oig hhs asp report 1-11
TRANSCRIPT
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!"#$%&'(#)'!*+!,#%-'.!%)/!,0(%)!1#&234#5OFFICE OF
INSPECTOR GENERAL!!!!
!!!!!!!7"89:;7!?1!!@A;!>7BC=!:D:8C:EC7!F7>7;89!";GF1!!!!!!!
!"%)3#-!;H!C#23)5*)!!8)5$#4'*&!F#)#&%-!
I%)0%&J!KLMM!A78NLONLPNLLQML!
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E X E C U T I V E S U M M A R Y
OBJECTIVES!
"# $%!&'()*+(&!(,&!-).+./)+0!)*1+/(!%-!(,&!(2%345+6(&6!6&)*756'&*&.(!0+8!%.!9&:)/+6&!1+;*&.('!-%6!&6&:!:658'!2)(,!.&20;!
+>+)0+70&!8&.&6)/!>&6')%.'#!
?# $%!&'()*+(&!2,&.!,)8,3&@1&.:)(56&!76+.:3%.0;!&6&:!:658'!2)00!0)A&0;!,+>&!-)6'(38&.&6)/!>&6')%.'!6&+/,!(,&!*+6A&(#!
BACKGROUND
B0(,%58,!9&:)/+6&!&6'!*%'(!16&'/6)1()%.!:658'D!
Q%6!(,)'!'(5:;D!2&!&@+*).&:!(,&!9&:)/+6&!1+;*&.(!+*%5.('!-%6!"F!&6&:!:658'!(,+(!2&!):&.()-)&:!+'!,+>).8!-)6'(38&.&6)/!>&6')%.'!
6&+/,!(,&!*+6A&(!).!?EERD!?EESD!%6!(,&!-)6'(!(2%!45+6(&6'!%-!?EET#!!Q%6!
&+/,!%-!(,&!:658'D!2&!:&(&6*).&:!,%2!*5/,!+)0+7)0)(;!G)#D!(,&!-)6'(!(,6&&!45+6(&6'!).!2,)/,!
8&.&6)/'!2&6&!+>+)0+70&I#!!U&!(,&.!(%(+0&:!(,&'&!-)856&'!(%!:&(&6*).&!(,&!
.&(!-).+./)+0!)*1+/(!%-!(,&!(2%345+6(&6!0+8!%.!):&!/%.(&@(!-%6!(,&!-5(56&!)*1+/(!%-!(,&!!!!!!!!!!!!!
!O E I - 0 3 - 0 9 - 0 0 5 1 0 M E D I C A R E PA Y M E N T S F O R N E W L Y AV A I L A B L E G E N E R I C D R U G S )
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E X E C U T I V E S U M M A R Y
!"#$%&'(!)(*+',-*")*'+.#*()%&).!)/*0(#1*!2)*3##/*'4/*5(&,*
6/1747.!('!7#4*83569*!2)*).!71'!)/*/'!)*#0*,)4)(7:*';;(#
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E X E C U T I V E S U M M A R Y!"#$%&'($)*+,&-%-)$.'#-)*$/%*'01+'"22-")'+/'!"#-'%-#-)')-".!-3'+!-'
4")5-+6''7/)'"%/+!-)'&)/12'/('3)1&*8'&-%-)$.'4"%1(".+1)-)*'("$9-3'+/'
)-2/)+':;/,D1")+-)'9"&'$%'2"=4-%+*'(/)'%->9='
"#"$9"09-'&-%-)$.'3)1&*6''E-'(/1%3'+!"+'F-3$.")-'2"=4-%+'"4/1%+*'
>-)-'*$&%$($."%+9='!$&!-)'+!"%'4")5-+'2)$.-*'(/)'"%'-G+-%3-3'2-)$/3'(/)'
+!-'%->9='"#"$9"09-'&-%-)$.'3)1&*'1%3-)')-#$->6''A%'/+!-)'>/)3*8'&-%-)$.'
#-)*$/%*'/('+!-*-'3)1&*'>-)-'0-$%&'"34$%$*+-)-3'/)'3$*2-%*-3'+/'0-%-($.$")$-*8'01+'F-3$.")-'>"*'*+$99'2"=$%&'0)"%3'2)$.-*6'':9+!/1&!'
/+!-)'&/#-)%4-%+'"%3'2)$#"+-9='*2/%*/)-3'2)-*.)$2+$/%'3)1&'2)/&)"4*'
")-'3-*$&%-3'+/'+"5-'"3#"%+"&-'/('9/>-),2)$.-3'&-%-)$.'3)1&*8'/1)'
($%3$%&*'3-4/%*+)"+-'+!"+'+!-'/,D1")+-)'9"&'"%3'4"5-'F-3$.")-'2"=4-%+'
"4/1%+*'4/)-')-(9-.+$#-'/('".+1"9'4")5-+'2)$.-*6 A('IF;'($%3*'+!$*'+/'0-'
"%'-((-.+$#-'4-"%*'(/)'"99-#$"+$%&'+!-'($%"%.$"9'$42".+'/('+!-''''''''''''''
+>/,D1")+-)'9"&8'+!-'"&-%.='4"='>$*!'+/'./%*$3-)')-D1$)$%&'4/%+!9='
:;
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O E I - 0 3 - 0 9 - 0 0 5 1 0 M E D I C A R E PA Y M E N T S F O R N E W L Y AV A I L A B L E G E N E R I C D R U G S !"#
E X E C U T I V E S U M M A R Y
$%&'!&($()*!(+$(!"(!,)%")#)&!(+)!(-'./0$1()1!%$2!31'()4(&!5)*"4$1)!$6*!"(&!
,)6)7"4"$1")&!71'8!064+)49)*!31"4)!"641)$&)&!$6*!"&!$6!"64)6("#)!7'1!
7$&()1!2)6)1"4!0("%":$("'6;!!!
$1(!
1)"8,01&)8)6(!%$2!8$@!'0(-)"2+!$6@!*"77"40%(")&!-"(+!"83%)8)6("62!$!
