Medicare: Drug Purchase Prices for CMS Consideration in Hospital
Outpatient Rate-Setting (30-JUN-05, GAO-05-581R).
Medicare pays hospitals for drugs that beneficiaries receive as
part of their treatment in hospital outpatient departments.
Specifically, the Centers for Medicare & Medicaid Services (CMS)
in the Department of Health and Human Services (HHS) uses an
outpatient prospective payment system (OPPS) to pay hospitals
fixed, predetermined rates for services. These services include
drugs given to beneficiaries in outpatient settings. When OPPS
was first developed as directed by the Balanced Budget Act of
1997, the rates for hospital outpatient services and drugs were
based on hospitals' 1996 median costs. However, these rates
prompted concerns that payments to hospitals would not reflect
the cost of newly introduced pharmaceutical products--drugs,
biologicals, and radiopharmaceuticals--used to treat, for
example, cancer, rare blood disorders, and other serious
conditions. In turn, congressional concerns were raised that
beneficiaries might lose access to some of these products if
hospitals avoided providing them because of a perceived shortfall
in payments. In response to these concerns, the Medicare,
Medicaid, and SCHIP Balanced Budget Refinement Act of 1999
authorized pass-through payments, which are a way to augment, on
a temporary basis, the OPPS payments for newly introduced
pharmaceutical products first used after 1996. The Medicare
Prescription Drug, Improvement, and Modernization Act of 2003
(MMA) modified this payment method for some of these
pharmaceutical products. As part of the modification, the MMA
defined a new payment category--specified covered outpatient
drugs (SCOD)--which includes many of these newly introduced
pharmaceutical products. The MMA defined a SCOD as a drug or
radiopharmaceutical used in hospital outpatient departments,
covered by Medicare, and for which CMS has established a separate
ambulatory payment classification (APC) group. In addition to
these criteria, the MMA required that, for a drug to be a SCOD,
it must have been paid for on a pass-through basis on or before
December 31, 2002. The MMA established a methodology for CMS to
follow in setting payment rates for SCODs in 2004 and 2005. The
MMA excluded, among other drugs, orphan drugs--certain drugs or
biologicals that are used for rare diseases and conditions--from
being paid as SCODs for 2004 and 2005 and was not explicit about
whether orphan drugs will be SCODs after 2005. CMS defines SCODs
by their Healthcare Common Procedure Coding System (HCPCS) codes,
which CMS assigns to products, supplies, and services for billing
purposes. Drug HCPCS are categories that include one or more
component drugs with similar chemical entities. These drugs
within a HCPCS can vary by manufacturer, strength, and package
size. The MMA directed us to collect data on hospital acquisition
costs of SCODs and to provide information based on these data to
the Secretary of Health and Human Services for his consideration
in setting 2006 Medicare payment rates. The MMA directed us to
collect these data by surveying a large sample of hospitals.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-05-581R
ACCNO: A28618
TITLE: Medicare: Drug Purchase Prices for CMS Consideration in
Hospital Outpatient Rate-Setting
DATE: 06/30/2005
SUBJECT: Hospitals
Prices and pricing
Medicare
Drugs
Medical services rates
Surveys
Payments
Cost analysis
Patient care services
Data collection
Medicare Hospital Outpatient Prospective
Payment System
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GAO-05-581R
United States Government Accountability Office Washington, DC 20548
June 30, 2005
The Honorable Michael O. Leavitt
The Secretary of Health and Human Services
Subject: Medicare: Drug Purchase Prices for CMS Consideration in Hospital
Outpatient Rate-Setting
Dear Mr. Secretary:
Medicare pays hospitals for drugs that beneficiaries receive as part of
their treatment in hospital outpatient departments. Specifically, the
Centers for Medicare & Medicaid Services (CMS) in the Department of Health
and Human Services (HHS) uses an outpatient prospective payment system
(OPPS) to pay hospitals fixed, predetermined rates for services. These
services include drugs given to beneficiaries in outpatient settings. When
OPPS was first developed as directed by the Balanced Budget Act of 1997,1
the rates for hospital outpatient services and drugs were based on
hospitals' 1996 median costs. However, these rates prompted concerns that
payments to hospitals would not reflect the cost of newly introduced
pharmaceutical products- drugs, biologicals,2 and
radiopharmaceuticals3-used to treat, for example, cancer, rare blood
disorders, and other serious conditions. In turn, congressional concerns
were raised that beneficiaries might lose access to some of these products
if hospitals avoided providing them because of a perceived shortfall in
payments.
In response to these concerns, the Medicare, Medicaid, and SCHIP Balanced
Budget Refinement Act of 1999 authorized pass-through payments, which are
a way to augment, on a temporary basis, the OPPS payments for newly
introduced pharmaceutical products first used after 1996.4 The Medicare
Prescription Drug,
1Pub. L. No. 105-33, S: 4523, 111 Stat. 251, 445-450.
2In this report, we use the term "drugs" to refer to both drugs and
biologicals. Biologicals are products derived from living sources,
including humans, animals, and microorganisms.
3Radiopharmaceuticals are radioactive drugs used for diagnostic or
therapeutic purposes; for this report, radiopharmaceuticals are not
included in the term "drugs."
4Pub. L. No. 106-113, app. F, S: 201(b), 113 Stat. 1501A-321,
1501A-337-1501A-339.
