Medicare Part B: Data on Coupon Discounts Needed to Evaluate Methodology for Setting Drug Payment Rates
Published: 2016-07-27T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Use of drug coupons in the private sector has increased in recent years. GAO was asked to study coupon programs for drugs covered by Medicare Part B, including any implications for Part B spending.
This report (1) identifies coupon programs associated with high-expenditure Part B drugs and describes the extent to which privately insured patients use coupons and (2) examines, for drugs with coupon programs, the suitability of the Part B drug payment rate methodology. GAO identified high-expenditure Part B drugs using 2013 Medicare claims data—the latest available at the time of the analysis—and collected information from manufacturers on coupon program characteristics in 2015. GAO also analyzed coupon use and patient costs for drugs using 2013 data from manufacturers and private insurers; estimated how Part B spending could have differed if ASP had accounted for coupon discounts in 2013; reviewed federal laws and regulations; and interviewed CMS officials.
section_title: What GAO Found
paragraphs: In 2015, manufacturers of 29 of the 50 high-expenditure Medicare Part B drugs GAO analyzed offered coupon programs, which reduce the costs patients incur for specific drugs. Part B drugs are typically administered by a physician. Coupon programs are prohibited in the Medicare program but are generally available to privately insured patients. GAO obtained data on coupon discounts for 18 drugs. GAO estimated that 19 percent of privately insured patients who received these drugs used coupons in 2013, but coupon use varied widely depending on the drug—from 1 percent to over 90 percent.
Medicare's methodology for setting Part B payment rates to providers may be less suitable for drugs with coupon programs than for drugs without them. The methodology for most Part B drugs is based on the average sales price (ASP), which is defined by law as the amount physicians and other purchasers pay manufacturers for the drug, net of discounts and rebates to those purchasers. Medicare and its beneficiaries spent $20 billion on Part B drugs paid based on ASP in 2013. As ASP does not account for coupon discounts to patients, the discounts reduce the effective market price that manufacturers receive for drugs with coupon programs. GAO estimated that, for the 18 drugs for which it obtained coupon discount data, the ASP exceeded the effective market price by an estimated 0.7 percent in 2013. Part B spending for these drugs could have been an estimated $69 million lower if ASP equaled the effective market price. ASP exceeded the effective market price by more than 1.0 percent for 5 of the 18 drugs, suggesting that the ASP-based methodology may be even less suitable for these drugs.
Upward trends in coupon program use and drug prices suggest that these programs could cause the methodology for setting Part B drug payment rates to become less suitable over time for drugs with coupon programs. However, the Centers for Medicare & Medicaid Services (CMS) lacks the authority to collect coupon discount data from manufacturers and thus lacks important information that could inform its ongoing efforts to evaluate alternatives to this methodology.
section_title: What GAO Recommends
paragraphs: To determine the suitability of the Part B drug payment rate methodology for drugs with coupon programs, Congress should consider (1) granting CMS authority to collect data from drug manufacturers on coupon discounts for Part B drugs paid based on ASP; and (2) requiring CMS to periodically collect these data and report on the implications of coupon programs for this methodology. The Department of Health and Human Services provided technical comments on a draft of this report, which GAO incorporated as appropriate.

section_title: Letter
paragraphs: In recent years, the percentage of brand name prescriptions that involved  the use of a drug coupon increased substantially from 3 percent in 2011  to 8 percent in 2014. Under coupon programs, drug manufacturers make  discounts available to privately insured patients to reduce or eliminate  their out-of-pocket costs for specific drugs. The reduction in out-of- pocket costs may improve adherence to drug regimens for patients who  use these programs. However, coupon programs may also increase  overall drug spending by encouraging patients to use more expensive  drugs instead of lower-cost alternatives. In addition, by making drugs  more affordable for patients, coupon programs may allow manufacturers  to increase their sales of these drugs and extract higher prices from  health care providers and other drug purchasers.
