percentage of Total Medicare Expenditures on and 

Number of Part B Drugs Paid Based on ASP, by 

Expenditures on Each Drug (2014) 11

Figure 3: Percentage of Total Administrations and Number of 

Medicare Part B Drugs Paid Based on ASP, by 

Administrations of Each Drug (2014) 13

Figure 4: Percentage of Total Medicare Expenditures on and 

Administrations of Part B Drugs Paid Based on ASP, by 

Provider Specialty/Type (2014) 31
Page iii GAO-16-594 Medicare Part B Drugs

Abbreviations

AMP average manufacturer price

ASP average sales price

AWP average wholesale price

CMS Centers for Medicare & Medicaid Services

DME durable medical equipment

ESRD end-stage renal disease

FDA Food and Drug Administration

FFS fee-for-service

HCPCS Healthcare Common Procedure Coding System

HHS Department of Health and Human Services

HOPD hospital outpatient department

MMA Medicare Prescription Drug, Improvement, and 

 Modernization Act of 2003

NDC National Drug Code 

OIG Office of Inspector General

This is a work of the U.S. government and is not subject to copyright protection in the 

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Page 1 GAO-16-594 Medicare Part B Drugs

441 G St. N.W.

Washington, DC 20548

July 1, 2016

The Honorable Sander M. Levin

Ranking Member

Committee on Ways and Means

House of Representatives

Dear Mr. Levin:

Medicare spent over $24 billion on drugs covered under Part B in 2014.1

The majority of these expenditures—over 85 percent—were based on the 

drug’s average sales price (ASP), which the Centers for Medicare & 

Medicaid Services (CMS) calculates quarterly based on price and volume 

data reported by drug manufacturers of all sales to all U.S. purchasers, 

including physicians, hospitals, and wholesale distributors. The Medicare 

Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) 

set the Medicare payment rate for most Part B drugs acquired by a 

physician’s office at 106 percent of manufacturers’ reported ASP for the 

drug.2 The MMA did not specify a payment rate for most Part B drugs 

acquired by a hospital outpatient department (HOPD) and instead 

authorized the Department of Health and Human Services (HHS)—the 

agency that oversees CMS—to annually update the payment rate to 

reflect HOPDs’ acquisition and overhead costs.3 Since 2013, CMS has 

set the payment rate for most separately payable Part B drugs acquired 

 1

Part B drugs, such as drugs used to treat cancer, are typically administered by a 

physician or under a physician’s close supervision in physicians’ offices or hospital 

outpatient departments. This spending estimate is based on total Medicare fee-for-service 

(FFS) allowed charges for separately payable Part B drugs and includes spending by the 

Medicare FFS program, its beneficiaries, and other payers in cases where Medicare is not 

the primary payer or where beneficiaries receive assistance with their cost sharing. The 

estimate does not include spending on drugs for which Medicare’s payment is bundled 

with that of a related service—which CMS officials estimated to be about $1.7 billion in 

2014—or spending for the administration or dispensing of the drugs. 

2

Pub. L. No. 108-173, § 303(c)(1), 117 Stat. 2066, 2239 (codified as amended at 42 

U.S.C. § 1395w-3a). In addition to payment for the drug itself, providers receive a 

separate payment from Medicare for the administration or supplying of a Part B drug.

3

Pub. L. No. 108-173, § 621, 117 Stat. 2307 (codified as amended at 42 U.S.C. §

1395l(t)(14)(A)(iii)).

Letter
Page 2 GAO-16-594 Medicare Part B Drugs

by HOPDs at 106 percent of ASP.4 Beneficiaries are generally 

responsible for 20 percent of the payment rate for Part B drugs.

Stakeholders have questioned the amount Medicare spends on Part B 

drugs and how drug prices affect Medicare beneficiaries’ ability to afford 

needed drugs.5 For example, members of Congress have noted that due 

to the high cost of many Part B drugs and the 20 percent cost sharing 

requirement under Part B, patients who face a serious diagnosis or are 

living with a chronic health condition are subject to significant financial 

burdens.6 Additionally, the HHS Office of Inspector General (OIG) has 

noted that current manufacturer reporting requirements could result in 

incomplete information on drug prices being submitted to CMS. In its 

report, OIG demonstrated how incomplete drug pricing information could 

affect the accuracy of Part B drug payment rates.7 We and others also 

have noted the long-term fiscal challenges facing the Medicare program. 

Additional information on Medicare Part B drug spending and utilization 

and the accuracy of the sales price data reported by drug manufacturers 

may inform congressional efforts to moderate program spending.

 4

Due to the impact of sequestration, an automatic, across-the-board cancellation of 

budgetary resources implemented pursuant to the Budget Control Act of 2011, most 

programs, projects, and activities across the federal government received budget cuts. 

Therefore, Part B drug payment rates to both physicians and hospitals have been 

approximately 104 percent of ASP. Some Part B drugs, including certain vaccines, 

radiopharmaceuticals, and new drugs, are not paid based on ASP in either physician’s 

offices or HOPDs. In March 2016, CMS released a proposed rule that outlined the 

agency’s plan to test alternative Part B drug payment designs over a 5-year period. 81 

Fed. Reg. 23230, 13258 (Mar. 11, 2016) (to be codified at 42 C.F.R. pt. 511). Under the 

proposal, the first phase would be implemented in fall 2016 and would involve changing 

the 6 percent add-on to ASP to 2.5 percent plus a flat fee (in a budget neutral manner) for 

both physicians and HOPDs. The second phase would be implemented no earlier than 

January 1, 2017, and would implement value-based purchasing tools similar to those 

employed by commercial health plans, pharmacy benefit managers, hospitals, and other 

entities that manage health benefits and drug utilization. 

5

See, for example, Medicare Payment Advisory Commission, Report to the Congress: 

Medicare and the Health Care Delivery System (Washington, D.C.: June 2015), 61-83.

6

See, for example, Subcommittee on Health of the Committee on Energy and Commerce, 

Examining Reforms to Improve the Medicare Part B Drug Program for Seniors, 113th

Cong. 1st session, June 28, 2013.

7

See Department of Health and Human Services Office of Inspector General, Limitations 

in Manufacturer Reporting of Average Sales Price Data for Part B Drugs, OEI-12-13-

00040 (Washington, D.C.: July 2014). 
Page 3 GAO-16-594 Medicare Part B Drugs

You asked us to examine Medicare spending and utilization for Part B 

drugs and the accuracy of the sales price data reported by drug 

manufacturers. In this report, we

• describe Medicare spending and utilization for Part B drugs that are 

paid based on ASP, including variations in spending and utilization by 

provider and drug characteristics and

• examine the steps CMS takes to ensure the accuracy of the sales 

price data reported by drug manufacturers.

To describe Medicare spending and utilization for Part B drugs that are 

paid based on ASP, we used Medicare fee-for service (FFS) claims data 

from 2014, the most recent full year of claims data available at the time of 

our analysis.8 We first identified all Healthcare Common Procedure 

Coding System (HCPCS) codes, which CMS uses to determine payment 

for certain Medicare services, for Part B drugs. A single HCPCS code can 

cover multiple drugs with different National Drug Codes (NDC), which are 

universal product identifiers assigned by the Food and Drug 

Administration (FDA). We used the list of HCPCS codes to identify all 

claim line items for Part B drugs during 2014. We then restricted the claim 

line items to those that were paid based on ASP by removing claim line 

items for drugs and facilities that were paid based on other payment 

methodologies.9 Next, for each Part B ASP drug, we calculated Medicare 

spending, defined as the total amount spent by the Medicare FFS 

program and its beneficiaries, and two measures of utilization: the 

number of times the drug was administered—defined as the number of 

claim line items for the drug—and the number of unique beneficiaries who 

received the drug.10 To examine variations in spending and utilization by 

drug characteristics, such as whether the drug was a brand name or 

generic drug, we used the claims data, FDA’s NDC Product Summary 

 8

Specifically, we used the June 2015 updates of CMS’s 2014 100 percent National Claims 

History file for physician services and durable medical equipment (DME) services and the 

hospital outpatient standard analytical file. 

9

We also removed claim line items where Medicare was not the primary payer and thus 

did not set the payment rate.