Improvement, and Modernization Act of 2003 (MMA) modified this payment
method for some of these pharmaceutical products.5 As part of the
modification, the MMA defined a new payment category-specified covered
outpatient drugs (SCOD)- which includes many of these newly introduced
pharmaceutical products. The MMA defined a SCOD as a drug or
radiopharmaceutical used in hospital outpatient departments, covered by
Medicare, and for which CMS has established a separate
6
ambulatory payment classification (APC) group. In addition to these
criteria, the MMA required that, for a drug to be a SCOD, it must have
been paid for on a passthrough basis on or before December 31, 2002. The
MMA established a methodology for CMS to follow in setting payment rates
for SCODs in 2004 and 2005. The MMA excluded, among other drugs, orphan
drugs-certain drugs or biologicals that are used for rare diseases and
conditions-from being paid as SCODs for 2004 and 2005 and was not explicit
about whether orphan drugs will be SCODs after 2005.7 CMS defines SCODs by
their Healthcare Common Procedure Coding System (HCPCS) codes, which CMS
assigns to products, supplies, and services for billing purposes. Drug
HCPCS are categories that include one or more component drugs with similar
chemical entities. These drugs within a HCPCS can vary by manufacturer,
strength, and package size.
The MMA directed us to collect data on hospital acquisition costs of SCODs
and to provide information based on these data to the Secretary of Health
and Human Services for his consideration in setting 2006 Medicare payment
rates.8 The MMA directed us to collect these data by surveying a large
sample of hospitals.
In summary, we obtained from our survey data the average and median
purchase prices for each of 53 SCOD drug categories. We report purchase
price information for those SCOD categories containing more than one drug.
Purchase price refers to the price that hospitals pay upon receiving the
product and is the key component of hospital acquisition costs. The 53
SCOD categories represent 86 percent of all Medicare spending on SCODS in
the first 9 months of 2004. The purchase price information takes account
of discounts taken at the time hospitals received the
5Pub. L. No. 108-173, S: 621(a), 117 Stat. 2066, 2307-2310.
6Under OPPS, CMS groups services into APCs on the basis of their clinical
and cost similarities. All services that are grouped into the same APC
have the same base payment rate. The MMA required CMS to establish a
separate APC for a pharmaceutical product if the cost per administration
is $50 or more. MMA 117 Stat. 2310. Drugs that cost less than $50 per
administration are bundled with other services for payment purposes. CMS
has interpreted the cost per administration as the median cost per day.
7MMA 117 Stat. 2308.
8MMA 117 Stat. 2308. In addition, the MMA required the Medicare Payment
Advisory Commission, known as MedPAC, to report on hospitals' overhead
costs and related expenses for SCODs for the Secretary's consideration in
setting 2006 payment rates. MMA 117 Stat. 2309. Overhead costs are not
part of acquisition costs. MedPAC's mandated report is Chapter 6, "Payment
for pharmacy handling costs in hospital outpatient departments," in Issues
in a Modernized Medicare Program (Washington, D.C.: MedPAC, June 2005).
product but excludes any rebates paid to hospitals subsequent to the
receipt of the product.
Scope and Methodology
This report presents results drawn from our survey data on 53 SCOD
categories for the period July 1, 2003, through June 30, 2004.9 These 53
SCOD categories represented 86 percent of Medicare spending for SCODs
during the first 9 months of 2004.10 We report the average and median
purchase prices for the SCOD categories containing more than one drug; we
do not include purchase price information where there is only one drug in
a category because of the potential proprietary sensitivity of
11
such information. The purchase price information takes account of volume
and other discounts, but it excludes rebates, which manufacturers may give
after a hospital has paid for the drugs, and payments made to hospitals by
group purchasing organizations, which negotiate prices with manufacturers
on behalf of their member hospitals. In a subsequent report, we will
provide information on the radiopharmaceuticals that constituted an
additional 9 percent of Medicare spending on SCODs during the first 9
months of 2004. These two reports together provide purchase price
information on SCODs that accounted for 95 percent of all Medicare
spending on SCODs during the first 9 months of 2004.
To produce average and median purchase prices, we conducted a survey of
1,400 acute care, Medicare-certified hospitals,12 expecting that this
would yield responses
13
from about 1,000 hospitals. We conducted the survey from September 27,
2004, through February 22, 2005, and received usable information from
1,157 hospitals, which gave us a response rate of 83 percent. We asked the
hospitals to provide price data for SCODs purchased from July 1, 2003,
through June 30, 2004. Using our survey data, we calculated average and
median purchase prices. To ensure the soundness of our approach to data
collection and analysis, we obtained comments from an advisory panel of
experts in pharmaceutical economics, pharmacy, medicine, survey sampling,
and Medicare payment. To assess the reliability of our data, we checked
for anomalies and outliers, asked hospitals for clarification as needed,
and discussed technical issues with a hospital pharmacist. On this basis,
we determined that the
9After September 2004, when we began collecting data, CMS divided two of
these categories into two SCOD categories each, in effect adding two
categories and resulting in a total of 55 SCOD categories.
10For this report, the term SCOD includes both pharmaceutical products
that currently meet the definition of SCODs and those that do not meet the
definition now but that may be considered SCODs in the future. The
pharmaceutical products in this report that do not meet the definition of
SCODs include orphan drugs and drugs that are currently on pass-through
status.