Provision of coupon discounts to induce or reward the use of certain  drugs is prohibited in Medicare and other federal health care programs.  Used in this way, coupon discounts are considered kickbacks that may  induce beneficiaries and their providers to choose certain drugs when  lower-cost but equally effective alternatives are available. According to  the Department of Health and Human Services (HHS) Office of Inspector  General (OIG), kickbacks such as these are unlawful in federal health  care programs in part because they could lead to excessive costs to the  programs and their beneficiaries.
Although prohibited in Medicare, the recent increases in coupon use in  the private sector may have implications for the methodology Medicare  has used since 2005 to set the rates it pays providers for drugs covered  under Part B. Medicare pays for most Part B drugs, which are typically  administered by a physician or under a physician’s supervision, based on  the average amount that purchasers paid to drug manufacturers, net of  discounts and rebates—referred to as the average sales price (ASP).
Medicare’s ASP is a market-based measure of a drug’s price. However,  this measure, as set forth in section 1847A of the Social Security Act,  does not account for coupon discounts that manufacturers provide to  patients, the ultimate consumers of these drugs. Although these coupon  discounts do not affect the amount that purchasers pay to drug  manufacturers, they do lower the net price—here termed the effective  market price—that manufacturers ultimately receive for drugs with such  coupon discounts. As a result, coupon discounts create a discrepancy  between Medicare’s ASP and the effective market price of a drug. This  discrepancy, coupled with the recent increase in coupon use and  Medicare’s role as an efficient purchaser of health care items and  services, raises questions about how suitable Medicare’s Part B payment  rate methodology is for drugs with coupon programs.
Given the increasing prevalence of coupon programs in the private sector  and that the Medicare program and its beneficiaries spent approximately  $20 billion in 2013 on Part B drugs paid based on ASP, you asked us to  examine the use of coupon programs and their potential implications for  the Medicare program and its beneficiaries. In this report, we  identify coupon programs associated with high-expenditure Part B  drugs and describe the extent to which privately insured patients use  these programs; and examine, for drugs with coupon programs, the suitability of Medicare’s  Part B drug payment rate methodology.
To identify coupon programs associated with high-expenditure Medicare  Part B drugs, we developed a list of the 50 highest-expenditure Part B  drugs using data on Medicare claims paid based on ASP in 2013—the  most recent full year of claims data available at the time of our analysis.  In that year, these 50 highest-expenditure drugs accounted for 85 percent  of Part B spending for drugs paid based on ASP. (For the complete list of  these 50 drugs, see app. I.) We then identified which of the 50 Part B  drugs either had coupon programs at the time of our analysis (2015) or in  2013, based on information from manufacturers and their websites, and  collected information from these sources on coupon program  characteristics. To describe the extent to which privately insured  patients used coupon programs, we obtained data for 2013 from (1) drug  manufacturers on coupon use—specifically, the number of patients who  used these programs and on the average annual discounts provided; and  (2) the Truven Health Analytics’ MarketScan® Commercial Claims and  Encounters Database on the estimated number of privately insured  patients nationally who used drugs with coupon programs and the out-of- pocket costs these patients incurred.
To examine the suitability of Medicare’s Part B drug payment rate  methodology for drugs with coupon programs, we reviewed relevant  statutes and regulations and also interviewed officials from the Centers  for Medicare & Medicaid Services (CMS), an agency within HHS. To  illustrate the potential effect, if any, of coupon programs on the suitability  of this methodology for Part B drugs with these programs, we estimated  how a drug’s ASP and Part B spending could have changed over a one- year period—from July 2013 through June 2014—if the drug’s ASP  accounted for coupon discounts. We calculated this estimate based on  2013 data from drug manufacturers on the total coupon discounts  provided for each drug in our analysis and data reported by  manufacturers to CMS on each drug’s total sales and ASP. (For more  detail on the data and methods for this study, see   app. II.)
We verified the reliability of Medicare claims and other data used in this  report through electronic data checks and by speaking with relevant  parties knowledgeable about the data, including CMS; drug  manufacturers; and Truven Health Analytics. In addition, we verified  information on coupon use by conducting checks of internal consistency  and by speaking with manufacturers as needed to verify the reliability of  the information. We determined that the data used in this report were  sufficiently reliable for our purposes.