8'6(+%@!AB>!1)3'1("62!&@&()8;!!C01(+)18'1)=!-)!6'()!(+$(!(+)!!!!!!!!
AB>.,$&)*!1)"8,01&)8)6(!&@&()8!D"6!-+"4+!$%%!#)1&"'6&!'7!$!*102!
$&&"26)*!('!'6)!3$@8)6(!4'*)!$1)!3$"*!$(!(+)!&$8)!$8'06(E!"&!$!6$(01$%!
"64)6("#)!7'1!8$607$4(01)1&!('!%"8"(!1$3"*!31"4)!"641)$&)&=!$&!-)%%!$&!7'1!
31'#"*)1&!('!0("%":)!2)6)1"4!#)1&"'6&;!
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T A B L E O F C O N T E N T S
E X E C U T I V E S U M M A R Y ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! "
I N T R O D U C T I O N ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! #$
F I N D I N G S ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! #%$
$ &'(")*+'$),-.($/*0'$1*0'($*2$'13"4*3'($5###$4"..",2$/*($$$$$$$$$$6*74'23$*4,-231$"44'("*3'.7$+'8.')3'($9'2'+")$1*.'1$6+")'1$8,+$$$$$$$$#:$(+-91! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! #%$
$ ;)),+("29$3,$$2-4'+,-1$/"9/?'@6'2("3-+'$(+-91$),-.($/*0'$$$$
8"+13?9'2'+")$0'+1",21$*66+,0'($"2$3/'$2'@3$1'0'+*.$7'*+1 ! ! ! ! ! ! ! #A$
$ B"92"8")*23$,C13*).'1$+'4*"2$"2$6+,*)3"0'.7$"('23"87"29$2'D.7$$*0*".*C.'$9'2'+")$(+-91 ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! #:$
R E C O M M E N D A T I O N ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! #E$
;9'2)7$F,44'231$*2($G88")'$,8$H216')3,+$I'2'+*.$J'16,21' ! ! ! KL$
A P P E N D I X E S ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! K%$
$ ;M$$='3*".'($&'3/,(,.,97$8,+$H('23"87"29$$;)),+("29$3,$
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I N T R O D U C T I O NOBJECTIVES
!" #$%&'()*+(&%(,&%-).+./)+0%)*1+/(%$-%(,&%(2$345+6(&6%6&)*756'&*&.(%0+8%$.%9&:)/+6&%1+;*&.('%-$6%&6&:%:658'%2)(,%.&20;%+>+)0+70&%8&.&6)/%>&6')$.'"%
?" #$%&'()*+(&%2,&.%,)8,3&@1&.:)(56&%76+.:3$.0;%&6&:%:658'%2)00%0)A&0;%,+>&%-)6'(38&.&6)/%>&6')$.'%6&+/,%(,&%*+6A&("%
BACKGROUND
B.%?CCDE%9&:)/+6&%'1&.(%+116$@)*+(&0;%F!!%7)00)$.%$.%&6&:%
:658'"!%%9&:)/+6&%1+;'%-$6%*$'(%16&'/6)1()$.%:658'%/$>&6&:%5.:&6%)$5'%L--)/&%$-%B.'1&/($6%M&.&6+0%GLBMJ%6&1$6(?%-$5.:%(,+(%(,)'%%%%%
(2$345+6(&6%6&)*756'&*&.(%0+8%,+:%.&8+()>&%-).+./)+0%/$.'&45&./&'%-$6%
(,&%9&:)/+6&%16$86+*%+.:%)('%7&.&-)/)+6)&'%G(,6$58,%,)8,&6%
/$).'56+./&J%2,&.%0$2&6316)/&:%8&.&6)/%>&6')$.'%$-%(,&%/+./&6%:658%
)6).$(&/+.%-)6'(%6&+/,&:%(,&%*+6A&("%%B.%)('%/$**&.('%($%(,+(%6&1$6(E%(,&%
N&.(&6'%-$6%9&:)/+6&%O%9&:)/+):%I&6>)/&'%GN9IJ%/$./566&:%2)(,%$56%
6&/$**&.:+()$.%(,+(%(,&%+8&./;%&@10$6&%$1()$.'%(,+(%2$50:%+00$2%
1+;*&.(%+*$5.('%($%*$6&%+//56+(&0;%6&-0&/(%.&2%8&.&6)/%16)/&'"%%N9I%'(+(&:%(,+(%)(%)'%).(&6&'(&:%).%+.;%'588&'()$.'%LBM%*+;%,+>&%($%)*16$>&%
(,&%*&(,$:'%5'&:%($%/$00&/(%+.:%+66+;%:+(+%5.:&6%(,&%HI&6%+%0)*)(&:%.5*7&6%$-%$5(1+()&.(%16&'/6)1()$.%
:658'%+.:%7)$0$8)/+0'%G,&6&).+-(&6%6&-&66&:%($%+'%:658'J%5.:&6%)('%
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I N T R O D U C T I O N
!"#$%&'($)*++,'-%)+.-'/()0$,+(/!(,$/#+#&+"+102)(!("/3)+)$'4(!$+++++++++++++
5$6%67+(/8$!#"9:$+,'-%)+-)$,+(/+!&//$!#(&/+;(#0+#0$+#'$"#
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I N T R O D U C T I O N
!"#$%&''($#)!*+$',$-$.)!)*+)$%'*+$'+$%/"-%),0$'."+'12'/$+!$-3'".'34)%'
*5"6-3')-'34$'."+5'".'!")-%6+*-!$&'