11We have provided HHS with the average and median purchase prices from
our survey for all 53 SCOD categories-both those included in and those
excluded from this report-and their component drugs.
12Forty-eight of these hospitals were in our pilot survey, which began on
August 5, 2004.
13We contracted for data collection and much of the data processing with a
large survey firm with experience in conducting health care surveys.
data were sufficiently reliable for our purposes. (For details on our
methods, see enc. I.)
Our results have certain limitations. First, despite a high survey
response rate and a large sample size, our estimates of average and median
purchase prices are more precise for drugs that were purchased by many
hospitals than for drugs that were purchased by relatively few hospitals.
Second, we limited our detailed results to hospitals' purchase prices
because we could not fully account for rebates or payments from group
purchasing organizations. Third, the average and median purchase prices we
report refer to a specific time period and might have increased or
decreased since then. We performed our work according to generally
accepted government auditing standards from March 2004 through June 2005.
Hospitals' Acquisition Costs for Selected SCOD Categories
The following section presents detailed information on purchase prices-the
key component of hospitals' acquisition costs-for certain SCOD
categories14 for the period July 1, 2003, through June 30, 2004. We also
present limited information on rebates, another component of acquisition
costs.
Table 1 contains information on average and median purchase prices. We
order the SCOD categories by their rank in Medicare spending for drug
SCODs and have identified the SCOD categories by their HCPCS codes.15
These SCOD categories accounted for 86 percent of all Medicare spending on
SCODs for the period January 1 through September 30, 2004. For each SCOD
category with more than one drug, we present both the average and the
median purchase prices, as well as other information that provides
context, including the CMS payment rate and average sales price (ASP). The
CMS payment rate is the payment rate specified for each HCPCS for 2005,
and ASP is the average price for a drug based on a manufacturer's sales to
all purchasers in the United States, with certain exceptions.
14Although SCODs by definition are used in hospital outpatient
departments, the data we received from hospitals may represent drugs that
were used for both inpatients and outpatients and for Medicare and
non-Medicare patients.
15For the specific drugs-identified by National Drug Code (NDC)-within
each HCPCS, see enc. II.
Table 1: Purchase Prices for Drugs Accounting for 86 Percent of Medicare
Spending on SCODs
Rank in Medicare spending on drug SCODs HCPCS code Description
% of
Medicare Medicare
spending spending Number Total CMS ASP 95% 95%
on confidence confidence
SCOD, on of number payment (average interval interval
2004a of the of the
($ in SCODs, hospitals of rate sales average median
for purchase purchase
2004b 2005d price)e
millions) in sample hospitalsc ($) ($) priceg ($) priceg ($)
Average purchase pricef ($)
Median purchase priceh ($) Rank in Medicare spending on drug SCODs HCPCS
code Description
1 Q0136 Injection, Epoetin
Alpha
(for non-ESRD
use), per
9.25 9.74
1,000 units 199.8 10.1 973 2,758 11.09 9.55-9.94 10.12
10.11-10.13
414.92 412.31
2 J9310 Rituximab, 100 mg 158.4 8.0 871 437.83 407.43-417.20
412.30
1,418 412.13-412.52
3 J2505 Injection,
Pegfilgrastim,
6 mg 144.8 7.3 759 1,177 2,448.50 i i i i2,017.55
4j Q9941 Injection, Immune
Globulin,
Intravenous,
36.54 36.50
k k 626 l 80.68 36.37-36.63
37.24
Lyophilized, 1 g 37.15-37.24
4j Q9943 Injection, Immune
Globulin,
Intravenous,
53.04 50.63
Non-Lyophilized, 1 k k 281 l 80.68 50.11-51.15
g 50.96
50.96-52.06
5 J1745 Injection,
Infliximab,
10 mg 114.8 5.8 897 1,903 57.40 i i i i50.20
6 Q0137 Injection,
Darbepoetin
alfa, 1 mcg
(non-ESRD
3.04 3.00
use) 100.6 5.1 743 1,117 3.66 2.95-3.05 3.09
3.06-3.11
278.95 295.03
7 J9170 Docetaxel, 20 mg 73.7 3.7 829 312.69 294.10-295.96
294.61
1,257 294.46-294.89
71.46 132.10
8 J9045 Carboplatin, 50 mg 70.7 3.6 893 129.96 131.65-132.55
132.69
1,482 132.55-132.83
9 C9205 Injection,
Oxaliplatin,
77.86 75.91
per 5 mg 67.0 3.4 708 1,172 82.53 74.90-76.91
77.69
77.65-77.76
10 J3487 Injection,
Zoledronic
187.47 185.27
Acid, 1 mg 66.9 3.4 862 1,316 197.87 183.71-186.83
190.67
190.26-191.01
11 J9201 Gemcitabine Hcl,
108.79 105.69
200 mg 55.0 2.8 855 1,317 105.73 105.13-106.24
106.54
106.44-106.65
119.56 116.31
12 J9206 Irinotecan, 20 mg 39.4 2.0 786 127.33 113.87-118.75