We conducted this performance audit from August 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.
subsections: section_title: Background
subsections: section_title: Drug Coupon Programs
paragraphs: Manufacturer drug coupon programs reduce or eliminate out-of-pocket  costs for specific drugs and are typically available to privately insured  patients regardless of income. Drug manufacturers provide these  discounts to patients through several mechanisms. For example,  manufacturers may provide patients with debit cards to be activated at the  point of sale. Alternatively, manufacturers may pay the patient’s coupon  discount amount directly to a provider, who would reduce the patient’s  out-of-pocket cost accordingly. Manufacturers inform patients and  providers of coupon programs in a variety of ways, such as distributing  promotional materials, operating program websites and patient hotlines,  and sending field representatives to communicate program information to  providers.
The effect of coupon programs on patients can differ depending on  whether programs are associated with single-source or multi-source  drugs, and changes in patient behavior may in turn lead to increased drug  sales by manufacturers. For single-source drugs, which are only available  from one manufacturer and may not have lower-cost, pharmaceutically  equivalent alternatives, such programs can help patients afford their  medications and have been shown to improve patient adherence to  specialty drug regimens. For multi-source drugs, which are available  from more than one manufacturer, coupon programs may encourage  patients to request, and providers to prescribe, more expensive drugs  instead of generics and other lower-cost, pharmaceutically equivalent  alternatives. These changes in patient behaviors could benefit drug  manufacturers financially while potentially increasing costs for health  insurers. Specifically, manufacturers gain revenue from the sale of drugs  received by patients who might have quit a drug regimen or chosen a  lower-cost alternative in the absence of a coupon program. Additionally,  manufacturers may be able to charge higher prices to purchasers than  the market could sustain without these programs.
Although the use of drug coupon programs to induce or reward use of  certain drugs is unlawful in federal health care programs such as  Medicare, beneficiaries who cannot afford their medications may be  eligible to obtain financial assistance from other sources. For example,  Medicare beneficiaries may be able to receive medications or assistance  with out-of-pocket costs from independent charity patient assistance  programs. Medicare beneficiaries with low income may also be eligible  to enroll in Medicaid, the joint federal-state program that finances health  insurance coverage for certain categories of low-income and medically  needy individuals.
section_title: Medicare Part B Drugs
paragraphs: Medicare Part B covers drugs and biologicals that are generally  administered by a physician or under a physician’s direct supervision,  including drugs administered in a physician’s office or hospital outpatient  department. Drugs covered under Part B include injectable drugs, oral  cancer drugs if the same drug is available in injectable form, and drugs  infused or inhaled through durable medical equipment.
Medicare and its beneficiaries make payments for Part B drugs to  providers, such as physicians and hospitals, which first purchase the  drugs from manufacturers or other sellers. Medicare generally pays 80  percent of a set payment rate for a drug, while beneficiaries are  responsible for the remaining 20 percent. For most Part B drugs,  Medicare sets payment rates at a drug’s ASP plus an additional 6  percent. To set these rates, CMS collects quarterly data from drug  manufacturers on the volume of sales and ASP for each drug. Sales  data that manufacturers report must be net of all rebates, discounts, and  other price concessions to purchasers, including physicians, hospitals,  and wholesalers. Manufacturers are not required to report sales net of  coupon discounts or other financial assistance provided by manufacturers  directly to patients.