Manufacturer Reporting Requirements
ASP data.''(*-6.*!36+$+%'7)34'($#)!*)#'#+68'+$,*3$'*8+$$5$-3%')-'
$..$!3'56%39'*5"-8'"34$+'34)-8%9'/+":)#$';(*+3'?@!":$+$#'#+68%',D'
-*3)"-*0'#+68'!"#$%'AEF;B9'74)!4'*+$'CC@#)8)3'-65$+)!'!"#$%'#):)#$#'
)-3"'34+$$'%$85$-3%')#$-3).D)-8'ACB'34$'.)+5'34*3'5*-6.*!36+$%9'
#)%3+),63$%9'"+'+$/*!G*8$%C1'34$'#+68'/+"#6!3'A)&$&9'34$'0*,$0$+'!"#$BH'''''
A1B'34$'%/$!).)!'%3+$-8349'#"%*8$'."+59'*-#'."+560*3)"-'".'34$'/+"#6!3H'
*-#'AIB'34$'/+"#6!3J%'/*!G*8$'%)K$&''(*-6.*!36+$+%'*+$'+$L6)+$#'3"'/+":)#$';(*+3'?@!":$+$#'#+68%')%',*%$#'"-'M;>;
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I N T R O D U C T I O N
!"#"$%&'$(")*$+,-$./#*/0$12$!"34$"%#('$#*($)5&4($&%$(")*$67"'#('8$$-9:$
#*(0$)"5)75"#(4$"$;&57*#(!$?:@$%&'$(")*$A-@-:$)&!(8$$B*/4$
?:@$C()&N4$?:@$!()5/0(4G$"4$#*($D"3$(0#('4$
#*($N4$C'"0!$(67/;"5(0#8$$?!!/#/&0"553G$>(0('/)$;('4/&04$&%#(0$67/)Q53$
"))&70#$%&'$#*($G$&;('#"Q/0>$#*($$/0$#*($
?:@$)"5)75"#/&0G$#*($5&.('$D'/)(4$"0!$/0)'("4(!$7#/5/S"#/&0$&%$>(0('/)$
;('4/&04$"'($0$/(0('/)$";"/5"C/5/#3G$"5#*&7>*$
9(!/)"'($D"3(8$
MP$A('(/0"%#('G$#*($#('$?DD'&;"548$$?))(44(!$"#$*##DWXX...8%!"8>&;$&0$?D'/5$HYG$H2M28$
$O E I - 0 3 - 0 9 - 0 0 5 1 0 M E D I C A R E PA Y M E N T S F O R N E W L Y AV A I L A B L E G E N E R I C D R U G S Z
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I N T R O D U C T I O N
FDAs Generic Approval Process
!"#$%&%"'()"*&(+,*$&-#.*$.&-"/.*0.+/$&12&.3*&4565&7#.*$.$%&
8"#%*9#":&;)/&("#$.*%&
9#":*.&*H0>')+,+.2&>2G&(*$*"+0&%"'(&9').&1*&.3*&)#9*)&
#&1"#$%&%"'(&I+.3&"*)-*0.&./&0/$%+.+/$)&/&/&3+)./"2G&
+$0>'%+$(&I3*.3*"&+.&I#)--"/,*%&'$%*"$&FNEFG&.3*"*12&+$%+0#.+$(&
#&(*$*"+0&%"'(5&&E"'()WDEF&+)&)*#"03#1>*&12-->+0#.+/$&$'91*"G&
-"/-"+*.#"2&%"'(&$#9*G$%.+,*&+$("*%+*$.5?Y&&
Previous OIG WorkF&?@@J&;PO&"*-/".&+%*$.+&D//%G&E"'(G$%&\/)9*.+0&F0.Ac&&&&&&&&&&&&
?B&\D]&aa&UBY5M?$%&UBY5B@Z=0A5&?U&DEFG&FNEF&=O*$*"+0A&E"'(&F--"/,#>)5&&F00*))*%.&3..-T^^III5
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I N T R O D U C T I O N
!"#$%&'()**)*(%)*%+',-#.%/0012%)*%34'%!)#53%6,-#3'#%"!%/0017%%84'%
9':);-#'%'%
34-3%-$",*3%?@A/B7CA27%%D'%!",*:%34-3%9':);-#'%'E';3':%-;3,->%$-#G'3%'()5>-3)F'%;4-*('2%34-3%=",>:%->>"=%';3%*'=%('*'#);%>';3%:-3-7%%Q"='F'#M%-5%"!%9-.%/0A0M%I9J%4-5%*"3%3-G'*%-*.%-;3)"*5%3"%-::#'55%
>"=)*(%:-3-%5",#;'5%='#'%,5':%)*%",#%-*->.5)5%3"%):'*3)!.%*'=>.%
-F-)>-&>'%('*'#);%:#,(5M%;->;,>-3'%34'%!)*-*;)->%)$.%4-F'%!)#53R('*'#);%F'#5)"*5%#'-;4%34'%
$-#G'37
FDAs monthly list of first-generic drug approvals. T-;4%$"*34M%+UK%
)54'5%"*%)35%D'&%5)3'%-%>)53%"!%!)#53R3)$'%('*'#);%:#,(%-5%-*:%=4'34'#%-%:#,(%=-5%-
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I N T R O D U C T I O N
FDA staff. !"#$"%&"'(")#*+,-$./(*-+#,$-.#'(/,,#/(#012#$"3/(*+4#(-#(5"#
4"+"$*6#/77$-8/3#'(/(&'#-,#6"$(/*+#5*459":7"+)*(&$"#;$/+)9-+3
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I N T R O D U C T I O N
!"!#$%&'(!)%#'*%!"!#$%#+"&'!%,-(+.&,)-*%/",%-#01%23435%0"*-%*&,('6%#%
6(7-'%8,!-,%",%9-#,:%%
Micromedexs quarterly Red Book file. ;1-%%/($-%()%#'%%%%%%%%%
('*&)!,9?@,"*&0-*%0"+@-'*(&+%0"'!#('('6%*,&6%@,"*&0!%('/",+#!("'%