10The spending and utilization estimates do not include drugs for which Medicare’s 

payment is bundled with that of a related service—which occurs for many drugs 

administered in hospital outpatient departments—or spending for the administration or 

dispensing of the drugs.
Page 4 GAO-16-594 Medicare Part B Drugs

File, and Truven Health Analytics’ RED BOOK.11 To examine variations 

by provider characteristics, such as whether the provider was located in a 

rural or urban area, we used the claims data and HHS and Department of 

Agriculture’s Rural-Urban Commuting Areas geographic taxonomy.12

To examine the steps CMS takes to ensure the accuracy of the sales 

price data reported by drug manufacturers, we spoke with officials from 

CMS and OIG about the data CMS receives from manufacturers, 

including the steps the agency takes to ensure the accuracy of the data. 

We also spoke with CMS officials about the guidance CMS provides to 

manufacturers for calculating and submitting these data. We also 

interviewed representatives from four large and two small drug 

manufacturers to gain their perspective on the process of calculating and 

submitting ASP data and the guidance provided by CMS.13 We reviewed 

CMS’s guidance related to ASP data and compared data validation 

checks conducted by CMS on manufacturers’ reported ASP data with 

GAO standards related to ensuring the completeness and accuracy of 

data.14

To assess the reliability of the Medicare claims and other data used in 

this report, we reviewed relevant documentation, performed electronic 

data checks, benchmarked our results against published sources,15

 11RED BOOK publishes drug pricing and product information. Because the level at which 

Medicare defines a Part B drug differs from the level used in the Product Summary File 

and RED BOOK, we used CMS crosswalks to generate a list of NDCs associated with a 

given HCPCS code, and then summarized the NDC-level drug characteristics to a 

HCPCS-level. Although CMS’s crosswalks do not necessarily include a complete list of all 

NDCs associated with that HCPCS code, we determined this approach was sufficiently 

reliable for the purposes of this report.

12We used the most recent version of the Rural-Urban Commuting Area Codes available 

at the time of our analysis, which were based on 2010 Census work-commuting data, the 

2012 Census Bureau’s revised urban area definition based on 2010 Census data, and 

2013 zip codes. 

13We selected manufacturers based on the number of the manufacturer’s drugs that were 

covered under Medicare Part B in 2014. We selected four manufacturers that produced 

over 100 drugs each and two manufacturers that produced only one drug each. 

14GAO, Standards for Internal Control in the Federal Government, GAO-14-704G

(Washington, D.C.: September 2014) and Assessing the Reliability of ComputerProcessed Data, GAO-09-680G (Washington, D.C.: July 2009).

15We found that our results were generally consistent with those published by CMS.
Page 5 GAO-16-594 Medicare Part B Drugs

interviewed agency officials and others familiar with these data sources, 

or some combination of the four. We determined that the data used in this 

report were sufficiently reliable for the purposes of this report.

We conducted this performance audit from March 2015 to July 2016 in 

accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

Medicare Part B generally covers both synthetic drugs and biologicals 

administered under a physician’s direct supervision, including those 

administered in physician offices and in hospital outpatient departments 

that are not usually self-administered.16 These include injectable drugs 

(such influenza, pneumococcal, and hepatitis B vaccines); drugs inhaled 

through durable medical equipment (such as certain asthma 

medications); and oral cancer drugs if the same drug is available in 

injectable form.

17

As with all drugs, Part B drugs can be either single-source or multisource. Single-source drugs have only one manufacturer. Multi-source 

drugs have at least two, and often several, versions produced by different 

manufacturers. While each of these versions will have its own NDC, 

Medicare pays a single rate for any NDC associated with a given HCPCS 

code.

 16Synthetic drugs are produced from specific chemical ingredients and have small, welldefined chemical structures. Conversely, biologicals are large compounds that are made 

in living systems using components from living entities. In this report, we use the term 

“drugs” to refer to both synthetic drugs and biologicals.

17Generally, DME is equipment that serves a medical purpose, can withstand repeated 

use, is generally not useful in the absence of an illness or injury, and is appropriate for use 

in the home. See 42 C.F.R. § 414.202 (2015). 

Background

Medicare Part B Drugs
Page 6 GAO-16-594 Medicare Part B Drugs

Part B drugs administered to Medicare beneficiaries are generally 

purchased by physicians or hospitals. In 2014, Medicare spent 

approximately $24 billion on these drugs. The majority of these 

expenditures—approximately $21 billion, or 87 percent—were for drugs 

paid based on ASP. The remaining 13 percent of expenditures were for 

drugs paid based on different methodologies. For example, several Part B 

drugs, including certain vaccines and drugs provided through DME, are 

paid for on the basis of average wholesale prices (AWP) or reasonable 

cost and not on the basis of ASPs.18 Part B ASP drugs accounted for a 

somewhat smaller percentage of administrations than expenditures of all 

Part B drugs in 2014—63 percent—as drugs paid based on AWP or 

reasonable cost, primarily flu, pneumonia, and hepatitis B vaccines, 

accounted for 26 percent of all administrations of Part B drugs. (See 

fig. 1.) Over 9 million Medicare beneficiaries received at least one Part B 

ASP drug during 2014, which accounted for approximately 43 percent of 

all beneficiaries who received a Part B drug that year. These 9 million 

beneficiaries were responsible for 20 percent of Medicare’s payment for 

these drugs via cost-sharing requirements, or about $4 billion in 2014.

 18See 42 U.S.C. §1395u(o)(1). AWP is often considered the price wholesalers charge 

retailers. It is based on pricing information reported by manufacturers and is not 

necessarily based on actual sales transactions. As a result, AWP does not reflect the 

rebates, discounts, and other price concessions that many of these purchasers receive.

Medicare Payment for Part 

B Drugs
Page 7 GAO-16-594 Medicare Part B Drugs

Figure 1: Medicare Expenditures on and Administrations of Part B Drugs, by Payment Methodology (2014)

Note: In 2014, Medicare spent about $24 billion on approximately 74 million administrations of 814 

Part B drugs. These estimates include spending by the Medicare fee-for-service program, its 

beneficiaries, and other payers in cases where Medicare is not the primary payer or where 

beneficiaries receive assistance with their cost sharing. These estimates do not include spending for 

or administrations of drugs for which Medicare’s payment is bundled with that of a related service—

approximately 88 million administrations in 2014—or spending for the administration or dispensing of 

the drugs.

According to statute, drug manufacturers that participate in the Medicaid 

Drug Rebate Program are required to submit data to CMS on sales of 

Part B drugs to most U.S. purchasers, including physicians, hospitals, 

and wholesale distributors within 30 days of the end of every calendar 

Manufacturer Reporting of 

Sales Price Data
Page 8 GAO-16-594 Medicare Part B Drugs

quarter.19 Sales must be reported net of rebates, discounts, and other 

price concessions.20 CMS officials have stated that most manufacturers 

participate in the Medicaid Drug Rebate Program. Other manufacturers 

may voluntarily submit sales price data to CMS. CMS reviews these data, 

which are typically reported at the NDC level, and calculates payment 

rates at the HCPCS level. According to CMS officials, the agency then 

publicly releases the revised quarterly payment rates so that stakeholders 

can comment on the new rates before they take effect. These officials 

noted that due to the time it takes for manufacturers to submit the data to 

CMS, CMS to review the data and then update the payment rates, and 

the public to review and comment on the revised rates, there is a twoquarter (6-month) lag between the sale and when the payment rate takes 

effect.

CMS produces a web page titled “Medicare Part B Drug Average Sales 

Price” that provides guidance for drug manufacturers on submitting ASP 

data.21 Manufacturers submit two forms to CMS: the ASP Data Collection 

Form—an Excel document in which manufacturers insert all relevant 

sales data—and the ASP Certification Form signed by the manufacturer’s 

CEO or CFO to affirm the accuracy of the submitted data.22 Where there 

is no specific guidance in federal statute or regulations regarding how to 

calculate ASP, CMS has indicated that it allows manufacturers to make 

reasonable assumptions in their calculations of ASP and to submit these 

 1942 U.S.C. § 1396r-8(a)(1), (b)(3)(A); 42 C.F.R. § 414.804(a)(5) (2015). The Medicaid 

Drug Rebate Program helps to offset the federal and state costs of most outpatient 

prescription drugs dispensed to Medicaid patients. A drug manufacturer must enter into, 

and have in effect, a national rebate agreement with the Secretary of HHS in exchange for 

state Medicaid coverage of most of the manufacturer’s drugs.