122.67
1,109 122.16-123.13
13 J2324 Injection,
Nesiritide,
0.25 mg 37.6 1.9 892 1,619 66.23 i i i i69.64
17.70 14.45
14 J9265 Paclitaxel, 30 mg 32.0 1.6 792 79.04 14.44-14.46
14.45
1,398 14.45-21.34
49.99 46.72
15 J9355 Trastuzumab, 10 mg 31.4 1.6 679 50.79 45.92-47.53
47.97
1,089 47.93-48.04
16 J9217 Leuprolide Acetate
(for
depot suspension),
213.83 234.05
7.5 mg 30.8 1.6 804 1,319 543.72 223.21-244.90
198.88
195.83-215.41
17 J0256 Injection, Alpha 1
-
Proteinase
Inhibitor -
3.06 2.35
Human, 10 mg 20.9 1.1 38 279 3.72 2.33-2.37 2.46
2.27-2.46
GAO-05-581R
Medicare
Hospital
Outpatient Drug
5 Prices
% of
Medicare Medicare
spending spending Number Total CMS ASP 95% 95%
on confidence confidence
SCOD, on of number payment (average interval interval
2004a of the of the
SCODs, of rate sales average median
($ in hospitals for purchase purchase
2004b 2005d price)e
millions) in sample hospitalsc ($) ($) priceg ($) priceg ($)
Average purchase pricef ($)
Median purchase priceh ($)
18 J9035m Injection,
Bevacizumab,
10 mg 19.8 1.0 436 916 57.11 53.88 53.31 53.01-53.61 53.72 53.69-53.75
Injection,
19 J1441 Filgrastim
(G-
CSF), 480 17.1 0.9 928 1,679 274.40 261.46 257.21 253.46-260.96 253.64 253.45-253.78
mcg
20 J1950 Injection,
Leuprolide
Acetate (for depot
suspension), per
3.75 mg 16.9 0.9 541 904 451.98 409.18 454.10 453.04-455.17 454.66 454.03-455.72
21 J9001 Doxorubicin
Hydrochloride,
all lipid
formulations, 16.3 0.8 614 955 343.78 338.66 336.33 332.22-340.44 338.70 338.28-338.97
10 mg
22 J2353 Injection,
Octreotide,
depot form for
intramuscular injection,
1 mg 15.7 0.8 545 852 69.44 80.95 71.13 69.63-72.62 74.04 73.54-74.87 23
J9055m Injection, Cetuximab, i i i i
10 mg 15.1 0.8 286 506 49.66 46.85 24 J9041m Injection, Bortezomib,
14.1 0.7 452
0.1 mg 631 28.38
26.77
13.9 0.7 585
25 J9350 858 697.76
Topotecan, 4 699.75 674.91
mg 656.60-693.21
709.19
706.34-710.50
26 J1440
Injection,
Filgrastim
(G-
CSF), 300 mcg
13.0 0.7 956
1,914 162.41
165.23 161.61
156.81-166.42
159.18
159.04-159.31
27 J1785
Injection,
Imiglucerase,
per unit 12.9
0.7 41 59 3.91
3.69 3.62
3.60-3.64 3.62
3.61-3.66
28 J3396
Injection,
Verteporfin,
0.1 mg 12.3 i
0.6 10 45 8.49 i
8.48 i
i
29 J9202
Goserelin
Acetate
11.4 0.6 392
529 390.09
Implant, per 181.78 201.76
3.6 mg 193.30-210.23
206.56
175.73-323.33
30 J1626
Injection,
Granisetron
Hydrochloride,
100 mcg 11.1
0.6 682 988
16.20 6.71
6.45 6.27-6.62
6.61 6.60-6.64
31 J0585
Botulinim
Toxin Type A,
i i i i
i i i i
per unit 10.8 0.5 480 1,062 4.32 4.44 32 J0207 Injection, Amifostine,
500 mg 10.5
0.5 477 705
395.75 403.84
33 J2430
Injection,
Pamidronate
Disodium, per
30 mg 10.2
0.5 945 1,567
128.74 54.10
58.49
51.51-65.47
72.59
71.50-72.72
34 J9390
Vinorelbine
Tartrate,
per
9.3 0.5 568
833 52.78
10 mg 58.20 48.15
48.13-48.16
48.14
48.13-52.05
35 J2993
Injection,
Reteplase,
18.1 mg 8.9
0.4 505 1,073
1,192.09
832.49 846.53
844.18-848.87
845.36
844.48-846.87
i i i i
6 GAO-05-581R Medicare Hospital Outpatient Drug Prices
Rank in Medicare spending on drug SCODs HCPCS code Description
% of
Medicare Medicare
spending spending Number Total CMS ASP 95% 95%
on confidence confidence
SCOD, on of number payment (average interval interval
2004a of the of the
SCODs, of rate sales average median
($ in hospitals for purchase purchase
2004b 2005d price)e
millions) in sample hospitalsc ($) ($) priceg ($) priceg ($)
Average purchase pricef ($)
Median purchase priceh ($)
36 J9293 Injection, Mitoxantrone Hydrochloride, per 5 mg 8.4 0.4 672 1,181
313.96 305.36 297.00 296.19-297.82 295.62 295.46-295.78 37 J9185
Fludarabine Phosphate, 50 mg 7.6 0.4 669 891 311.09 243.05 293.99
291.43-296.56 298.44 298.37-298.68 38 C1305 Apligraf(R), per 44 square
7.0 0.4
centimeters 63 450
1,130.88
1,114.74
39 J9395
Injection,
Fulvestrant,
25 mg 6.9
0.3 468 778
79.65 76.78
74.63
74.45-74.80
75.03
74.95-75.18
40 J3100
Injection,
Tenecteplase,
i
i
i
i
i i i i
50 mg 6.8 0.3 509 1,181 2,350.98 1,901.29 41 J9305m Injection, Pemetrexed,
i i i i
10 mg 5.6 0.3 162 251 40.54 38.25 42 J9160 Denileukin Diftitox,
300 mcg 5.6
0.3 73 95
1,438.80
1,144.18
43 J0180 m Injection,
Agalsidase
Beta, 1 mg 5.3
0.3 29 49
121.11 114.26
111.33
111.08-111.58
109.71
108.18-111.09
44 Q0166
Granisetron
Hydrochloride,
1 mg,
4.8 0.2 541
886 39.04
oraln 31.04 24.86
24.82-24.89
23.99
21.58-24.94
45 J2469m Injection,
Palonosetron
i
i
i
i
i i i i
Hcl, 25 mcg 4.6 0.2 295 525 18.09 17.06 i i i i
46 J9010 Alemtuzumab, 10 mg 4.4 0.2 236 356 541.46 478.73 47o Q9942
Injection, Immune
Globulin, Intravenous,
p p q
Lyophilized, 10 mg 626 0.75 0.37 0.37 0.36-0.37 0.37 0.37-0.37 47o Q9944
Injection, Immune