#'*%@,(0('6%*#!#%#!%!1-%AB3%$-7-$:%%CDE%,-0-(7-)%&@*#!-*%%*#!#%
-#01%8,!-,:
Manufacturer online press releases. ;1,"&61%+#'&/#0!&,-,%F-.%)(!-)%#'*%
"'$('-%!,#*-%@&.$(0#!("')G%+#'&/#0!&,-,)%@-,("*(0#$$9%#''"&'0-%!1-%
$#&'01%"/%,-0-'!$9%#@@,"7-*%6-'-,(0%*,&6):%
Identification of Newly Available Generic Drugs
F-%0"')&$!-*%HBIJ)%+"'!1$9%$()!%"/%/(,)!?6-'-,(0%*,&6%#@@,"7#$)%!"%
(*-'!(/9%#$$%*,&6)%!1#!%1#*%/(,)!?6-'-,(0%7-,)("')%@"!-'!(#$$9%.-0"+-%#7#($#.$-%('%KLLMG%KLLNG%",%!1-%/(,)!%!O"%8,!-,)%"/%KLLP:QK%%F-%
0"+@#,-*%!1()%$()!%"/%*,&6)%!"%3R5J)%4#,!%=%0,"))O#$>%/($-)%!"%*-!-,+('-%
O1(01%"/%!1-)-%/(,)!?6-'-,(0%*,&6)%O-,-%0"7-,-*%&'*-,%4#,!%=%#'*%
,-(+.&,)-*%.#)-*%"'%!1-%I54%@#9+-'!%+-!1"*"$"69:%
=-0#&)-%())&-)%)&01%#)%@#!-'!%('/,('6-+-'!%$(!(6#!("'%@,-7-'!%)"+-%
HBI?#@@,"7-*%/(,)!%6-'-,(0)%/,"+%.-0"+('6%#7#($#.$-%",%#7#($#.$-%
(++-*(#!-$9%#/!-,%#@@,"7#$G%O-%@-,/",+-*%!1-%/"$$"O('6%#**(!("'#$%
01-0>)%!"%*-!-,+('-%O1-!1-,%4#,!%=%*,&6)%"'%HBIJ)%$()!%#0!$$9%
,-#01-*%!1-%+#,>-!%('%KLLMG%KLLNG%",%!1-%/(,)!%!O"%8,!-,)%"/%KLLPS%
T:
F-%/(,)!%&)-*%3R5J)%8,!-,$9%I54%.#0>6,"&'*%/($-)%!"%*-!-,+('-%!1-%'&+.-,%"/%+#'&/#0!&,-,)%!1#!%,-@",!-*%)#$-)%"/%@"!-'!(#$%%%%%%%%%%%%%
/(,)!?6-'-,(0%*,&6)%0"7-,-*%&'*-,%4#,!%=%#'*%!1-%*,&6)J%
0",,-)@"'*('6%AB3):%%=-0#&)-%+#'&/#0!&,-,)%#,-%,-8&(,-*%!"%)&.+(!%
8,!-,$9%I54%*#!#%!"%3R5G%!1-%.#0>6,"&'*%/($-)%-'#.$-*%&)%!"%
(*-'!(/9%!1-%'&+.-,%"/%+#'&/#0!&,-,)%!1#!%)"$*%-#01%*,&6%('%-#01%
8,!-,G%!1-,-.9%0"'/(,+('6%O1-!1-,%HBIJ)%/(,)!?6-'-,(0%#@@,"7#$%
*#!-%0"('0(*-*%O(!1%!1-%+#,>-!%-'!,9%"/%'-O%+#'&/#0!&,-,)%/",%-#01%
*,&6:%%2"O-7-,G%.-0#&)-%@,-7("&)%CDE%O",>QQ%/"&'*%!1#!%
+#'&/#0!&,-,)%*"%'"!%#$O#9)%,-@",!%I54)%('%#%!(+-$9%+#''-,G%O-%
QK%=-0#&)-%!1-,-%()%"/!-'%#%6#@%.-!O--'%!1-%!(+-%O1-'%#%*,&6%,-0-(7-)%HBI%#@@,"7#$%#'*%
O1-'%(!%.-0"+-)%#7#($#.$-%"'%!1-%+#,>-!@$#0-G%O-%#$)"%('0$&*-*%*,&6)%/,"+%HBIJ)%$()!%"/%
6-'-,(0%*,&6)%#@@,"7-*%('%A"7-+.-,%#'*%B-0-+.-,%KLLU%(/%*#!#%)"&,0-)%('*(0#!-*%!1-9%*(*%
'"!%.-0"+-%#7#($#.$-%&'!($%KLLM:%
QQ%CDEG%I7-,#6-%5#$-)%4,(0-)S%%R#'&/#0!&,-,%
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I N T R O D U C T I O N
!"#$%&$$'%!(()&)$*!"%#&+,#%&$%)(+*&)-.%/0+&0+1%!*(%/0+*%!%,1$(23&%
1+!30+(%&0+%4!1'+&5%
657+%,+1-$14+(%#)4)"!1%30+3'#%2#)*8%9:;%-)"+#E%/+%/+1+%!D"+%&$%(+&+14)*+%&0+%-)1#&%
4$*&0%&0!&%8+*+1)3%#!"+#%/+1+%1+,$1&+(%&$%9:;5%%F0+%#!4+%BC9#%
/+1+%!"#$%2#+(%&$%(+&+14)*+%&0+%-)1#&%G2!1&+1%&0!&%8+*+1)3%
4!*2-!3&21+1#%1+,$1&+(%,1$(23&%)*-$14!&)$*%&$%@+(%A$$'E%/0)30%
#+1H+(%!#%!*%!(()&)$*!"%3$*-)14!&)$*%$-%&0+%(!&+%$-%8+*+1)3%4!1'+&%
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O E I - 0 3 - 0 9 - 0 0 5 1 0 M E D I C A R E PA Y M E N T S F O R N E W L Y AV A I L A B L E G E N E R I C D R U G S P
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I N T R O D U C T I O N
!"#$%&'()*+(,-&./(.#01&.2(3/($"(2.$.4!-#.(5%.$%.4(6.#.4-7(
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-2.#$-,'-#6(,-4/$(6.#.4-7/:(
Financial Impact of the Two-Quarter Lag During Initial Generic Availability
B"(2.$.4!-#.($%.(,-#0#7-0&(-!807$(",($%.(4.-!134/.!.#$(&06(,"4($%.((((((