20Rebates are price concessions given to providers by manufacturers subsequent to 

receipt of the product. Discounts are price concessions given by manufacturers that are 

reflected in the purchase price—the price providers pay at the time of delivery. 

21See Centers for Medicare & Medicaid Services, Medicare Part B Drug Average Sales 

Price, accessed March 21, 2016, 

https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Part-B-Drugs/McrPartBDrugAvg

SalesPrice/index.html.

22This form may also be signed by an individual who has delegated authority to sign for, 

and who reports directly to, the manufacturer’s CEO or CFO. 
Page 9 GAO-16-594 Medicare Part B Drugs

assumptions with the required data.23 CMS’s web page also includes a 

common e-mail address for manufacturers to send ASP-related questions 

to the agency.

The OIG has conducted two studies related to manufacturer reporting and 

CMS oversight of ASP data.24 The first report, published in 2010, found 

that CMS lacks complete ASP data for certain drugs because not all 

manufacturers of Part B drugs are required to report ASPs. OIG 

recommended that CMS consider seeking a legislative change to require 

all manufacturers of Part B drugs to submit ASPs. CMS did not concur 

with this recommendation, stating that the President’s budget for the 

upcoming fiscal year did not include any proposals to require 

manufacturers of Part B drugs to submit ASPs. The second report, 

published in 2014, further explored this policy and found that at least onethird of the more than 200 manufacturers of Part B drugs included in the 

study did not submit ASPs for some of their products in the third quarter 

of 2012, despite being required to do so. An additional 45 manufacturers 

of Part B drugs were not required to report ASPs that quarter. OIG again 

recommended that CMS seek a legislative change to directly require all 

manufacturers of Part B drugs to submit ASPs. CMS again did not concur 

with this recommendation, stating that the President’s budget for the 

upcoming fiscal year did not include any proposals to require 

manufacturers of Part B drugs to submit ASPs. However, the agency said 

it would take the recommendation into consideration in the future. These 

reports also recommended that CMS develop or implement an automated 

system for the submission of ASP data to potentially limit the possibility of 

data entry errors, reduce the amount of time it takes to calculate ASPbased payment amounts and adjust ASP payment limits, and enable 

CMS to track ASPs with greater ease. CMS concurred with these 

recommendations.

 23CMS has indicated that allowing submission of reasonable assumptions in the absence 

of specific guidance is consistent with the general requirements and intent of the Social 

Security Act, federal regulations, and the customary business practices of manufacturers. 

71 Fed. Reg. 69624, 69666-7 (Dec. 1, 2006) (preamble II.F.1.b.).

24See Department of Health and Human Services Office of Inspector General, Average 

Sales Prices: Manufacturer Reporting and CMS Oversight, OEI-03-80-00480 

(Washington, D.C.: Feb. 2010) and OEI-12-13-00040. 

OIG Studies of CMS 

Oversight of ASP Data
Page 10 GAO-16-594 Medicare Part B Drugs

Medicare expenditures were concentrated in a small number of the 551 

Part B drugs that were paid based on ASP in 2014. (See fig. 2.) In 

particular, 6 drugs each had expenditures of over $1 billion and 

collectively accounted for 36 percent of all expenditures on Part B ASP 

drugs that year. (See table 1 and, for a list of characteristics associated 

with the highest expenditure drugs in 2014, see table 6 in app. I.) Beyond 

the 6 highest expenditure drugs, an additional 43 drugs each had 

between $100 million and $1 billion in expenditures and collectively 

accounted for an additional 48 percent of expenditures on Part B ASP 

drugs. In contrast, 306 drugs (56 percent of all Part B ASP drugs) each 

had less than $1 million in expenditures and collectively accounted for 

less than 1 percent of all expenditures on Part B ASP drugs. (For a list of 

the 50 Part B ASP drugs with the highest expenditures in 2014, see table 

7 in app. I.)

Medicare 

Expenditures on and 

Administrations of 

Part B ASP Drugs 

Were Concentrated in 

a Small Number of 

Drugs in 2014

Expenditures on and 

Administrations of Part B 

ASP Drugs Were Each 

Concentrated in a Small 

Number of Drugs, with 

Few Drugs among Highest 

in Both
Page 11 GAO-16-594 Medicare Part B Drugs

Figure 2: Percentage of Total Medicare Expenditures on and Number of Part B Drugs Paid Based on ASP, by Expenditures on 

Each Drug (2014)

Note: In 2014, Medicare spent about $21 billion on 551 Part B drugs paid based on average sales 

price (ASP). We defined expenditures as the total amount spent by the Medicare fee-for-service 

program and its beneficiaries, and included only those for claim line items that Medicare paid based 

on ASP. We defined a drug at the Health Care Common Procedure Coding System level and counted 

it as a Part B ASP drug if it had at least one claim line item paid based on ASP.
Page 12 GAO-16-594 Medicare Part B Drugs

Table 1: The Six Part B Drugs Paid Based on ASP with Over $1 Billion in Medicare Expenditures in 2014

Drug brand 

name Drug description HCPCS

Expenditures 

(millions of 

dollars) 

Percentage

of total Examples of conditions treateda

Rituxan Rituximab injection J9310 1,513 7.1 Cancer

Lucentis Ranibizumab injection J2778 1,352 6.4 Wet age-related macular degeneration

Eylea Aflibercept injection J0178 1,315 6.2 Wet age-related macular degeneration 

Remicade Infliximab injection J1745 1,184 5.6 Crohn’s disease

Neulasta Pegfilgrastim injection J2505 1,183 5.6 Reduce infection in patients treated for 

cancer

Avastin Bevacizumab injection J9035 1,072 5.1 Cancer

Source: GAO analysis of Centers for Medicare & Medicaid Services data and National Library of Medicine publications. | GAO-16-594

Note: In 2014, Medicare spent about $21 billion on 551 Part B drugs paid based on average sales 

price (ASP). We defined expenditures as the total amount spent by the Medicare fee-for-service

program and its beneficiaries, and included only those for claim line items that Medicare paid based 

on ASP. We defined a drug at the Health Care Common Procedure Coding System (HCPCS) level 

and counted it as a Part B ASP drug if it had at least one claim line item paid based on ASP.

a

These descriptions do not reflect off-label uses of each drug. For example, Avastin is also used to 

treat wet age-related macular degeneration.

Administrations of Part B ASP drugs were also concentrated in a small 

number of drugs in 2014. (See fig. 3.) In particular, 10 drugs were each 

administered over 1 million times and collectively accounted for 37 

percent of all administrations of Part B ASP drugs that year. (See table 2 

and, for a list of characteristics associated with the highest administration 

drugs in 2014, see table 8 in app. I.) Beyond the 10 drugs with the highest 

number of administrations, an additional 75 drugs were each 

administered between 100,000 and 1 million times, and collectively 

accounted for an additional 51 percent of all administrations of Part B 

drugs paid based on ASP. In contrast, 187 drugs (34 percent of all Part B 

ASP drugs) were each administered fewer than 1,000 times and 

collectively accounted for less than 1 percent of all administrations of Part 

B ASP drugs. (For a list of the 50 Part B ASP drugs with the highest 

number of administrations in 2014, see table 9 in app. I.)
Page 13 GAO-16-594 Medicare Part B Drugs

Figure 3: Percentage of Total Administrations and Number of Medicare Part B Drugs Paid Based on ASP, by Administrations 

of Each Drug (2014)

Note: In 2014, there were about 46 million administrations of 551 Part B drugs paid based on average 

sales price (ASP). We defined administrations as the number of Medicare fee-for-service claim line 

items for a drug, and included only those claim line items that Medicare paid based on ASP. We 

defined a drug at the Health Care Common Procedure Coding System level and counted it as a Part 

B ASP drug if it had at least one claim line item paid based on ASP.
Page 14 GAO-16-594 Medicare Part B Drugs

Table 2: The 10 Part B Drugs Paid Based on ASP with Over 1 Million Administrations in 2014

Drug brand

name example Drug description HCPCS

Administrations 

(thousands)