Globulin, Intravenous,
pp q
Non-Lyophilized, 10 mg 281 0.75 0.53 0.51 0.50-0.51 0.51 0.51-0.52 48
J7190 Factor VIII
(Antihemophilic Factor,
r
Human) per I.U. 4.2 0.2 55 122 0.76 0.60 0.46 0.46-0.46 0.46 49 J0130
Injection, Abciximab,
i i i i
10 mg 4.0 0.2 570 797 448.22 417.35 50 J0850 Injection,
Cytomegalovirus
Immune Globulin
Intravenous (Human),
i i i i
per vial 3.8 0.2 156 260 622.13 632.67 51 J1327 Injection, Eptifibatide,
5 mg 3.7 0.2 911 1,661 11.21 11.79 12.49 12.35-12.63 11.03 10.75-12.39
7 GAO-05-581R Medicare Hospital Outpatient Drug Prices
Rank in Medicare spending on drug SCODs HCPCS code Description
% of
Medicare Medicare
spending spending Number Total CMS ASP 95% 95%
on confidence confidence
SCOD, on of number payment (average interval interval
2004a of the of the
SCODs, of rate sales average median
($ in hospitals for purchase purchase
2004b 2005d price)e
millions) in sample hospitalsc ($) ($) priceg ($) priceg ($)
Average purchase pricef ($)
Median purchase priceh ($)
52 J9214
Interferon,
Alfa-2B,
Recombinant,
1 million
3.6 0.2 619
954 13.00
units 12.25 11.20
11.02-11.37
11.93
11.78-11.98
53 C9201 (R) , per
Dermagraft 37.5
i
i
i
square centimeters 3.4 0.2 2 80 529.54 545.10 i
Source: GAO survey and CMS.
Notes: ESRD = end-stage renal disease, g = gram, I.U. = international
unit, mcg = microgram, and mg = milligram.
aMedicare spending is for the period January 1, 2004, through September
30, 2004.
bThe percentage of Medicare spending is based on Medicare spending for all
SCODs-both drugs and radiopharmaceuticals.
cThis estimate of the total number of hospitals in the population is based
on our sample.
dThis is the payment rate specified for each HCPCS for 2005. It
incorporates CMS's April 2005 update.
eCMS publishes the ASP plus 6 percent for certain drugs used in
physicians' offices. These amounts are based on data provided by
manufacturers each quarter. We are reporting ASPs for the quarter
beginning in April 2005. ASPs reported here do not include the 6 percent
added by CMS.
fThis price is based on data provided by the hospitals in our survey and
does not reflect any other costs associated with purchasing or
administering the product. We asked hospitals to report prices for drugs
purchased from July 1, 2003, through June 30, 2004. We weighted the prices
by the volume purchased as well as by the sample weights. We have excluded
prices under the 340B program, a federal program that provides drug price
discounts for certain health care entities, including those that provide
health care services for low-income individuals and individuals in
medically underserved areas. (42 U.S.C. S: 256b (2000)).
gThe confidence interval measures the precision of the estimate. The
narrower the interval, the greater the precision.
hThe median purchase price is the midpoint of all prices reported by
hospitals in our sample. Half of the prices reported by hospitals are
above the median and half are below. The median is weighted by volume
purchased and by hospital sample weights. The average purchase price
excludes prices paid under the 340B program.
iFor HCPCS codes that contain only one National Drug Code (NDC), we do not
include information on the average or median purchase price because of the
potential proprietary sensitivity of such information.
jOn April 1, 2005, CMS replaced J1563, Injection, Immune Globulin,
Intravenous, 1g, with two new codes: Q9941 and Q9943. J1563 was ranked
fourth in total Medicare spending on SCODs from January 1, 2004, to
September 30, 2004.
kJ1563, Injection, Immune Globulin, Intravenous, 1g, accounted for $127.1
million in Medicare spending from January 1, 2004, through September 30,
2004, which was 6.4 percent of total Medicare spending on SCODs for that
time period.
lOn April 1, 2005, CMS replaced J1563, Injection, Immune Globulin,
Intravenous, 1g, with two new codes: Q9941 and Q9943. Because J1563 was
replaced by two codes, we could not estimate the total number of hospitals
in the population for these new codes individually.
mOn January 1, 2005, CMS replaced C9214, C9215, C9207, C9213, C9208, and
C9210 with J9035, J9055, J9041, J9305, J0180, and J2469, respectively. The
ranks for the new codes correspond to the ranks in total Medicare spending
on SCODs from January 1, 2004, to September 30, 2004, for the former
codes.
nThe complete description for HCPCS Q0166 is "Granisetron Hydrochloride, 1
mg, Oral, Food and Drug Administration (FDA) Approved Prescription
Anti-Emetic, for Use as a Complete Therapeutic Substitute for an IV
(intravenous) Anti-Emetic at the Time of Chemotherapy Treatment, Not to
Exceed a 24 Hour Dosage Regimen."