CD(#.5&'(0E0-&01&.(6.#.4-7(2436/
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I N T R O D U C T I O NI N T R O D U C T I O N
!"#$%&!"'()*+()*!,&(-%.,)+,(/0('+"+,!#(.1.!$.2!$!)3(!"(/%,(0!"."#!.$(
!45.#)(.".$36!67(8+(8+,+(.2$+()/(.##/%")(0/,()*+6+(+9)+"&+&(+00+#)6:(
;"(!"6)."#+6(!"(8*!#*(.(0!,6)('+"+,!#(8.6(.55,/1+&(.0)+,()*+(0!,6)(4/")*(
/0(.(-%.,)+,(.)!/"(&.).()/(,+0$+#)()*+(.4/%")(/0(
)!4+()*+('+"+,!#6(8+,+(.1.!$.2$+(!"()*.)(-%.,)+,:?@(((
A"#+(8+(+6)!4.)+&()*+(0!"."#!.$(!45.#)(0/,(+.#*(&,%'7(8+()/).$+&()*+6+(
0!'%,+6()/(&+)+,4!"+()*+("+)(0!"."#!.$(!45.#)(/0()*+()8/B-%.,)+,(
,+!42%,6+4+")($.'(/"(C.,)(D(."&(!)6(2+"+0!#!.,!+6(0/,()*+(EF(&,%'6(/1+,(
)*+!,(!"!)!.$(5+,!/&6(/0('+"+,!#(.1.!$.2!$!)3:((G+(#/45.,+&()*+()/).$(
5/)+")!.$(6.1!"'6()/()*+()/).$(.4/%")(,+!42%,6+&(0/,(.$$(&,%'6(/1+,()*+(
6.4+(5+,!/&(."&(&+)+,4!"+&()*+(5,/5/,)!/"(/0(5/)+")!.$$3(+9#+66!1+(
+95+"&!)%,+6(,+6%$)!"'(0,/4()*+()8/B-%.,)+,($.':(
Comparison of generic and brand ASPs.((H*+(1/$%4+B8+!'*)+&(IJC(0/,(.(
KLCLJ(#/&+(!6(#.$#%$.)+&(%6!"'()*+(!"&!1!&%.$(IJC6(0/,(.$$(
#/,,+65/"&!"'(MNL6:((G!)*!"(+.#*(KLCLJ(#/&+7()*+(IJC6(0/,()*+(2,."&(
."&(."3('+"+,!#(MNL6(/0)+"(1.,3(#/"6!&+,.2$3(
?@(LOJP6(IOC(0!$+6(.$$/8+&(%6()/(&+)+,4!"+()*+(0!,6)(4/")*(/0('+"+,!#(.1.!$.2!$!)3:(?R(N.).(8+,+(%".1.!$.2$+(0/,()8/(&,%'6:(UV(D+#.%6+()*,++(&,%'6(&!&("/)(,+.#*()*+(4.,Q+)(%")!$(0!,6)B(/,(6+#/"&B-%.,)+,(TVVR7(
5.34+")(.4/%")6(0/,()*+6+(&,%'6(8+,+("/)(.1.!$.2$+(0/,()*+(0%$$(T(3+.,6:(
(O E I - 0 3 - 0 9 - 0 0 5 1 0 M E D I C A R E PA Y M E N T S F O R N E W L Y AV A I L A B L E G E N E R I C D R U G S EE
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I N T R O D U C T I O N
!"#$%&'()(*+!,'(-!&+,./0((1*(2#"3!,4%5(&6+(7+842!,+(3!*"+%&(!"#$%&'(
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C+(3,#(;4&6(!(-4'&(#:(&6+((/F(9,!%8=#%-*(8,$5'(G9*(
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5+%+,42(!33,#NE>(!33,#
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"!,J+&(+%&,*.(
Standards
K64'('&$8*(;!'(2#%8$2&+8(4%(!22#,8!%2+(;4&6(&6+(R$!-4&*(?&!%8!,8'(:#,(
S%'3+2&4#%'(!33,#
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F I N D I N G S!"#$%&'('$)''*$*+$%,+-./"(%'($
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F I N D I N G S
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/'2%##%#2(%#($6'()%1.$(%!*1'(-*05'#$(*5"$()"1("#>*#.'$1"#(60>1"!6+"1%>'(>'!+%#'>(
/0(JF(-'1!'#$C((K6'(-*05'#$(*5"$(!"#$%#&'>($"(>'!1'*.'('*!6(
.&/.'($61"&26"&$($6'()%1.$(F(0'*1.(")(2'#'1%!(*4*%+*/%+%$0()"1($6'(>1&2.(>'1(1'4%':C((N#(
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+'..($6*#($6'("1%2%#*+(/1*#>;"#+0(-*05'#$(*5"$.CPM((Q'!*&.'("&1(
PM(K:"()&++(0'*1.(")(>*$*(:'1'(*4*%+*/+'()"1(EJ(>1&2.("#+0R(F(")($6'.'(EJ(>1&2.(:'1'(
1'5"4'>()1"5($6'(.*4%#2.(*#*+0.%.(/'!*&.'(2'#'1%!(5*#&)*!$&1'1.(>%>(#"$(1'-"1$(*#0(@AB.C(
(O E I - 0 3 - 0 9 - 0 0 5 1 0 M E D I C A R E PA Y M E N T S F O R N E W L Y AV A I L A B L E G E N E R I C D R U G S EP
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F I N D I N G S
!"#$%&!'"%"()!$!'$%*(+,-,'.%()'/0-'1$2!/'/02--'3+"2/-2!'.1'-"*0',2+&4!'
