$12.6 Million Sandoz ASP Reporting Settlement Raises More Questions Than It Answers

Recently, HHS-OIG announced a first-of-its-kind settlement over pharmaceutical manufacturer reporting of Average Sales Price (ASP). Sandoz, Inc. agreed to pay a civil monetary penalty of $12.64 million for alleged failure to submit accurate ASP data to CMS.

ASP reporting was adopted in large part to create a mechanism whereby government drug reimbursement rates for biologics and physician-administered drugs are tied to the actual purchase price of those drugs. ASP is used by Medicare, and some Medicaid programs, to reimburse biologics and physician-administered drugs, such as chemotherapy drugs. Federal law requires pharmaceutical manufacturers to submit ASP information for each of these drugs to CMS on a quarterly basis. The statute authorizes imposition of a maximum civil penalty of $100,000 for each item of false information that is knowingly provided in the ASP reporting to CMS. Additional statutory authority provides that:

If the Secretary determines that a manufacturer has made a misrepresentation in the reporting of the manufacturer's average sales price for a drug or biological, the Secretary may apply a civil money penalty in an amount of up to $10,000 for each such price misrepresentation and for each day in which such price misrepresentation was applied. So we know the legal authority that is the basis for HHS-OIG's sanction. But we don't know much more than that. In fact, the settlement itself raises more questions than it answers.

How did the case arise?

We don't know. Whether the case was the result of a self-disclosure, OIG investigation, or whistleblower report, was not addressed by HHS-OIG in its press release on the case. Sandoz did not issue a press release regarding the settlement.

What, allegedly, did Sandoz do?

Not much detail was provided. The settlement alleges that from January 2010 through March 2012 Sandoz failed to submit accurate quarterly ASP data to CMS. Neither the settlement nor the HHS-OIG press release provide information as to what Sandoz drugs were implicated, the nature of the price reporting inaccuracy, or the impact of inaccuracy. Sandoz admitted no liability in entering into the settlement.

How was the settlement amount determined?

Once again, we don't know. The amount is termed a civil monetary penalty, and the settlement documents and press release all cite to penalty authority.

Given ASP reporting utilized for Medicare and Medicaid reimbursement, we must question whether inaccurate ASP had an...

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