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Pending ASP Changes Impact Payments & May Shape Future FDA Filings

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Summary

Beginning July 1, 2021, average sales price (ASP) calculations for Part B drugs with an additional non-covered self-administered formulation could alter Medicare reimbursement.

Background

In December 2020, Congress passed the Consolidated Appropriations Act of 2021, to amend the Social Security Act for determination of ASP calculation for certain Part B products. This bill would change the way the Centers for Medicare and Medicaid Services (CMS) crosswalk pricing and volume data that manufacturers report by physician-administered National Drug Codes (NDC) to map to ASP calculations by the Healthcare Common Procedure Coding System. While self-administered products are typically not covered under Medicare Part B, this act grants the Secretary of the Department of Health and Human Services (HHS) authority to determine how to account for NDC pricing data for self-administered formulations when calculating ASP for physician-administered products with a J code.

A November 2017 report from the Office of the Inspector General (OIG) found that the inclusion of noncovered versions of Part B products with self-administered formulations increased Medicare expenditures by $366 million from 2014 to 2016. In direct response to this report, the OIG advocated in a separate July 2020 report for a legislative change that would provide the CMS the authority to determine when noncovered, self-administered versions of Part B drugs should be included in the calculation of ASP. Both reports highlighted specific drugs that would be implicated by the proposed statutory change.

Effective July 1, this statutory update will require the Secretary of HHS to exercise broader authority to determine what can be sourced to calculate ASP, particularly for the original formulations of physician-administered biologics that have a second, self-administered formulation approved under the initial Biologics License Application (BLA) by way of a supplemental BLA (sBLA). Under this statutory update, the payment amount, ASP reimbursement, would be the lesser of:

  1. The current standard for reimbursement including calculation of ASP for both the self-administered and physician-administered NDC
  2. The proposed alternative where volume for the self-administered NDC is excluded

Considerations for Stakeholders

As of July 1, Part B products affected by the statutory change to Section 405 will see significant changes, and likely decreases, to ASP calculations for certain products. Under this statutory update, the CMS will calculate the ASP for an affected product through a separate rather than combined unit of sales for both the physician-administered and self-administered product formulations. Where applicable, manufacturers with affected products can file the noncovered, self-administered formulation of a product with the Food & Drug Administration (FDA) under an sBLA, creating opportunity for pipeline products.

As manufacturer and supplier stakeholders attempt to understand product-by-product pricing determinations for implicated therapies, with a self-administered formulation within the same BLA, including sBLA, changes to provider-based contracting and differential ASP calculations dependent on FDA filing should be considered. This statutory change has pricing and contracting implications for existing products as well as those in the pipeline or with pending approvals. While the current statute creates reimbursement barriers for manufacturers when filing an sBLA for a self-administered formulation and drives the need to file separately, the updated statute creates an opportunity to file an sBLA for products without any concern of negative provider reimbursement. Manufacturers with affected products should begin to assess how this affects product-by-product regulatory strategy in conjunction with milestone meeting with FDA reviewers.

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