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On average, brand drugs were initially 3 times more expensive than their
generic versions
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FG'C"/"''
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F I N D I N G S
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F I N D I N G S
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F I N D I N G S
Table 2: First Generics With ASP Reporting Issues
HCPCS DrugFDA Generic
Approval DateEstimated Actual
Generic Entry Date
Period Coveredby First Reported
Generic ASP1
J7620Albuterol sulfate/
ipratropium bromide inh. soln. Dec. 21, 2006 JulySept. 2007 4Q 2007
J1451 Fomepizole inj. Dec. 14, 2007 Jan. 2008 2Q 2008
Q01672
Dronabinol oral, 2.5 mg June 27, 2008 July 2008 (none listed)3
Q01682
Dronabinol oral, 5 mg June 27, 2008 July 2008 (none listed)3
! Source: FDA's ANDA (Generic) Drug Approvals and OIG analysis.!1
Based on the first appearance of generic manufacturer NDC(s) in the ASP background file. See Appendix A for adescription of this analysis.
2These drugs were not included in our potential savings analysis.
3No generic ASPs were reported as of fourth-quarter 2009.
!O E I - 0 3 - 0 9 - 0 0 5 1 0 M E D I C A R E PA Y M E N T S F O R N E W L Y AV A I L A B L E G E N E R I C D R U G S "#
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R E C O M M E N D A T I O N S R E C O M M E N D A T I O N!
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R E C O M M E N D A T I O N
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AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL
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R E C O M M E N D A T I O N
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R E C O M M E N D A T I O N
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A P P E N D I X ~ ADetailed Methodology for Identifying First-Generic Drugs andTheir Dates of Market Entry
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approvals. #$%#&'()*#+,-.'/%0#1#/')*#,//#0(23)#/')*%0#240%(#5678)#
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A P P E N D I X ~ A
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A P P E N D I X ~ B!
Table B-1: First-Generic Drugs Included in Our Analysis
HCPCSCode
Drug NameBrandName
First GenericEntry Date
1
Part B Expenditures Duringthe Three Quarters of Initial
Generic Availability2
Potential Savings Duringthe Three Quarters of
Initial Generic Availability
J0207Amifostine, inj.,
500milligrams (mg) Ethyol May 2008 $8,479,381 $1,364,634J0692
Cefepime inj.,500 mg Maxipime Jan.Mar. 2008 $567,286 $48,719
J1325Epoprostenol inj.,
0.5 mg Flolan May 2008 $19,576,492 $66,109
J1451Fomepizole inj.,
15 mg Antizol Jan. 2008 $23 -$2
J1626Granisetron inj.,
0.1 mg Kytril Jan. 2008 $13,040,208 $1,816,964
J3030Sumatriptan
Succinate inj., 6 mg Imitrex Feb. 2009 $957 $75
J7517
MycophenolateMofetil oral,
250 mg Cellcept May 2009 $132,035,240 $28,958,160
J7620
Albuterol Sulfate/Ipratropium
Bromide inh. soln.,2.5 mg/0.5 mg Duoneb JulySept. 2007 $165,624,799 $32,073,194
J9206Irinotecan inj.,
20 mg Camptosar Mar. 2008 $90,705,689 $44,131,109
J9245
Melphalan inj.,
50 mg Alkeran June 2009 $277,347 $9,909
J9268Pentostatin inj.,
10 mg Nipent Aug. 2007 $3,915,369 $273,111
Q0166Granisetron oral,
1 mg Kytril Jan. 2008 $649,379 $375,497
Q0179Ondansetron oral,
8 mg Zofran Jan.Mar. 2007 $4,296,612 $1,859,387
Q2009Fosphenytoin inj.,
50 mg Cerebyx Aug. 2007 $61 $48
Q01673
Dronabinol oral,2.5 mg Marinol July 2008 (n/a) (n/a)
Q01683
Dronabinol oral,5 mg Marinol July 2008 (n/a) (n/a)
Total $439,168,842 $110,976,913Source: Office of Inspector General analysis of newly available generic drugs, 2009.1 For some drugs, we could not determine from the available data the specific month in which generics first became available. For these drugs, we
provided the first quarter of generic availability (e.g., JanuaryMarch 2008).2 Part B Analytics Reporting (98 percent of claims reported). Accessed on March 25, 2010.3
Generic manufacturers for these two drugs did not report any average sales prices and were therefore not included in our savings analysis.
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A P P E N D I X ~ C
Table C-1: Medicare Payment Amounts for 16 Newly Available Generic Drugs
QuarterJ0207
(2Q 2008)1
J0692(1Q 2008)
J1325(2Q 2008)
J1451(1Q 2008)
J1626(1Q 2008)
J3030(1Q 2009)
J7517(2Q 2009)
J7620(3Q 2007)
Q0(Brand Only)PaymentAmount $496.281 $8.026 $14.526 $12.924 $5.792 $72.575 $3.190 $1.148Q1(First GenericReaches Market)PaymentAmount $511.217 $5.718 $14.362 $13.731 $4.721 $74.704 $3.436 $1.105Q2 PaymentAmount $511.316 $6.749 $14.368 $14.115 $6.046 $84.495 $3.441 $1.079Q3 PaymentAmount
2 $424.029 $5.711 $14.332 $14.804 $5.341 $82.659 $2.494 $0.805
Q4 PaymentAmount
3 $386.293 $5.721 $14.355 $11.850 $4.329 $56.559 $2.600 $0.830
Q5 PaymentAmount $373.298 $5.249 $14.218 $11.412 $4.053 $43.545 $1.884 $0.581
Q6 PaymentAmount $367.756 $4.589 $14.101 $10.100 $3.292 $46.678 (dataunavailable) $0.307Q7 PaymentAmount $356.806 $4.417 $14.023 $8.753 $2.344 (dataunavailable) (dataunavailable) $0.273Q8 PaymentAmount $340.108 $3.781 $14.032 $8.146 $2.004 (dataunavailable) (dataunavailable) $0.243
1
Quarter and year in parenthesis denote the first quarter in which generics were available. (continued on next page)2
Q3 refers to the quarter in which the Medicare payment amount begins to reflect sales of the first generic(s).3Q4 refers to the quarter in which the Medicare payment amount fully reflects sales of the first generic(s).