Percentage 

of total Examples of conditions treateda

Kenalog Triamcinolone 

acetonide injection

J3301 2,661 5.7 Inflammation associated with various 

conditions, such as allergic states, 

dermatologic diseases, and endocrine 

disorders

N/Ab Dexamethasone 

sodium phosphate 

injection

J1100 2,465 5.3 Inflammation associated with various 

conditions, such as allergic states, 

dermatologic diseases, and endocrine 

disorders

N/Ab Vitamin B-12 

cyanocobalamin 

injection

J3420 2,315 5.0 Vitamin B-12 deficiency due to 

malabsorption 

Depo-Medrol Methylprednisolone 

acetate injection 

(40mg) 

J1030 1,896 4.1 Inflammation associated with various 

conditions, such as allergic states, 

dermatologic diseases, and endocrine 

disorders

Accuneb Albuterol inhalation 

solution

J7613 1,659 3.6 Chronic obstructive pulmonary disease 

DuoNeb Albuterol and 

ipratropium bromide 

inhalation solution

J7620 1,517 3.3 Chronic obstructive pulmonary disease 

Depo-Medrol Methylprednisolone 

acetate injection 

(80mg) 

J1040 1,502 3.2 Inflammation associated with various 

conditions, such as allergic states, 

dermatologic diseases, and endocrine 

disorders

Optiray Low osmolar contrast 

material 

Q9967 1,192 2.6 N/Ac

Celestone 

Soluspan

Betamethasone 

acetate and 

betamethasone 

sodium phosphate 

injection

J0702 1,123 2.4 Inflammation associated with various 

conditions, such as allergic states, 

dermatologic diseases, and endocrine 

disorders

Rocephin Ceftriaxone sodium 

injection

J0696 1,019 2.2 Certain infections caused by bacteria, 

such as meningitis

Source: GAO analysis of Centers for Medicare & Medicaid Services data and National Library of Medicine and Food and Drug Administration publications. | GAO-16-594

Note: In 2014, there were about 46 million administrations of 551 Part B drugs paid based on average 

sales price (ASP). We defined administrations as the number of Medicare fee-for-service claim line 

items for a drug, and included only those claim line items that Medicare paid based on ASP. We 

defined a drug at the Health Care Common Procedure Coding System (HCPCS) level and counted it 

as a Part B ASP drug if it had at least one claim line item paid based on ASP.

a

These descriptions do not reflect potential off-label uses of each drug.

b

These drugs had generic versions only.

c

Low osmolar contrast material is used to improve the quality of images obtained during certain 

radiology procedures.
Page 15 GAO-16-594 Medicare Part B Drugs

Few Part B ASP drugs were among both the highest expenditure and the 

highest administration drugs in 2014. For example, no Part B ASP drug 

had over $1 billion in expenditures and over 1 million administrations that 

year. Additionally, of the 102 Part B ASP drugs with either $100 million or 

more in expenditures or 100,000 or more administrations, only 32 were in 

both categories. These 32 drugs included all 6 drugs with expenditures 

over $1 billion, but none of the 10 drugs with over 1 million 

administrations.

The characteristics of drugs associated with the majority of expenditures 

on Part B ASP drugs tended to differ from the characteristics of drugs 

associated with the majority of administrations. For example, the majority 

of Medicare expenditures for Part B ASP drugs in 2014 were for biologics, 

brand name drugs, drugs made by a single manufacturer, and drugs that 

came onto the market since 2000. In contrast, the majority of 

administrations of Part B ASP drugs were for synthetics, generics, drugs 

made by multiple manufacturers, and drugs that came onto the market 

prior to 2000. Additionally, the therapeutic categories associated with the 

largest percentage of expenditures tended to differ from the categories 

associated with the largest percentage of administrations. However, 

injections accounted for the majority of both expenditures and 

administrations (See table 3.)

Drug Characteristics 

Associated with the 

Highest Percentage of 

Expenditures Generally 

Differed from Those 

Associated with the 

Highest Percentage of 

Administrations
Page 16 GAO-16-594 Medicare Part B Drugs

Table 3: Drug Characteristics Associated with the Highest Percentage of Expenditures and Administrations for Part B Drugs 

Paid Based on ASP (2014)

Drug characteristic

Expenditures Administrations

Characteristic

Percentage

of total Characteristic

Percentage

of total 

Drug composition Biologic 68 Synthetic 76

Brand/generic status Brand only 89 Generic available 66

Single-source/multi-source status Single-source 81 Multi-source 74

First year on the market 2000-2009 59 Prior to 2000 64

2010-2014 19

Therapeutic category Immunological agents 28 Endocrine metabolic agents 26

Anti-neoplastic agentsa 27 Respiratory agents 13

Blood modifier agentsb 14 Immunological agents 10

Ophthalmologic agents 13 Anti-neoplastic agentsa 9

Route of administration Injection 84 Injection 67

Source: GAO analysis of Centers for Medicare & Medicaid Services (CMS), Food and Drug Administration, and RED BOOK data. | GAO-16-594

Note: In 2014, Medicare spent about $21 billion on approximately 46 million administrations of Part B 

drugs paid based on average sales price (ASP). We defined expenditures as the total amount spent 

by the Medicare fee-for-service program and its beneficiaries, and administrations as the number of 

claim line items for a drug. Both measures included only those for claim line items that Medicare paid 

based on ASP. We assigned drug characteristics at the Health Care Common Procedure Coding 

System (HCPCS) level by summarizing the characteristics of the National Drug Codes (NDC) that 

CMS associated with each HCPCS. For example, we classified a drug as brand only if all NDCs for a 

HCPCS were classified as such in RED BOOK, and otherwise classified the drug as generic 

available.

a

Anti-neoplastic agents are substances that inhibit or prevent the proliferation of neoplasms, which 

are abnormal growths of tissue, often associated with cancer.

b

Blood modifier agents enhance or inhibit the clotting or thinning of blood.

The majority of expenditures were for drugs with average expenditures 

per beneficiary over $10,000 and for drugs received by fewer than 

100,000 beneficiaries. The majority of administrations were for drugs with 

average expenditures per beneficiary under $100 and for drugs received 

by over 100,000 beneficiaries. (See table 4.)
Page 17 GAO-16-594 Medicare Part B Drugs

Table 4: Spending and Utilization Characteristics Associated with the Highest Percentage of Expenditures and 

Administrations for Part B Drugs Paid Based on ASP (2014)

Drug characteristic

Expenditures Administrations

Characteristic

Percentage

of total Characteristic

Percentage

of total 

Average expenditures per 

administration

$1,000 up to $10,000

$10,000+

73

8

Less than $10

$10 up to $100

42

19

Average expenditures per beneficiary $1,000 up to $10,000

$10,000+

36

59

Less than $10

$10 up to $100

29

29

Average administrations per 

beneficiary

3 to 5 times per year

6 to 9 times per year

50

23

1 to 2 times per year

3 to 5 times per year

42

36

Number of beneficiaries Fewer than 10,000

10,000 up to 100,000

25

47

100,000+ 61

Source: GAO analysis of Centers for Medicare & Medicaid Services data. | GAO-16-594

Note: In 2014, Medicare spent about $21 billion on approximately 46 million administrations of Part B 

drugs paid based on average sales price (ASP). We defined expenditures as the total amount spent 

by the Medicare fee-for-service program and its beneficiaries, and administrations as the number of 

claim line items for a drug. Both measures included only those for claim line items that Medicare paid 

based on ASP.

Expenditures on and administrations of Part B ASP drugs were generally 

associated with the same provider characteristics in 2014. In particular, 

the majority of expenditures and administrations occurred in physicians’

offices (rather than hospital outpatient departments or other settings) and 

in urban areas (rather than suburban or rural areas). Additionally, the 

highest percentage of both expenditures and administrations generally 

were for Part B ASP drugs that were prescribed by the same provider 

specialty: hematology oncology.25 (See table 5.)

 25For additional information on the physician specialties that provided Part B ASP drugs in 

2014, see fig. 4 in app. I. 

Provider Characteristics 

Associated with the 

Highest Percentage of 

Expenditures and the 

Highest Percentage of 

Administrations Were 

Generally Similar
Page 18 GAO-16-594 Medicare Part B Drugs

Table 5: Provider Characteristics Associated with the Highest Percentage of Expenditures and Administrations for Part B 

Drugs Paid Based on ASP (2014)

Provider characteristic

Expenditures Administrations

Characteristic Percentage of total Characteristic Percentage of total 

Place of service Physician’s office 56 Physician’s office 74

Geographic area Urban core 86 Urban core 80

Provider specialty/type Hematology oncology 27 Hematology oncology 17

Internal medicine 15 DME supplier 15

Ophthalmology 13 Internal medicine 11

Source: GAO analysis of Centers for Medicare & Medicaid Services data. | GAO-16-594

Note: In 2014, Medicare spent about $21 billion on approximately 46 million administrations of Part B 

drugs paid based on average sales price (ASP). We defined expenditures as the total amount spent 

by the Medicare fee-for-service program and its beneficiaries, and administrations as the number of 

claim line items for a drug. Both measures included only those for claim line items that Medicare paid 

based on ASP.