8 GAO-05-581R Medicare Hospital Outpatient Drug Prices
oOn April 1, 2005, CMS replaced J1564, Injection, Immune Globulin,
Intravenous, 10 mg, with two new codes: Q9942 and Q9944. J1564 was ranked
47th in total Medicare spending on SCODs from January 1, 2004, to
September 30, 2004.
pJ1564, Injection, Immune Globulin, Intravenous, 10 mg accounted for $4.4
million in Medicare spending from January 1, 2004, through September 30,
2004, which was 0.2 percent of total Medicare spending on SCODs for that
time period.
qOn April 1, 2005, CMS replaced J1564, Injection, Immune Globulin,
Intravenous, 10 mg, with two new codes: Q9942 and Q9944. Because J1564 was
replaced by two codes, we could not estimate the total number of hospitals
in the population for these new codes individually.
rFor this SCOD, our sample data cannot be extrapolated to compute a
confidence interval for the median.
9 GAO-05-581R Medicare Hospital Outpatient Drug Prices
In contrast to the detailed purchase price information in table 1, our
information on the rebate component of hospitals' acquisition costs is
limited. Nearly 60 percent of our sample hospitals reported receiving one
or more rebates. Over half of those hospitals received one or more rebates
for a specific SCOD category, while the others received rebates for a set
of drugs (and sometimes other products). In the latter case, it is
generally not feasible to allocate rebates to specific drugs.
Rebates were not spread uniformly across SCOD categories. For example, for
14 SCOD categories, no hospital reported receiving a rebate. For nearly
all other SCOD categories, rebates were reported by a small number of
hospitals. However, the effect of rebates on hospital acquisition costs
may be significant for some hospitals purchasing certain drugs. For one
high-volume drug, rebates were reported by onefifth of all hospitals that
purchased drugs in at least one SCOD category. For some hospitals, these
rebates were as high as 29 percent of the drug's purchase price. Averaged
over all hospitals, rebates for this drug relative to its purchase price
were likely to be considerably smaller, since most hospitals did not
report receiving large rebates.
Agency Comments and Our Evaluation
We received comments on a draft of this report from HHS (see enc. III).
HHS commended our efforts and acknowledged the challenges of accurately
surveying hospitals for drug acquisition costs. HHS also stated that it
had concerns regarding the limitations of our study. For example, HHS
cited the difficulties that hospitals had in attributing rebates from
manufacturers and payments from group purchasing organizations to
hospitals' purchases of individual drug products. In addition, HHS
anticipated concerns that purchase prices of drugs might have changed
after the sample period for which we collected price data. HHS stated that
it would take account of our data on hospital purchase prices in
developing 2006 Medicare payment rates for SCODs. HHS added that, in
developing payment rates for 2006 and future years, it considered it
important to have a methodology that can be updated appropriately and that
reflects rebates and other components of drug acquisition costs.
Despite the limitations that CMS noted, we believe our estimates of
average purchase price for each SCOD category that we report are
sufficiently accurate for use in developing Medicare rates for SCOD
categories. Moreover, these data are the only publicly available source of
information on what hospitals are paying for these drugs. As HHS pointed
out, our draft report indicated that the lack of comprehensive rebate data
was a limitation of our study. However, hospitals reported no rebates for
14 of the 53 SCOD categories. In addition, we found that, for nearly all
other SCOD categories, rebates were reported by a small number of
hospitals; consequently, the effect of rebates on acquisition cost
averaged across all hospitals is likely to be small. We have revised the
report to clarify this point. While we believe that purchase price is
currently an adequate measure of hospitals' acquisition costs, this
measure could be improved by adjusting purchase price for rebates if a
different rebate data source or estimating method were available. HHS also
expressed concerns about whether our data are sufficiently current for use
in Medicare rate-setting. If HHS uses our
purchase price data in developing SCOD payment rates, it can mitigate the
effect of time lags by adjusting drug purchase prices in line with the
expected increase or decrease in hospital drug prices for the coming year.
HHS regularly uses a similar approach in other payment systems, including
the hospital inpatient payment system.
We are sending copies of this report to the Senate Committee on Finance,
the House Committee on Energy and Commerce, and the House Committee on
Ways and Means. We will also make copies available to others on request.
The report is available at no charge on GAO's Web site at
http://www.gao.gov.
If you or your staff have any questions about this report, please call me
at (202) 5127119. Another contact and key contributors are listed in
enclosure IV.
