RJ Health - Average Sales Price (ASP), Medicare Allowable - Explained

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Shedding Light on Medically Covered Specialty Drug Pricing Methods

Presented by:
Christopher Webb, CPhT
Director, Product Development
&
Jason Young, PharmD
SVP, Clinical Data Operations

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Thirdly we have ASP or the Medicare allowable. ASP stands for Average Sales Price. Unlike AWP and Wholesale Acquisition, this is actually closer to the acquisition cost. CMS will get sales data from all the manufacturers for the products that can be reimbursed under the HCPCS code. They'll look at first point of sale. Taking into account volume, prompt pay discount, cash discounts, and they'll take a look at all that sales market share for that quarter. There is a lag of about two quarters, so the most recent April quarter was off of October sales data from last year. Again, it is updated on a quarterly basis. It fluctuates a lot more than AWP and Wholesale Acquisition as it requires multiple manufacturers to submit sales data, again taking that first point of sale information. If they’re trying to dump stock or having a promotion going it can fluctuate tremendously. But it is based off the HCPCS code level only. It's not at the NDC level. All the NDCs are accounted for by CMS to come up with this rate. There is a 6% mark up when you're looking at provider reimbursement of ASP, this will allow for, again, some profit up-share for those wholesale sellers in-between and hopefully have a closer reimbursement rate for the provider, for better or for worse. Commercial payors may provide a different mark up to these particular values. So, for AWP, typically, we'll see a minus 5 to minus 10 to 15 percent. Wholesale Acquisition is usually 5 - 15 percent mark up. For Medicare Allowable we typically see eight, ten and twelve percent per contract. Above and beyond the products that are currently based off of ASP, for Medicare Allowable, there are also are vaccine rates, DME rates and blood rates. I believe vaccine rates are based off of 95% off of AWP, however CMS obtains that, there are some other rates for the blood rate and DME.