CMS takes three main steps to validate that the sales price data reported 

by drug manufacturers are complete and accurate. First, CMS requires 

that, before a manufacturer submits a report containing data to CMS, the 

CEO, CFO, or authorized official of each drug manufacturer attests to the 

accuracy of the information provided in that report by signing the ASP 

Certification Form.26 Second, according to CMS officials, once CMS 

receives the sales data from the manufacturer, it performs a series of 

electronic data checks to assess the completeness of the submitted data. 

CMS’s data checks include

 26See 42 C.F.R. § 414.804(a)(7) (2015). 

CMS Checks 

Reported Sales 

Prices for Potential 

Data Errors, but Does 

Not Routinely Verify 

the Underlying Data 

or Receive All 

Relevant Data

CMS Performs Several 

Electronic Data Checks on 

Manufacturer-Reported 

Sales Price Data, but 

these Checks Do Not 

Verify the Accuracy of the 

Underlying Data
Page 19 GAO-16-594 Medicare Part B Drugs

• checking for missing data or duplicate entries,

• checking for incorrect product information, and

• comparing submissions to those of previous quarters.

In cases where CMS identifies discrepancies through its data checks, 

agency officials stated that they attempt to resolve the issue directly with 

the manufacturer. If CMS is unable to resolve the issue directly with the 

manufacturer, the agency refers the case to OIG and OIG determines 

appropriate enforcement, if needed. Third, officials from CMS stated the 

agency holds a 7 to 10 day public comment period where manufacturers 

and providers have an opportunity to comment on the payment amounts 

before they are published.

CMS officials believe that the steps the agency takes to validate 

manufacturer-reported sales price data are sufficient, but CMS does not 

verify that the reported data reflect actual sales prices. Federal standards 

for internal control call for management to use quality information to 

achieve its objectives. According to GAO’s guidance for assessing the 

reliability of computer-processed data, completeness and accuracy are 

the two key components of quality data.27 CMS officials noted that, since 

2009, only one drug manufacturer has incurred civil monetary penalties 

as a result of OIG’s review of manufacturer reporting discrepancies. CMS 

officials told us that there have been few other issues with drug 

manufacturers’ ASP submissions over the past couple of years and that 

any issues that did arise were minor. These officials also noted that 

during the public comment period, they receive few comments from 

stakeholders. Additionally, CMS’s electronic data checks described earlier 

are consistent with recommendations in GAO’s guidance related to 

verifying the completeness of data.28 Specifically, examples of GAO’s 

guidance include

• testing electronic data for missing or duplicate data,

• looking for values outside of a desired range, and

• testing relationships between data elements.

 27Data are considered complete if relevant records are present and fields in each record 

are populated appropriately. Data are considered accurate if the recorded data reflect the 

actual underlying information. See GAO-09-680G.

28GAO-09-680G, 18.
Page 20 GAO-16-594 Medicare Part B Drugs

However, CMS does not take sufficient steps to verify the accuracy of the 

data. Officials from CMS told us that they do not routinely verify the 

underlying data from manufacturers either by tracing the data to and from 

source documents, such as sales invoices, or through CMS’s referrals to 

OIG. The Social Security Act authorizes CMS to survey manufacturers 

that have Medicaid drug rebate agreements when necessary to verify 

ASP.29 However, CMS officials told us that this authority does not allow 

them to conduct blanket surveys to routinely collect information regarding 

manufacturers’ ASP data beyond what is on the ASP data collection form. 

CMS officials indicated they may also request that OIG use its authority to 

audit ASP data submitted by manufacturers.30 However, CMS has limited 

such referrals to situations where the agency has identified potential 

consistent or repeated problems with calculating and reporting ASP data. 

In situations where CMS requires additional information about the data 

submission, the agency officials stated that the requests are typically for 

information that could be considered public.31

Officials from CMS indicated the agency is developing an automated ASP 

submission system to use with drug manufacturers; however, the new 

system will not help to ensure the accuracy of the underlying sales price 

data. According to OIG, this automated system could limit the possibility 

of data entry errors, reduce the amount of time it takes to calculate and 

adjust ASP payments, and enable CMS to track ASPs with greater ease 

and efficiency.32 CMS began working on an automated system following a 

2010 OIG recommendation.33 CMS officials told us that the agency is still 

testing the system and hopes to begin implementation at the end of 2016.

Four of the six drug manufacturers we spoke with stated that 

implementation of an automated submission system would improve the 

 2942 U.S.C. § 1396r-8(b)(3)(B). 

3042 U.S.C. § 1396r-8(b)(3)(A).

31For example, according to CMS officials, the agency may request updated package 

inserts to confirm the amount of a drug associated with the sales price submitted by the 

manufacturer. 

32OEI-03-08-00480, iii.

33OEI-03-08-00480, 18. 
Page 21 GAO-16-594 Medicare Part B Drugs

ASP submission process.34 The two manufacturers that did not believe an 

automated submission system would improve the ASP submission 

process already submit their data exclusively via e-mail instead of by 

mail. CMS officials stated that due to the time it takes for manufacturers 

to calculate and submit ASP data and for CMS to review the data and 

update the payment rates, the automated system may not reduce the 

two-quarter lag between when drugs are sold and CMS receives all data 

and updates the payment rates.35

CMS is unable to assess the accuracy of all drug manufacturers’ sales 

price data because not all drug manufacturers submit these data to CMS. 

As stated previously, only drug manufacturers with Medicaid drug rebate 

agreements are required to submit ASP data on a quarterly basis. 

However, not all manufacturers of Medicare Part B drugs have these 

agreements; therefore, not all manufacturers are required to submit ASP 

data to CMS. Further, CMS officials said that the agency lacks the 

authority to require manufacturers not participating in the Medicaid Drug 

Rebate Program to submit ASP data. CMS officials also said that most 

manufacturers of Part B drugs do submit sales price data because they 

have Medicaid drug rebate agreements or submit the data voluntarily, but 

not all do. Without complete data from manufacturers that have been 

assessed for accuracy by CMS, the agency risks setting payment rates 

based on inaccurate information. This is inconsistent with federal 

standards for internal control, which call for management to use quality 

information to achieve objectives.36

Drugs manufactured by multiple sources are more likely to have 

inaccurate payment rates than are drugs manufactured by a single source 

because, according to CMS officials, the payment system provides an 

 34Noted potential improvements were providing a better system for record retention, 

simplifying the ASP submission process for manufacturers and CMS, and providing extra 

time for the manufacturers to calculate and validate the data because they would not need 

to be mailed to CMS, which is currently the preferred method of submission per CMS’s 

web page.

35Drug manufacturers have 30 days following the end of a quarter to submit ASP data to 

CMS. CMS officials stated that it then takes them approximately 5 weeks to review the 

data and calculate new payment rates which are then posted for 7 to10 days for the public 

to view and comment.

36GAO-14-704G. 

CMS Is Unable to Assess 

the Accuracy of All Sales 

Price Data because Not All 

Manufacturers Submit 

Sales Price Data
Page 22 GAO-16-594 Medicare Part B Drugs

incentive for single-source manufacturers to report their data. CMS 

officials told us that single-source drug manufacturers have an incentive 

to report ASP data so that health care providers will know Medicare’s 

payment rate for their drug. These officials stated that providers prefer to 

use drugs with published Medicare payment rates because they know 

what they will be paid. If the manufacturer of a single-source drug did not 

submit sales price data, ASP data for that billing code would be 

unavailable, and CMS would substitute ASP with another metric that 

might be less accurate. Other metrics include rates published in national 

pricing compendia such as Truven Health Analytics’ RED BOOK or First 

Databank’s National Drug Data File, which publish product information for 

drugs such as strength, package size, and package quantity. OIG has 

found that prices published in national pricing compendia do not 

accurately reflect actual market prices.37 In contrast, CMS officials told us 

if a manufacturer did not submit ASP data for a drug that is manufactured 

by multiple sources, the sales price would still be based on ASP data 

submitted by the other manufacturers of the drug. This gives multi-source 

drug manufacturers less incentive to report ASP data, particularly if the 

inclusion of their data would result in a lower Medicare payment rate for 

the drug.