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A P P E N D I X ~ C
Table C-1: Medicare Payment Amounts for 16 Newly Available Generic Drugs (Continued)Quarter
J9206(1Q 2008)
1
J9245(2Q 2009)
J9268(3Q 2007)
Q0166(1Q 2008)
Q0179(1Q 2007)
Q2009(3Q 2007)
Q01672
(3Q 2008)Q0168
2
(3Q 2008)
Q0(Brand Only)PaymentAmount $125.800 $1,624.598 $1,934.913 $50.436 $36.064 $5.555 $5.415 $10.835
Q1(First GenericReaches Market)PaymentAmount $126.309 $1,624.598 $1,977.801 $50.224 $36.829 $5.795 $5.387 $11.711
Q2 PaymentAmount $126.235 $1,624.598 $2,071.219 $46.955 $36.550 $5.813 $5.876 $11.838
Q3 PaymentAmount3 $74.753 $1,654.023 $1,858.684 $17.173 $25.029 $3.595 $5.822 $11.508
Q4 PaymentAmount
4 $36.997 $1,549.472 $1,828.915 $17.877 $18.543 $0.817 $5.824 $11.676
Q5 PaymentAmount $21.715 $1,500.321 $1,741.579 $16.583 $9.169 $1.217 $6.799 $13.515
Q6 PaymentAmount $18.296
(dataunavailable) $1,622.651 $9.244 $4.604 $0.728 $6.795 $13.567
Q7 PaymentAmount $14.955
(dataunavailable) $1,601.255 $5.261 $3.160 $0.607 $6.809 $13.604
Q8 PaymentAmount $13.433
(dataunavailable) $1,447.688 $7.082 $3.938 $0.617 $7.169 $14.165
Source: Centers for Medicare & Medicaid Services posted Part B payment limits.1
Quarter and year in parenthesis denote the first quarter in which generics were available.2 Not included in our savings analysis.3
Q3 refers to the quarter in which the Medicare payment amount begins to reflect sales of the first generic(s).4 Q4 refers to the quarter in which the Medicare payment amount fully reflects sales of the first generic(s).
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A P P E N D I X ~ DTable D-1: Estimated Generic Approval Timeline for the Top 26 Dollar-Volume Brand-Only Part B
Drugs (Biologics Excluded), According to FDA
Drug Name Brand NameFDA-Estimated Generic
Approval Timeline1
2009 Part BExpenditures
2
2009 Part BRank
3
Oxaliplatin Eloxatin Approved in generic form4
$307,305,870 8
Docetaxel Taxotere After February 10, 2012 $273,059,887 9
Zoledronic acid Zometa After April 30, 2012 $228,200,463 12
Pemetrexed Alimta Currently eligible for approval $224,725,011 13
Gemcitabine hydrochloride Gemzar Approved in generic form $214,841,468 14
Bortezomib Velcade After August 31, 2011 $157,915,565 19
Leuprolide acetate Lupron Approved in generic form $148,807,207 20
Palonosetron hydrochloride Aloxi After April 30, 2012 $141,432,119 22
Treprostinil sodium Remodulin After April 30, 2012 $112,277,602 26
Octreotide acetate Sandostatin Lar Depot After April 30, 2012 $107,672,719 28
Azacitidine Vidaza After May 19, 2011 $101,648,346 29
Zoledronic acid Reclast After May 18, 2011 $100,768,293 30
Arformoterol tartrate Brovana After March 30, 2012 $77,081,333 32
Paclitaxel protein-bound Abraxane After April 30, 2012 $72,033,094 36
Adenosine AdenoscanCurrently eligible for approval
(legal disputes remain) $69,316,718 39
Triptorelin pamoate Trelstar After April 30, 2012 $67,684,223 40
Decitabine Dacogen After May 2, 2013 $62,196,704 42
Doxorubicin hydrochloride liposome Doxil After May 17, 2014 $49,619,144 47
Iloprost Ventavis Currently eligible for approval $48,970,602 48
Mycophenolate acid Myfortic After January 17, 2012 $46,469,720 51
Sirolimus Rapamune After April 30, 2012 $45,449,381 52
Topotecan hydrochloride Hycamtin Approved in generic form $43,430,255 54
Fulvestrant Faslodex After March 30, 2012 $40,709,396 57
Ibandronate sodium Boniva Currently eligible for approval $25,710,811 66
Imiglucerase Cerezyme After April 30, 2012 $24,355,150 70
Verteporfin Visudyne After April 30, 2012 $17,308,914 80
Total $2,808,989,996Source: Food and Drug Administration (FDA) analysis of Part B drugs, 2009.1
Approximate date of April 30, 2012, is used by FDA to estimate how long it would take to approve an abbreviated new drug application if it issubmitted before November 10, 2009, with a Paragraph IV Patent Certification.
2Part B Analytics Reporting (98 percent of claims reported). Accessed on March 29, 2010. Figures do not add to total because of rounding.
3Rankings include single-source drugs, multiple-source drugs, and biologics.
4Generic versions of this drug were initially approved and marketed, but litigation brought by the brand manufacturer against the genericmanufacturers resulted in the discontinuation of generic sales.
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A P P E N D I X ~ E
Table E-1: Top 22 Dollar-Volume Biologics Under Part B
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Source: Food and Drug Administration analysis of Part B drugs, 2009.1Part B Analytics Reporting (98 percent of claims reported). Accessed on March 29, 2010.
2Rankings include single-source drugs, multiple-source drugs, and biologics.
