Drug prices & Part D
OIG Report Finds Medicare Part B Drug Price-Substitution Mechanism Saved 1.6 Million Dollars in 2024
An annual OIG analysis posted Wednesday found CMS applied price reductions to 14 physician-administered drugs based on 2024 market data, while reporting that errors in manufacturer price submissions blocked the review of 31 additional drugs.
By the Goodsurance editorial teamSeptember 24, 2026
The HHS Office of Inspector General posted a new annual report Wednesday tracking a Medicare safeguard that limits what the program pays for certain drugs given in doctors' offices and clinics.
Under the mechanism, OIG each year compares two price series that manufacturers report for Medicare Part B drugs: the average sales price (ASP), which sets Medicare's payment rate, and the average manufacturer price (AMP), reported separately to Medicaid. When a drug's ASP exceeds its AMP by more than 5 percent for two consecutive quarters, OIG refers the drug to CMS, which then substitutes an AMP-based rate for the ASP-based rate in its payment calculation.
Federal watchdogs found Medicare's Part B drug price safeguard saved 1.6 million dollars in 2024, but flagged data errors that blocked the review of 31 more drugs.
For 2024 data, the review identified 14 drugs that met the threshold. CMS applied price substitutions to those drugs, saving Medicare and its enrollees an estimated 1.6 million dollars in 2024. Since CMS first applied this safeguard in 2013, cumulative savings have reached approximately 78 million dollars across 101 drugs.
The report also flagged a data quality concern. For 31 additional drugs reviewed for 2024, potential errors in the AMP figures submitted by manufacturers prevented OIG from determining whether those drugs would qualify for a substitution. OIG said it is working with CMS to address the data accuracy issue.
The safeguard matters most for beneficiaries receiving treatments in clinical settings, including cancer therapies, infused biologics, and drugs for autoimmune conditions. Part B drug cost-sharing is typically 20 percent of the Medicare payment rate, so when the payment rate falls, the patient's share falls as well.
In plain words
Medicare has a safety check for certain drugs given at a doctor's office. A federal watchdog found that in 2024, this check helped lower prices for 14 drugs and saved Medicare and its members 1.6 million dollars. Since 2013, total savings from this program add up to 78 million dollars. But for 31 other drugs, data from drug companies had errors, so the watchdog could not tell if those prices were too high. The government is working to fix the data problem.
Understand the basics first
Source: OIG
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