Sincerely yours,
A. Bruce Steinwald Director, Health Care
Enclosures - 4
Methodology
This enclosure summarizes the sample design, methods for conducting the
survey and processing data submissions, and the methods we used for
estimating average and median drug purchase prices of specified covered
outpatient drugs (SCOD). It also names the members of the advisory panel
that commented on our approach to data collection and analysis. We did our
work in accordance with generally accepted government auditing standards
from March 2004 through June 2005.
Sample Design
We developed a stratified random sample of hospitals. The population
consisted of 3,450 hospitals (1) that had charged Medicare for SCODs
during the first half of 2003 and (2) that were still Medicare providers
on July 1, 2004. To achieve a sample of 1,000 hospitals, which we
determined would meet the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003's (MMA) requirement for a large sample, we drew
a sample of 1,400 hospitals from the population, on the basis of an
expected response rate of 71 percent. A pilot sample of 48 hospitals was
included in the 1,400.
To improve the precision of our estimates of average and median purchase
price, we stratified the sample of hospitals. The objective was to select
strata that would represent very different average purchase prices for
SCODs. Because we did not have a measure of purchase price at the time we
selected the sample, we used total hospital outpatient drug charges to
Medicare as a proxy for purchase price. We used a regression model to
identify stratification factors (such as teaching hospital status) that
would maximize the difference in average purchase price (as proxied by
Medicare charges) among strata. We selected the strata of hospitals as
follows. First, we grouped them into major teaching hospital, nonmajor
teaching hospital, urban nonteaching hospital, and rural nonteaching
hospital strata. Second, within each of these strata, we further divided
the hospitals into several strata depending on the number of unique SCODs
that the hospitals billed for. For example, one stratum contains major
teaching hospitals that billed for fewer than 20 unique SCODs. Third, we
placed small hospitals in a separate stratum to ensure that hospitals with
no or minimal charges for SCODs during the first 6 months of 2003 were
appropriately represented.1
In our sample design, we defined a major teaching hospital as a hospital
for which the ratio of residents to the average number of patients was at
least 1 to 4 and a nonmajor teaching hospital as one having a ratio of
residents to patients of less than 1 to 4. We defined an urban hospital as
one located in a county that was considered a metropolitan statistical
area (as defined by the Office of Management and Budget) and a rural
hospital as one located in a county that was not considered a metropolitan
statistical area. We defined a small hospital as a hospital for which the
total charge
1Even if these hospitals did not have charges for SCODs in the first 6
months of 2003, they might have made purchases for SCODs after that time
period. Therefore, it was important to include them in the sample.
amount to Medicare for SCODs during the first 6 months of 2003 was less
than $10,000. The number of unique SCODs refers to the number of SCODs for
which each hospital submitted Medicare claims during the first 6 months of
2003. (See table 2.)
Table 2: Characteristics of Sample Strata Major teaching hospitals Nonmajor
teaching hospitals Urban nonteaching hospitals
Neyman
Standard
allocation
deviation of for
Hospitals Average total Target Target
in the total total sample of sample of response
Stratum charges b ($) charges c ($) 1,000e rate in %f
population a 1,400d
< 20 unique SCODs 75 238,949 320,349 21 11
20-39 unique SCODs 111 861,415 1,805,586 111 96
40-59 unique SCODs 96 2,297,626 1,985,026 96 91
60+ unique SCODs 73 6,034,849 3,703,998 73 73 100
< 20 unique SCODs 143 196,875 241,523 29 16
20-39 unique SCODs 313 714,043 630,105 151 94
40-59 unique SCODs 137 1,952,405 1,222,357 129 80
60+ unique SCODs 34 5,242,311 3,410,652 34 34 100
< 20 unique SCODs 609 161,797 210,080 99 61
20-39 unique SCODs 428 735,416 728,106 238 149
40+ unique SCODs 126 2,232,851 1,837,833 126 110
Rural nonteaching hospitals
< 20 unique SCODs 730 136,618 141,370 80 49
20-39 40+ Small
unique 321 672,290 560,202 140 86 61 unique 53 2,072,873 1,382,985 53 35 66 hospitals 201 3,679 3,116 20 15 75
SCODs SCODs Total 3,450 1,400 1,000 71
Source: GAO.
aHospitals in the population refers to the number of hospitals that made
any claims to Medicare for outpatient drugs from January 1, 2003, through
June 30, 2003, and were still Medicare-certified hospitals on July 1,
2004.
bTotal charges are the hospital outpatient charges to Medicare from
January 1, 2003, through June 30, 2003. Average total charges are average
total charges per hospital.
cThe standard deviation is a measure of variation around the average.
dThe Neyman allocation is a method for determining the optimum sample
size, that is, the sample size that results in the greatest precision.
eWe expected an achieved sample of 1,000 (an overall response rate of 71
percent), and we applied the Neyman allocation to determine the optimum
number of hospitals in each stratum. In some strata, the optimum
allocation exceeded the number of hospitals in the population. In these
instances, the excess hospitals were reallocated to the remaining strata
according to the Neyman allocation.
fThe target response rate is the ratio of the target sample to the total
sample for each stratum.
To determine whether we had selected strata that represented substantially
different average purchase prices for SCODs, we examined other possible
stratification factors and compared the efficiency of our stratified
sample with a simple random sample.2 Other factors that we examined
included hospital size (measured by both annual discharges and average
number of patients), ownership status (for-profit, nonprofit), whether the
hospital billed Medicare for radiopharmaceuticals, and whether the
hospital billed Medicare for blood products. However, these other factors
were highly correlated with the factors that we had selected and did not
significantly improve the model. Stratification made the sample about 10
times more efficient than a simple random sample.