Drug Name Brand Name2009 Part B
Expenditures1
2009 Part BRank
2
Ranibizumab Lucentis $814,869,580 1
Rituximab Rituxan $807,136,671 2
Bevacizumab Avastin $723,336,581 3
Infliximab Remicade $605,603,464 4
Pegfilgrastim Neulasta $493,788,366 5
Darbepoetin alfa Aranesp $426,599,502 6
Epoetin alfa Epogen/Procrit $332,792,303 7
Trastuzumab Herceptin $211,603,637 15
Cetuximab Erbitux $165,132,074 18
Abatacept Orencia $145,050,591 21
Antihemophilic factor VIII(Recombinant) (All brands) $125,289,250 24
Botulinum toxin type A Botox $88,997,730 31
Coagulation factor VIIa Novoseven $74,330,848 33
Filgrastim Neupogen $69,897,511 38
Natalizumab Tysabri $54,497,650 46
Omalizumab Xolair $43,285,268 55
Immune globulin Vivaglobin $42,709,895 56
Immune globulin Gammagard Liquid $30,226,662 61
Panitumumab Vectibix $27,170,683 63
Coagulation factor IXRecombinant Benefix $25,176,467 67
Antihemophilic factor VIII:CHuman (All brands) $24,453,801 69
Immune globulin, powder (All brands) $21,200,286 74
Total $5,353,148,820
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A P P E N D I X ~ F
Table F-1: Comparison of FDAs ANDA Approval Dates and Actual GenericEntry Dates
HCPCSCode
Drug NameFDA Generic
Approval DateEstimated Actual
Generic Entry Date
First Generics With Comparable Entry Dates
J0207 Amifostine, inj. Mar. 14, 2008 May 2008
J1325 Epoprostenol inj. Apr. 23, 2008 May 2008
J1451 Fomepizole inj. Dec. 14, 2007 Jan. 2008
J1626 Granisetron inj. Dec. 31, 2007 Jan. 2008
J3030 Sumatriptan succinate inj. Feb. 6, 2009 Feb. 2009
J9206 Irinotecan inj. Feb. 20, 2008 Mar. 2008
J9245 Melphalan inj. June 9, 2009 June 2009
J9268 Pentostatin inj. Aug. 7, 2007 Aug. 2007
Q0166 Granisetron oral Dec. 31, 2007 Jan. 2008
Q0179 Ondansetron oral Dec. 26, 2006 Jan.Mar. 2007
Q2009 Fosphenytoin inj. Aug. 6, 2007 Aug. 2007
Q01671
Dronabinol oral, 2.5 mg June 27, 2008 July 2008
Q01681
Dronabinol oral, 5 mg June 27, 2008 July 2008
First Generics With Conflicting Entry DatesJ0692 Cefepime inj. June 18, 2007 Jan.Mar. 2008
J7517 Mycophenolate mofetil oral July 29, 2008 May 2009
J7620Albuterol sulfate/
ipratropium bromide inh. soln. Dec. 21, 2006 JulySept. 2007
FDA-Identified First Generics Which Did Not Come to Market2
J92011
Gemcitabine inj. Dec. 18, 2008(Generics did notcome to market)
J32651
Torsemide inj. June 10, 2008(Generics did notcome to market)
FDA-Identified First Generics Which Temporarily Came to Market
J76261
Budesonide inh. soln. Nov. 18, 2008
(Products were launched inNov. 2008 and ceased being
distributed for sale by the genericmanufacturer later that month)
Source: Food and Drug Administration's (FDA) Abbreviated New Drug Application (ANDA) Generic Drug Approvals andOffice of Inspector General analysis.1
These drugs were not included in our savings analysis.
2No generics available as of fourth-quarter 2009.
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A P PEN 0 x GAgency Comments
/- ...( DEPARTMENT OF HEALTH & HUMAN SERVICES Cenlers for MedIcare & Medicaid Services
AdministrAtorWashington, DC 20201
OCT 0 7 2010DATE:TO: Daniel R. LevinsonInspector GeneralFROM: Donald Berwick, M.D.AdministratorSUBJECT: Office of Inspector General (OIG) Draft Report: Medicare Payments for NewlyAvailable Generic Drugs (OEI"03-09-0051 0)
The Centers for Medicare & Medicaid Services (CMS) appreciates the opportunity to review andrespond to the OIG Draft Report entitled, "Medicare Payments for Newly Available GenericDrugs" (OEI-03-09-0051 0). We appreciate the OIG's continuing efforts to examine paymentmade under the average sales price (ASP) methodology.The OIG report presents findings from a comparison ofMedicare payment amounts to marketprices for certain newly available generic drugs. The report finds differences between theMedicare payment limits and the market prices for the generic drugs and attributes thesedifferences primarily to the "two-quarter lag" inherent in the Medicare payment limit calculationprocess. The OIG claims that Medicare could have saved $111 million ifMedicare paymentlimits had reflected sales prices during the period of initial generic availability of 16 differentdrugs, and, therefore, urges that the two quarter lag be eliminated.However, this estimate is based on the premise that no time lag would exist between theintroduction and inclusion of generics in the ASP. Such potential savings could not be achievedbecause any calculation of payment that relies on manufacturer reporting would require a lagtime to allow manufacturers to calculate and submit their pricing data. Moreover, the 01G'sestimate also assumes that providers would immediately switch from branded to generic productswithout factoring the lag time associated with the introduction of any new product in the market.In addition, it is not clear from the report that the $111 million is not an annualized savingsamount, but instead a sum of potential savings over the course of several years.CMS notes that almost 95 percent of the OIG's reported savings are attributed to three drugs and,therefore, the 0I0's savings projections may not be accurate. Nearly $105 million of the $111million in projected savings is attributed to three products, mycophenolate mofetil (genericCeIlCept), albuterol sulfateiipratropium Bromide (generic DuoNeb) and irinotecan (genericCamptostar). We do not believe that extrapolating savings projections that are based on such asmall subset of drugs to all generic drugs correctly represents Part B drug price changes due tothe introduction ofgeneric drugs.
OEI030900510 MEDICARE PAYMENTS FOR NEWLY AVAILABLE GENERIC DRUGS 31
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A P P E N D I X ~ GA P P E N D I X ~ G
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A P P E N D I X ~ GA P P E N D I X ~ G
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A P P E N D I X ~ GA P P E N D I X ~ G
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A P P E N D I X ~ GA P P E N D I X ~ G
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