To assess the potential impact of manufacturers without rebate 

agreements that do not voluntarily report ASP data, in its 2014 report, 

OIG looked at 50 high-expenditure multi-source Part B drugs in the third 

quarter of 2012.38 These drugs included those with payment rates that 

used sales price data from both manufacturers that were required to 

report their data and manufacturers that voluntarily reported their data. If 

manufacturers had not voluntarily reported their data, 12 of the 50 drug 

payment rates would have changed. Payment rates would have 

increased for 5 drugs (between 3 and 40 percent) and decreased for 7 

drugs (between 1 and 49 percent). Payment rates for the remaining 38 

drugs would have stayed the same.

In 2014, Medicare spent approximately $21 billion on Part B drugs paid 

based on ASP. The substantial expenditures for Part B ASP drugs 

underscore how important it is that CMS ensure that the data on which 

 37OEI-12-13-00040, 9.

38OEI-12-13-00040, 9.

Conclusions
Page 23 GAO-16-594 Medicare Part B Drugs

the agency bases Medicare’s payment rates for these drugs are accurate. 

Federal standards for internal control call for management to use quality 

information to achieve its objectives. According to GAO’s guidance for 

assessing the reliability of computer-processed data, completeness and 

accuracy are the two key components of quality data. CMS conducts 

certain data checks to assess the completeness of the ASP data 

submitted by drug manufacturers. However, CMS does not verify the 

accuracy of the underlying data by tracing the data to and from source 

documents, such as sales invoices. Because CMS does not verify the 

accuracy of the underlying data used to determine Medicare payment 

rates, the resulting payment rates may be inaccurate if drug 

manufacturers do not report accurate data.

CMS is unable to assess the accuracy of all sales price data because the 

agency does not receive data from all drug manufacturers. Currently, only 

drug manufacturers with Medicaid drug rebate agreements are required 

to submit ASP data to CMS. Although agency officials told us that most 

drug manufacturers have rebate agreements or choose to voluntarily 

submit ASP data, some manufacturers do not. Federal standards for 

internal control call for management to use quality information to achieve 

its objectives. Without complete data from all manufacturers that have 

been assessed for accuracy by CMS, the agency risks setting payment 

rates based on inaccurate information.

To help the Department of Health and Human Services ensure accuracy 

in Part B drug payment rates, Congress should consider requiring all 

manufacturers of Part B drugs paid at ASP, not only those with Medicaid 

drug rebate agreements, to submit sales price data to CMS, and ensure 

that CMS has authority to request source documentation to periodically 

validate all such data.

CMS should periodically verify the sales price data submitted by a sample 

of drug manufacturers by requesting source documentation from 

manufacturers to corroborate the reported data, either directly or by 

working with OIG as necessary.

Matter for 

Congressional 

Consideration

Recommendation for 

Executive Action
Page 24 GAO-16-594 Medicare Part B Drugs

We provided a draft of this report for review to HHS and received written 

comments that are summarized below and reprinted in appendix II.

In its comments, HHS agreed with our recommendation. HHS stated that 

CMS will work with OIG as appropriate regarding collecting source 

documentation from drug manufacturers and that CMS will take action as 

it is warranted. To fulfill this recommendation, CMS will have to take 

additional actions relative to what it has done in the past. As we noted in 

the report, CMS has previously requested that OIG use its authority to 

audit ASP data submitted by manufacturers when it has identified 

potential consistent or repeated problems with calculating and reporting 

ASP data. HHS also noted in its comments that the OIG reviews average 

manufacturer price (AMP) data for Part B drugs and that CMS has the 

authority to adjust the ASP-based payment amount in situations where 

the OIG finds that ASP exceeds AMP by a certain threshold percentage. 

However, AMP data are also reported by manufacturers and would be 

inaccurate if the data do not represent actual manufacturer prices. 

As agreed with your office, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days from the 

report date. At that time, we will send copies of this report to the 

Secretary of Health and Human Services and other interested parties. In 

addition, the report is available at no charge on the GAO website at 

http://www.gao.gov.

If you or your staff have any questions regarding this report, please 

contact me at (202) 512-7114 or cosgrovej@gao.gov. Contact points for 

our Offices of Congressional Relations and Public Affairs may be found 

on the last page of this report. GAO staff who made major contributions to 

this report are listed in appendix III.

Sincerely yours,

James Cosgrove

Director, Health Care

Agency Comments 

and Our Evaluation
Appendix I: Characteristics Associated with 

the Part B Drugs Paid Based on ASP with the 

Highest Expenditures and Highest Number of 

Administrations (2014)

Page 25 GAO-16-594 Medicare Part B Drugs

Table 6: Drug Characteristics Associated with the 6 Part B Drugs Paid Based on ASP with Over $1 Billion in Expenditures and 

the 10 Drugs with Over 1 Million Administrations (2014)

Drug brand name 

example Drug description HCPCS

Drug 

composition

Singlesource/multisource statusFirst year 

on the 

market

Brand/generic 

status

Route of 

administration

Highest expenditure drugs

Rituxan Rituximab J9310 Biologic Single-source 1997 Brand only Injection

Lucentis Ranibizumab J2778 Biologic Single-source 2006 Brand only Injection

Eylea Aflibercept J0178 Biologic Single-source 2011 Brand only Injection

Remicade Infliximab J1745 Biologic Single-source 1998 Brand only Injection

Neulasta Pegfilgrastim J2505 Biologic Single-source 2002 Brand only Injection

Avastin Bevacizumab J9035 Biologic Single-source 2004 Brand only Injection

Highest administration drugs

Kenalog Triamcinolone 

acetonide

J3301 Synthetic Multi-source 1989 Generic 

available

Injection

N/Aa Dexamethasone 

sodium phosphate

J1100 Synthetic Multi-source 1977 Generic 

available

Injection

N/Aa Vitamin B-12 

cyanocobalamin

J3420 Synthetic Multi-source 1974 Generic 

available

Multiple

Depo-Medrol Methylprednisolone 

acetate (40mg) 

J1030 Synthetic Multi-source 1987 Generic 

available

Injection

Accuneb Albuterol J7613 Synthetic Multi-source 1996 Generic 

available

Inhalation

DuoNeb Albuterol and 

ipratropium bromide 

J7620 Synthetic Multi-source 2001 Generic 

available

Inhalation

Depo-Medrol Methylprednisolone 

acetate (80mg) 

J1040 Synthetic Multi-source 1987 Generic 

available

Injection

Optiray Low osmolar contrast 

material 

Q9967 Synthetic Multi-source 1986 Brand-only Injection

Celestone Soluspan Betamethasone 

acetate and 

betamethasone 

sodium phosphate 

J0702 Synthetic Multi-source 1986 Generic 

available

Injection

Rocephin Ceftriaxone sodium J0696 Synthetic Multi-source 1985 Generic 

available

Multiple

Source: GAO analysis of Centers for Medicare & Medicaid Services (CMS), Food and Drug Administration, and RED BOOK data. | GAO-16-594

Note: In 2014, Medicare spent about $21 billion on approximately 46 million administrations of Part B 

drugs paid based on average sales price (ASP). We defined expenditures as the total amount spent 

by the Medicare fee-for-service program and its beneficiaries, and administrations as the number of 

claim line items for a drug. Both measures included only those for claim line items that Medicare paid 

based on ASP. We assigned drug characteristics at the Health Care Common Procedure Coding 

System (HCPCS) level by summarizing the characteristics of the National Drug Codes (NDC) that 

CMS associated with each HCPCS. For example, we classified a drug as brand only if all NDCs for a 

HCPCS were classified as such in RED BOOK, and otherwise classified the drug as generic 

available.

a

These drugs had generic versions only.