CMS, as part of its ongoing efforts to evaluate Medicare’s methodology  for setting Part B drug payment rates, recently issued a proposed rule to  test alternatives to this payment method. Various studies have pointed  out that Medicare’s current methodology for setting Part B drug payment  rates as a fixed percentage above ASP may give providers a financial  incentive to prescribe more expensive drugs. This is among the  shortcomings of the current ASP-based payment method that CMS’s  proposed payment model is designed to address. The first phase of the  proposed payment model would change the payment rate for drugs paid  based on ASP from ASP plus 6 percent to ASP plus 2.5 percent plus a  flat fee. The second phase would implement value-based pricing  strategies, such as varying prices based on drugs’ clinical effectiveness  and decreasing beneficiary coinsurance for drugs deemed high in value.
section_title: Most High- Expenditure Part B Drugs Had Coupon Programs in 2015; an Estimated 19 Percent of Privately Insured Patients Taking Such Drugs Used Programs in 2013
paragraphs: In 2015, drug manufacturers offered coupon programs to privately insured  patients for 29 of the 50 high-expenditure Medicare Part B drugs in our  analysis. Coupon programs were typically open to privately insured  patients regardless of income. Programs for 3 of the drugs required  patients to have incomes below a certain amount, with maximum annual  incomes of approximately $100,000.
Coupon programs varied in the discount amounts that patients could  receive in 2015. Most programs had a maximum annual discount, which  ranged across programs from $400 to $42,000 per year. Until patients  reached that maximum discount, they could pay as low as $0 to $50 per  coupon use. These amounts could represent a small fraction of patients’  full out-of-pocket cost for a prescription. For example, privately insured  patients using the drug Yervoy were required to pay an estimated $571,  on average, per prescription without the drug’s coupon program,  compared to paying $25 under the coupon program. (See table 1 for  examples of drug coupon programs and app. III for more information on  out-of-pocket costs for drugs with coupon programs.)
Factors that can affect privately insured patients’ use of coupons include  patient out-of-pocket cost requirements and the extent of manufacturer  outreach to patients and providers. For example, whether patients are  required to pay out-of-pocket costs for a drug can affect whether patients  use coupon programs, as patients without such costs do not need these  programs. On average, across drugs in our analysis with coupon  programs in 2013, we estimated that 50 percent of privately insured  patients did not have out-of-pocket costs, and this percentage ranged  from 8 to 76 percent, depending on the drug. The amount of patient out- of-pocket costs can also affect the discount amount patients receive,  because coupon discounts are directly related to patients’ out-of-pocket  costs. Other factors, including manufacturer outreach to providers and  patients, could also explain variation in coupon program use. For  example, some manufacturers told us that they reach out to patients  directly regarding coupon programs, while others told us that they  communicate directly only with providers.
With respect to patients’ use of available drug coupon programs, we  determined that 21 of the 50 high-expenditure Part B drugs had coupon  programs in 2013, and these drugs accounted for 50 percent of Part B  spending paid based on ASP. We were able to obtain data on coupon  discounts from manufacturers for 18 of these drugs. An estimated 19  percent of the 509,000 privately insured patients who used these 18  drugs in 2013 also used a coupon program. The percentage of these  patients who used a coupon program ranged from 1 to over 90 percent,  depending on the drug, with coupon programs for all but 2 drugs being  used by less than 40 percent of patients.
Coupon discounts reported by manufacturers of the 18 drugs totaled  $205 million in 2013. Individual patients who used coupon programs for  these drugs received an average annual discount of $2,051. This  discount ranged from $1,000 to over $7,000 per year for 13 of the 18  drugs and was $800 or less for the remaining 5 drugs.
section_title: Methodology for Setting Part B Drug Payment Rates May Be Less Suitable for Drugs with Coupon Programs, but CMS Lacks Data to Evaluate Methodology
subsections: section_title: Payment Rate Methodology for Part B Drugs May Be Less Suitable for Drugs with Coupon Programs because Medicare’s Average Sales Price Exceeds Effective Market Price
paragraphs: Medicare’s market-based methodology for setting Part B drug payment  rates may be less suitable for drugs with coupon programs than for other  Part B drugs that are paid based on ASP. Because ASP does not account  for coupon discounts between manufacturers and patients, the ultimate  consumers of these drugs, the ASP for drugs with coupons exceeds the  effective market price a manufacturer receives for a drug purchase. For  example, in figure 1, the ASP reported by the manufacturer was $1,000;  however, the effective market price the manufacturer received for the  drug—net of the coupon discount the manufacturer provided to the  patient—was actually $300 less, or $700.
