Reasonable Assumptions in Manufacturer Reporting of AMPs and Best Prices

Ensuring the accuracy of manufacturer-reported average manufacturer prices (AMPs) and best prices (BPs) is vital given that these prices are the primary benchmarks that the Federal Government uses to calculate the rebates and discounts available to Medicaid and certain safety-net providers. In the absence of guidance to the contrary, CMS allows manufacturers to make "reasonable assumptions" that are consistent with statute and regulation when they calculate rhe AMPs and BPs for Medicaid-covered drugs. Previous OIG work has shown that manufacturers have made different assumptions when including or excluding certain sales in their price calculations, potentially leading to significantly lower or higher AMPs and BPs. AMPs and BPs are used to calculate the amount of rebates that manufacturers must pay to Medicaid. A lower AMP for example, could reduce the rebate amount that a manufacturer must pay, thus increasing net costs for Medicaid. In addition, AMPs and BPs are also used to establish the prices paid by health care entities eligible for the 340B Drug Discount Program. In September 2016, Congress asked OIG to examine CMS's oversight of the Medicaid Drug Rebate Program. This report is the last of three OIG evaluations related to this request.