Appendix I: Characteristics Associated with

the Part B Drugs Paid Based on ASP with 

the Highest Expenditures and Highest 

Number of Administrations (2014)
Appendix I: Characteristics Associated with 

the Part B Drugs Paid Based on ASP with the 

Highest Expenditures and Highest Number of 

Administrations (2014)

Page 26 GAO-16-594 Medicare Part B Drugs

Table 7: 50 Part B Drugs Paid Based on ASP with the Highest Expenditures (2014)

Drug description HCPCS

Expenditures 

(millions of 

dollars) 

Administrations 

(thousands)

Number of 

beneficiaries 

(thousands) Therapeutic category

1 Rituximab J9310 1,513 300 68 Anti-neoplastica

2 Ranibizumab J2778 1,352 696 142 Ophthalmologic 

3 Aflibercept J0178 1,315 646 132 Ophthalmologic 

4 Infliximab J1745 1,184 354 59 Immunological 

5 Pegfilgrastim J2505 1,183 358 98 Blood modifierb

6 Bevacizumab J9035 1,072 948 216 Immunological 

7 Denosumab J0897 775 646 293 Immunological

8 Trastuzumab J9355 564 193 18 Immunological

9 Pemetrexed J9305 564 118 23 Anti-neoplastica

10 Bortezomib J9041 476 369 20 Anti-neoplastica

11 Abatacept J0129 346 167 20 Multiple

12 Octreotide J2353 344 87 11 Endocrine metabolic 

13 Epoetin alfa (nonend-stage renal 

disease (ESRD) use)

J0885 307 802 96 Blood modifierb

14 Bendamustine hcl J9033 306 100 13 Anti-neoplastica

15 Darbepoetin alfa 

(non-ESRD use)

J0881 289 371 63 Blood modifierb

16 Capecitabine WW093 279 116 27 Anti-neoplastica 

17 Paclitaxel proteinbound particlesJ9264 279 157 18 Anti-neoplastica

18 Ipilimumab J9228 266 9 3 Anti-neoplastica 

19 Cetuximab J9055 260 105 9 Anti-neoplastica

20 Natalizumab J2323 257 61 7 Immunological

21 Leuprolide acetate J9217 257 322 142 Multiple

22 Immune globulin J1561 241 83 9 Immunological

23 Factor viii J7192 229 14 < 1 Blood modifierb

24 Budesonide J7626 229 753 136 Respiratory

25 Immune globulin J1569 227 84 11 Immunological

26 Omalizumab J2357 222 153 11 Respiratory

27 Onabotulinumtoxina J0585 221 258 106 Musculoskeletal

28 Treprostinil J7686 209 16 2 Cardiovascular

29 Azacitidine J9025 196 275 9 Anti-neoplastica

30 Immune globulin J1459 189 76 9 Immunological

31 Palonosetron J2469 184 956 158 Gastrointestinal
Appendix I: Characteristics Associated with 

the Part B Drugs Paid Based on ASP with the 

Highest Expenditures and Highest Number of 

Administrations (2014)

Page 27 GAO-16-594 Medicare Part B Drugs

Drug description HCPCS

Expenditures 

(millions of 

dollars) 

Administrations 

(thousands)

Number of 

beneficiaries 

(thousands) Therapeutic category

32 Eculizumab J1300 179 9 < 1 Blood modifierb

33 Sipuleucel-T auto 

CD54+

Q2043 175 5 2 Immunological

34 Fulvestrant J9395 174 103 15 Anti-neoplastica 

35 Carfilzomib J9047 161 106 4 Anti-neoplastica 

36 Arformoterol J7605 151 412 68 Respiratory

37 Filgrastim J1442 146 360 44 Blood modifierb

38 Hyaluronan or 

derivative

J7325 144 309 167 Musculoskeletal

39 Tocilizumab J3262 143 84 10 Immunological

40 Romiplostim J2796 136 77 4 Blood modifierb

41 Mycophenolic acid J7518 134 211 26 Immunological

42 Zoledronic acid J3489 126 405 192 Endocrine metabolic

43 Decitabine J0894 126 102 5 Anti-neoplastica

44 Tacrolimus J7507 124 687 76 Immunological

45 Certolizumab pegol J0717 120 54 7 Immunological

46 Regadenoson J2785 119 574 568 Diagnostic

47 Pertuzumab J9306 111 24 4 Anti-neoplastica

48 Factor viia J7189 109 4 < 1 Blood modifierb

49 Ado-trastuzumab 

emtansine

J9354 102 16 2 Anti-neoplastica

50 Cyclophosphamide J9070 92 151 34 Anti-neoplastica

Source: GAO analysis of Centers for Medicare & Medicaid Services and RED BOOK data. | GAO-16-594

Note: In 2014, Medicare spent about $21 billion on 551 Part B drugs paid based on average sales 

price (ASP). We defined expenditures as the total amount spent by the Medicare fee-for-service 

program and its beneficiaries, and administrations as the number of claim line items for a drug. Both 

measures included only those for claim line items that Medicare paid based on ASP. We defined a 

drug at the Health Care Common Procedure Coding System (HCPCS) level and counted it as a Part 

B ASP drug if it had at least one claim line item paid based on ASP.

a

Anti-neoplastic agents are substances that inhibit or prevent the proliferation of neoplasms, which 

are new and abnormal growths of tissue, often associated with cancer.

b

Blood modifier agents enhance or inhibit the clotting or thinning of blood.
Appendix I: Characteristics Associated with 

the Part B Drugs Paid Based on ASP with the 

Highest Expenditures and Highest Number of 

Administrations (2014)

Page 28 GAO-16-594 Medicare Part B Drugs

Table 8: Spending and Utilization Characteristics Associated with the 6 Part B Drugs Paid Based on ASP with Over $1 Billion 

in Expenditures and the 10 Drugs with Over 1 Million Administrations (2014)

Drug brand name 

example Drug description HCPCS

Average 

expenditures 

per 

administration 

(dollars)

Average 

expenditures 

per 

beneficiary 

(dollars)

Average 

administrations 

per beneficiary

Number of 

beneficiaries 

(thousands)

Highest expenditure drugs

Rituxan Rituximab injection J9310 5,044 22,105 4.38 68

Lucentis Ranibizumab injection J2778 1,944 9,550 4.91 142

Eylea Aflibercept injection J0178 2,037 9,923 4.87 132

Remicade Infliximab injection J1745 3,349 19,920 5.95 59

Neulasta Pegfilgrastim injection J2505 3,301 12,021 3.64 98

Avastin Bevacizumab injection J9035 1,131 4,964 4.39 216

Highest administration drugs

Kenalog Triamcinolone acetonide 

injection

J3301 7 12 1.62 1,640

N/Aa Dexamethasone sodium 

phosphate injection

J1100 1 3 2.51 982

N/Aa Vitamin B-12 

cyanocobalamin injection

J3420 2 8 4.00 579

Depo-Medrol Methylprednisolone acetate 

injection (40mg) 

J1030 4 7 1.59 1,192

Accuneb Albuterol inhalation solution J7613 11 35 3.12 532

DuoNeb Albuterol and ipratropium 

bromide inhalation solution

J7620 18 67 3.70 410

Depo-Medrol Methylprednisolone acetate 

injection (80mg) 

J1040 7 10 1.59 945

Optiray Low osmolar contrast 

material 

Q9967 13 19 1.44 827

Celestone Soluspan Betamethasone acetate 

and betamethasone sodium 

phosphate injection

J0702 13 21 1.56 721

Rocephin Ceftriaxone sodium 

injection

J0696 3 4 1.70 598

Source: GAO analysis of Centers for Medicare & Medicaid Services data. | GAO-16-594

Note: In 2014, Medicare spent about $21 billion on approximately 46 million administrations of Part B 

drugs paid based on average sales price (ASP). We defined expenditures as the total amount spent 

by the Medicare fee-for-service program and its beneficiaries, and administrations as the number of 

claim line items for a drug. Both measures included only those for claim line items that Medicare paid 

based on ASP. We defined a drug at the Health Care Common Procedure Coding System (HCPCS)

level and counted it as a Part B ASP drug if it had at least one claim line item paid based on ASP.

a

These drugs only had generic versions available.
Appendix I: Characteristics Associated with 

the Part B Drugs Paid Based on ASP with the 

Highest Expenditures and Highest Number of 

Administrations (2014)

Page 29 GAO-16-594 Medicare Part B Drugs

Table 9: 50 Part B Drugs Paid Based on ASP with the Highest Number of Administrations (2014)

Drug description HCPCS

Expenditures 

(millions of 

dollars)

Administrations 

(thousands)