We estimated that, for the 18 drugs for which we obtained coupon  discount data in 2013, ASP exceeded the effective market price by an  average of 0.7 percent. Medicare spending for these 18 drugs could  have been $69 million lower if ASP had been equal to the effective  market price manufacturers received. ASP exceeded the effective  market price for some drugs by much more than the 0.7 percent average,  which suggests that the ASP-based payment method may be even less  suitable for these drugs. For example, for 5 of the 18 drugs, ASP  exceeded the effective market price by an estimated 2.7 percent, on  average, and ranged from 1.4 to 7.8 percent depending on the drug (see  fig. 2). Part B spending for these 5 drugs combined could have been an  estimated $50 million lower if ASP equaled the effective market price. The  drugs for which ASP exceeded the effective market price by the highest  percentage either had high rates of coupon use relative to other drugs, a  high average annual discount, or both. For example, the drug in figure 2  with the highest percentage (Drug A) had the highest average annual  discount per patient ($7,100) and the second highest percentage of  patients who used a coupon (53 percent). (For more detail on the data  and methodology for these estimates, see app. II.)
Upward trends in the use of coupon programs suggest that drug coupons  could have an even greater effect in the future on the suitability of  Medicare’s methodology for setting Part B drug payment rates. A recent  study found that coupon use more than doubled between 2011 and  2014. Several manufacturers we interviewed told us that the number of  patients using coupon programs and the discount amounts that patients  receive have increased over time. In addition, to the extent that drug  prices continue to increase and translate into higher out-of-pocket costs  for privately insured patients, this could increase patients’ use of drug  coupons and the discount amounts they receive.
section_title: CMS Lacks Data to Evaluate Implications of Coupon Programs for Medicare’s Part B Drug Payment Rate Methodology
paragraphs: CMS currently lacks data on coupon discounts, which are necessary for  evaluating the implications of coupon programs for Medicare’s Part B  payment rate methodology. CMS lacks the authority to collect data from  drug manufacturers on coupon discounts to patients because the  authority to collect information relating to ASP is based on manufacturer  sales to purchasers. In addition, these data are proprietary and are not  readily available from other sources. Standards for internal control in the  federal government require agencies to have access to quality  information to achieve their objectives, which for CMS entails having the  information necessary to evaluate the implications coupon programs may  have for Medicare’s methodology for setting Part B drug payment rates.  Without data on coupon discounts, CMS lacks information that could  inform its ongoing efforts to evaluate alternatives to this payment rate  methodology.
section_title: Conclusions
paragraphs: The high spending on Part B drugs based on ASP—approximately $20  billion in 2013—underscores the need to ensure that Medicare pays  appropriately for these drugs. Various studies have noted previously that  payments to providers under the current ASP-based payment  methodology could lead providers to prescribe more costly drugs. Our  findings in this report indicate that the shortcomings of this payment  system go beyond problems with the incentives associated with payments  to providers. In particular, even if Medicare Part B drug payments  accurately reimburse providers’ costs and do not introduce inappropriate  incentives, Medicare still may be paying more than necessary for drugs  with coupon programs because the ASP for these drugs exceeds the  effective market price that manufacturers ultimately received.  Furthermore, upward trends in coupon program use and drug prices  suggest that Medicare’s Part B drug payment rate methodology could  become less suitable over time for drugs with coupon programs. These  trends emphasize the need for regular monitoring of the implications that  coupon programs may have for this methodology as CMS works to  propose an alternative payment system. However, the agency lacks the  authority to collect data on coupon discounts and therefore lacks  important information that could inform its ongoing efforts to design and  evaluate alternative approaches.
section_title: Matter for Congressional Consideration
paragraphs: To determine the suitability of Medicare’s Part B drug payment rate  methodology for drugs with coupon programs, Congress should consider granting CMS the authority to collect data from drug manufacturers on  coupon discounts for Part B drugs paid based on ASP and  requiring the agency to periodically collect these data and report on  the implications that coupon programs may have for this methodology.
section_title: Agency Comments
paragraphs: We provided a draft of this product to HHS. HHS provided us with  technical comments, which we incorporated as appropriate.
