OIG: Government should consider more drug substitution

Drug substitutions saved the government $13 million last year, but more drug substitutions under Medicare Part B would have saved an additional $6 million, the Office of Inspector General for Health and Human Services concluded in a recent report to Congress. 

Under the Centers for Medicare & Medicare Services' price substitution policy, 15 drug codes were subject to reimbursement reductions on the basis of data from 2013, according to the OIG report released February 27. “We estimate that if CMS had expanded its price substitution criteria to include drug codes with complete average manufacturer price data in a single quarter or certain codes with partial AMP [average manufacturer price] data, the agency could have generated almost $6 million in additional savings,” OIG noted.

While it acknowledged HHS' “cautious approach” in expanding drug substitution criteria to prevent impeding beneficiary access to needed drugs, the OIG said CMS should take steps to ensure that Medicare and its beneficiaries do not overpay for drugs with average sales prices that exceed the AMPs by the threshold percentage. 

“Therefore, we recommend that CMS consider pursuing rulemaking to expand the price substitution policy to include at least some additional drug codes,” the OIG noted, adding that CMS said more experience with the policy is needed before it is expanded.