Number of 

beneficiaries

(thousands) Therapeutic category

1 Triamcinolone 

acetonide

J3301 20 2,661 1,640 Endocrine metabolic 

2 Dexamethasone sodium 

phosphate

J1100 3 2,465 982 Endocrine metabolic 

3 Vitamin B-12 

cyanocobalamin

J3420 5 2,315 579 Nutritive

4 Methylprednisolone 

acetate 

J1030 8 1,896 1,192 Endocrine metabolic

5 Albuterol J7613 18 1,659 532 Respiratory 

6 Albuterol and 

ipratropium bromide

J7620 28 1,517 410 Respiratory

7 Methylprednisolone 

acetate

J1040 10 1,502 945 Endocrine metabolic

8 Low osmolar contrast 

material 

Q9967 16 1,192 827 Diagnostic

9 Betamethasone acetate 

and betamethasone 

sodium phosphate 

J0702 15 1,123 721 Endocrine metabolic

10 Ceftriaxone sodium J0696 3 1,019 598 Anti-infective 

11 Palonosetron J2469 184 956 158 Gastrointestinal

12 Bevacizumab J9035 1,072 948 216 Immunological

13 Normal saline solution J7050 < 1 829 195 Nutritive

14 Epoetin alfa (non-endstage renal disease 

(ESRD) use)

J0885 307 802 96 Blood modifierb

15 Budesonide J7626 229 753 136 Respiratory

16 Ketorolac tromethamine J1885 < 1 740 433 Central nervous system

17 Ranibizumab J2778 1,352 696 142 Ophthalmologic

18 Tacrolimus J7507 124 687 76 Immunological

19 Diphenhydramine hcl J1200 < 1 686 145 Respiratory

20 Hyaluronan or derivative J7321 72 684 132 Musculoskeletal

21 Denosumab J0897 775 646 293 Immunological

22 Aflibercept J0178 1,315 646 132 Ophthalmologic

23 Regadenoson J2785 119 574 568 Diagnostic

24 Testosterone cypionate J1080 3 525 71 Endocrine metabolic

25 Ipratropium bromide J7644 5 436 126 Respiratory 

26 Arformoterol J7605 151 412 68 Respiratory 
Appendix I: Characteristics Associated with 

the Part B Drugs Paid Based on ASP with the 

Highest Expenditures and Highest Number of 

Administrations (2014)

Page 30 GAO-16-594 Medicare Part B Drugs

Drug description HCPCS

Expenditures 

(millions of 

dollars)

Administrations 

(thousands)

Number of 

beneficiaries

(thousands) Therapeutic category

27 Zoledronic acid J3489 126 405 192 Endocrine metabolic

28 Mycophenolate mofetil J7517 79 385 47 Immunological

29 Hyaluronan or derivative J7324 80 376 99 Musculoskeletal

30 Darbepoetin alfa (nonESRD use)J0881 289 371 63 Blood modifierb

31 Bortezomib J9041 476 369 20 Anti-neoplastica

32 Filgrastim (g-csf) J1442 146 360 44 Blood modifierb

33 Pegfilgrastim J2505 1,183 358 98 Blood modifierb

34 Ondansetron 

hydrochloride

J2405 < 1 358 76 Gastrointestinal

35 Infliximab J1745 1,184 354 59 Immunological

36 Hyaluronan or derivative J7323 66 345 98 Musculoskeletal

37 Leuprolide acetate J9217 257 322 142 Multiple

38 Hyaluronan or derivative J7325 144 309 167 Musculoskeletal

39 Rituximab J9310 1,513 300 68 Anti-neoplastica

40 Normal saline solution J7040 < 1 298 86 Nutritive

41 Gadolinium-based 

magnetic resonance 

contrast agent

A9579 8 276 246 Diagnostic

42 Azacitidine J9025 196 275 9 Anti-neoplastica

43 Fosaprepitant J1453 69 273 64 Central nervous system

44 Daptomycin J0878 92 259 16 Anti-infective

45 Onabotulinumtoxina J0585 221 258 106 Musculoskeletal

46 Normal saline solution J7030 < 1 255 87 Nutritive

47 Methylprednisolone 

acetate

J1020 1 237 159 Endocrine metabolic 

48 Prednisone J7506 < 1 235 35 Endocrine metabolic 

49 Low osmolar contrast 

material

Q9966 < 1 235 128 Diagnostic

50 Granisetron 

hydrochloride

J1626 < 1 216 30 Gastrointestinal

Source: GAO analysis of Centers for Medicare & Medicaid Services and RED BOOK data. | GAO-16-594

Note: In 2014, there were about 46 million administrations of 551 Part B drugs paid based on average 

sales price (ASP). We defined expenditures as the total amount spent by the Medicare fee-for-service 

program and its beneficiaries, and administrations as the number of claim line items for a drug. Both 

measures included only those for claim line items that Medicare paid based on ASP. We defined a 

drug at the Health Care Common Procedure Coding System (HCPCS) level and counted it as a Part 

B ASP drug if it had at least one claim line item paid based on ASP.

a

Anti-neoplastic agents are substances that inhibit or prevent the proliferation of neoplasms, which 

are new and abnormal growths of tissue, often associated with cancer.

b

Blood modifier agents enhance or inhibit the clotting or thinning of blood.
Appendix I: Characteristics Associated with 

the Part B Drugs Paid Based on ASP with the 

Highest Expenditures and Highest Number of 

Administrations (2014)

Page 31 GAO-16-594 Medicare Part B Drugs

Figure 4: Percentage of Total Medicare Expenditures on and Administrations of Part B Drugs Paid Based on ASP, by Provider 

Specialty/Type (2014)

Note: In 2014, Medicare spent about $21 billion on approximately 46 million administrations of Part B 

drugs paid based on average sales price (ASP). We defined expenditures as the total amount spent 

by the Medicare fee-for-service program and its beneficiaries, and administrations as the number of 

claim line items for a drug. Both measures included only those for claim line items that Medicare paid 

based on ASP. The figure includes all provider specialties that accounted for at least 3 percent of 

expenditures or administrations on Part B ASP drugs.
Appendix II: Comments from the Department 

of Health and Human Services

Page 32 GAO-16-594 Medicare Part B Drugs

Appendix II: Comments from the Department 

of Health and Human Services
Appendix II: Comments from the Department 

of Health and Human Services

Page 33 GAO-16-594 Medicare Part B Drugs
Appendix III: GAO Contact and Staff 

Acknowledgments

Page 34 GAO-16-594 Medicare Part B Drugs

James Cosgrove, (202) 512-7114 or cosgrovej@gao.gov

In addition to the contact named above, individuals who made key 

contributions to this report included Gregory Giusto, Assistant Director; 

Alison Binkowski; George Bogart; Alexander Cattran; Daniel Lee; Lauren 

Metayer; Elizabeth T. Morrison; and Aubrey Naffis.

Appendix III: GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments
Related GAO Products

Page 35 GAO-16-594 Medicare Part B Drugs

Medicare Part B: Expenditures for New Drugs Concentrated among a 

Few Drugs and Most Were Costly for Beneficiaries. GAO-16-12. 

Washington, D.C.: October 23, 2015.

Medicare: Information on Highest-Expenditure Part B Drugs. 

GAO-13-739T. Washington, D.C.: June 28, 2013.

Medicare: High-Expenditure Part B Drugs. GAO-13-46R. Washington, 

D.C.: October 12, 2012.

Medicare Part B Drugs: CMS Data Source for Setting Payments Is 

Practical but Concerns Remain. GAO-06-971T. Washington, D.C.: July 

13, 2006.

Medicare Hospital Pharmaceuticals: Survey Shows Price Variation and 

Highlights Data Collection Lessons and Outpatient Rate-Setting 

Challenges for CMS. GAO-06-372. Washington, D.C.: April 28, 2006.

Medicare: Comments on CMS Proposed 2006 Rates for Specified 

Covered Outpatient Drugs and Radiopharmaceuticals Used in Hospitals. 

GAO-06-17R. Washington, D.C.: October 31, 2005.

Medicare: Radiopharmaceutical Purchase Prices for CMS Consideration 

in Hospital Outpatient Rate-Setting. GAO-05-733R. Washington, D.C.: 

July 14, 2005.

Medicare: Drug Purchase Prices for CMS Consideration in Hospital 

Outpatient Rate-Setting. GAO-05-581R. Washington, D.C.: June 30, 

2005.

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