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 to the appropriate  congressional committees, the Secretary of Health and Human Services,  and the Administrator of the Centers for Medicare & Medicaid Services. 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 about 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 IV.
section_title: Appendix I: Highest-Expenditure Medicare Part B Drugs Paid based on Average Sales Price (ASP), 2013
subsections: section_title: Rank by total 2013 Medicare expenditures paid based on ASP 1
paragraphs: Aflibercept injection  (ophthalmic)
Injection, IVIG Bivigam  (C9130)  Gammaplex injection  (J1557)  Gamunex-C/Gammaked  (J1561)  Octagam injection (J1568)  Flebogamma injection  (J1572)
Zoledronic acid (J3487)  Reclast injection (J3488)  Zoledronic acid 1mg  (Q2051)
section_title: Rank by total 2013 Medicare expenditures paid based on ASP 14
paragraphs: Medicare  expenditures  paid  based on ASP,  2013 (dollars  in millions)
Drug description(s)
Healthcare  Common Procedure  Coding System  (HCPCS) code(s)
Darbepoetin alfa, non- ESRD (J0881)  Darbepoetin alfa, ESRD  use (J0882)
Leuprolide acetate /3.75  MG (J1950)  Leuprolide acetate  suspension (J9217)
Xyntha inj (J7185)  Factor vii recombinant  (J7192)
section_title: Rank by total 2013 Medicare expenditures paid based on ASP 27
paragraphs: Hyalgan/supartz inj per  dose (J7321)  Euflexxa inj per dose  (J7323)
section_title: Rank by total 2013 Medicare expenditures paid based on ASP 43
paragraphs: Brand name(s)  Adriamycin, Doxil  Doxorubicin hcl injection  Drug description(s)
Healthcare  Common Procedure  Coding System  (HCPCS) code(s)
Medicare  expenditures  paid  based on ASP,  2013 (dollars  in millions) (J9000)  Doxil injection (J9002)  Imported Lipodox inj  (Q2049)  Doxorubicin inj 10mg  (Q2050)
Apligraf skin sub (Q4101)  Dermagraft skin sub  (Q4106)  Graftjacket skin sub  (Q4107)
Also includes Flebogamma 10% DIF, Flebogamma 5% DIF, Gamunex, Gamunex-C, and Octagam.  Also includes Kogenate FS BIO-SET, Recombinate, ReFacto, and Xyntha.
section_title: Appendix II: Data and Methods
paragraphs: This appendix describes the data and methods we used in our study.
subsections: section_title: Identifying Coupon Programs Associated with High-Expenditure Medicare Part B Drugs and Describing Use among the Privately Insured
paragraphs: To identify coupon programs associated with high-expenditure Medicare  Part B drugs, we used 2013 Medicare claims data—the most recent full  year of data available at the time we began our analysis (2015)—to  develop a list of the 50 highest-expenditure Part B drugs paid based on  the average sales price (ASP) methodology. We identified drugs based  on their Healthcare Common Procedure Coding System (HCPCS)  codes. Each HCPCS code refers to one or more brand or generic  products, which are identified by their national drug codes (NDC). The  drugs we identified for our analysis had multiple HCPCS codes if the  codes shared one or more NDCs for products that were pharmaceutically  equivalent, defined by the Food and Drug Administration as those with  the same active ingredient(s), dosage form, route of administration, and  strength or concentration. Our final list of the 50 highest-expenditure  drugs accounted for 85 percent of Part B spending in 2013 for drugs paid  based on ASP. (For the complete list of these 50 drugs, see app. I.)
We identified which of the 50 high-expenditure Part B drugs had coupon  programs, either at the time of our analysis (2015) or in 2013, based on  information from manufacturers and their websites. If we were unable to  identify a coupon program for a drug and did not receive information from  its manufacturer, we recorded that the drug did not have a coupon  program. Some drugs in our analysis comprised multiple NDCs. As a  result, some drugs we analyzed had a coupon program for one product  but did not have programs for other products, while other drugs had  multiple coupon programs.
To describe the extent to which privately insured patients used coupon  programs, we obtained data from Truven Health Analytics’ MarketScan®  Commercial Claims and Encounters Database on the estimated number  of privately insured patients nationally who used drugs with coupon  programs in 2013 (to correspond with the year of available Medicare  claims data) and the out-of-pocket costs these patients incurred. We also  obtained data for 2013 from drug manufacturers on coupon use— specifically, the number of patients who used each program and the  average annual coupon discount provided. We calculated the percentage  of patients taking a drug who used a coupon program by dividing the  number of patients who used a coupon program by the estimated total  number of patients who used the drug. To calculate the average of this  percentage across all drugs in our analysis for which we obtained data on  coupon use, we weighted each drug’s percentage by the total number of  patients who used the drug. We calculated the total amount of coupon  discounts provided in 2013 for each drug by multiplying the number of  patients who used the program by the average discount provided. To  calculate the average annual coupon discount across all drugs for which  we obtained data on coupon use, we weighted the average annual  discount for each drug by the number of patients who used the coupon  program. In addition to data on coupon use, we collected information from  manufacturers on the mechanisms through which manufacturers provide  coupon discounts to patients and on the ways in which manufacturers  inform patients and providers about drug coupon programs.
section_title: Examining the Suitability of Medicare’s Part B Drug Payment Rate Methodology
paragraphs: The ASP for a drug in 2013, as calculated above, is equal to the average of the quarterly ASPs in  2013 reported to CMS by drug manufacturers, weighted by the units of the drug sold in a given  quarter.  Total sales net of manufacturer price concessions to purchasers, as defined by ASP.
We then calculated the percentage by which ASP exceeded the effective  market price in 2013 for each drug and across all drugs with coupon  discount data in our analysis. To calculate this percentage across all  drugs in the analysis, we weighted the percentage for each drug based  on the drug’s Medicare spending from July 2013 through June 2014,  which is the time period during which changes in ASP in 2013 would take  effect. Finally, to estimate what Medicare spending from July 2013  through June 2014 could have been if a drug’s ASP accounted for  coupon discounts, we multiplied the drug’s actual Medicare spending  during this time by the percentage by which ASP in 2013 could have  decreased if it had equaled the effective market price. We then calculated  the difference between this spending estimate and actual Medicare  spending for the same time period for each drug and across all drugs in  our analysis with coupon discount data.
section_title: Appendix III: Estimated Out-of-Pocket Costs of Privately Insured Patients for Drugs with Coupon Programs in 2015
subsections: section_title: Brand name(s) for drugs with coupon programs Abraxane
paragraphs: Average annual  out-of-pocket cost among  patients with out-of-pocket  costs (in 2015 dollars)
Actemra  Advate, Helixate FS, Kogenate FS, and various other brands  Alimta  Eligard, Lupron Depot, Lupron Depot-PED  Faslodex  Flebogamma, Gammaked, Gammaplex, and various other brands  Gammagard Liquid  1,965  Values are based on 2013 data from Truven Health Analytics and have been adjusted for inflation to  2015 dollars using the Consumer Price Index for All Urban Consumers.
section_title: Appendix IV: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Acknowledgments
paragraphs: In addition to the contact named above, William Black (Assistant  Director), Ramsey Asaly, Namita Bhatia-Sabharwal, George Bogart,  Muriel Brown, William A. Crafton, Kelsey Kennedy, Dan Lee, Maria  Maguire, Lauren Metayer, and Beth Morrison made key contributions to  this report.
section_title: Related GAO Products
paragraphs: Medicare Part B: CMS Should Take Additional Steps to Verify Accuracy  of Data Used to Set Payment Rates for Drugs. GAO-16-594. Washington,  D.C.: July 1, 2016.
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-Expenditures 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.