To determine the appropriate number of hospitals in each stratum, we used
the Neyman allocation-a method for determining the optimum sample size,
that is, the sample size that results in the greatest precision. After the
sample was selected, we established the optimal allocation of 1,000
hospitals-our target response-among strata, using another Neyman
allocation. We used the results of this second allocation to establish
target response rates by stratum.
Data Collection and Data Processing
We developed a survey instrument and tested it before sending it to the
entire sample of 1,400 hospitals. We gave hospitals several options for
submitting data, which we extracted from their submissions and put in a
standard format.
After consulting a number of experts, including pharmacists, hospital
administrators, and representatives from industry groups, on methods of
developing and administering the survey, we developed and pretested the
survey instrument with 12 hospitals in June 2004. This initial instrument
was limited to 22 products. As a result of responses to the pretest, we
modified the data collection instrument, and Westat, our data collection
contractor, piloted the revised instrument with 48 hospitals beginning on
August 5, 2004. As a result of the pilot, we clarified certain
instructions and made changes in our procedures but did not significantly
change the instrument.
Westat began data collection from the 1,352 hospitals in the sample on
September 27, 2004.3 Key components of the data collection protocol were
as follows:
o a first mailing to the chief executive officer or chief financial
officer of each hospital explaining the survey, followed by a telephone
call to identify the main point of contact;
o a second mailing to the main contact outlining the data that were
needed and describing the options for submitting the data;
2We measured efficiency by the size of the reduction in sample variation.
3We also used data from the 48 hospitals in the pilot survey, for a total
sample of 1,400 hospitals.
o a follow-up telephone call to facilitate the main contact's
understanding of the data collection, provide technical assistance as
needed, and obtain some basic information about the hospital, such as
whether the hospital participated in the 340B program; and
o telephone calls at regular intervals to remind the hospitals to submit
their data and to provide assistance as needed.
Hospitals could submit data in one of three ways: by uploading electronic
files through the study Web site, by sending an e-mail to the study
address with data attached, or by sending electronic media or paper
submissions through the mail. Electronic submissions took three forms:
downloads from distributors' ordering and order management systems,4
extracts from hospitals' own databases, and entries made in a worksheet
form we supplied. Paper submissions were most often copies of invoices.
The contractor performed extensive follow-up. On average, Westat
interviewers called each hospital 8 times before receiving a complete data
submission. Hospitals that were late in responding received 15 calls, on
average. Follow-up calls were most extensive for hospitals in strata with
high target response rates. We obtained an overall response rate of 83
percent and met our target response rate in 11 of 15 strata. (See table
3.)
4Distributors are intermediaries that buy drugs from manufacturers and
sell them to hospitals.
Table 3: Target and Actual Response Rates by Stratum
Stratum Target response rate in % Actual response ratea in %
Major teaching hospitals Nonmajor teaching hospitals
< 20 unique SCODs 52 71
20-39 unique SCODs 86 82b
40-59 unique SCODs 95 79b
60+ unique SCODs 100 85b
< 20 unique SCODs 55
20-39 unique SCODs 62
40-59 unique SCODs 62
60+ unique SCODs 100 85b
Urban nonteaching hospitals
< 20 unique SCODs 62
20-39 unique SCODs 63
40+ unique SCODs 87 90b
Rural nonteaching hospitals
< 20 unique SCODs 61
20-39 unique 61 81 40+ unique 66 85 Small hospitals 75 80
SCODs SCODs Total 71 83
Source: GAO.
aExcept where otherwise indicated, we counted as responses all hospitals
that sent usable data on or before January 15, 2005.
bWe continued to process data received through February 22, 2005, for
strata where we had not yet reached our target response rate as of January
15, 2005.
We extracted data from hospitals' submissions and placed those data in a
standard format for analysis. In many cases, hospitals submitted data on
all drugs purchased-not just SCODs-and consequently we needed to extract
the SCOD data. Most data were submitted for periods of a day or a month,
as we requested, but 106 hospitals submitted annual data, which we also
accepted.
Westat technical staff checked the data for consistency and completeness
and followed up with 71 hospitals to resolve specific issues. We trimmed
the data to exclude outliers. On average, 2.6 percent of purchase records
were excluded.
Estimates of SCOD Average and Median Purchase Prices
This section describes the rationale and method for weighting the hospital
sample data, calculating average purchase price, calculating median
purchase price, and calculating their confidence intervals.
Weighting the Hospital Sample Data
To estimate hospitals' average and median purchase prices for SCODs, the
sample hospitals' purchase price data are weighted to make them
representative of the population of hospitals from which the sample is
drawn. A survey sample is drawn from a population. To enable data from the
sample to represent data from the population on purchase prices and other
variables, the sample data are weighted: the less likely that a hospital
will be sampled, the larger its weight. For example, if each hospital has
a 1 in 10 probability of being sampled, its sample weight is 10. That is,
each hospital in the sample represents 10 hospitals in the population.
Consequently, if 5 hospitals in a sample buy a particular drug, and the
sample weight is 10, we estimate that 50 hospitals in the population
bought that drug. In this report, we refer to sample weights as "hospital
weights." Our sample is stratified, so all hospitals in a particular
stratum (for example, major teaching hospitals) have the same weight.
Since in our sample the probability of a hospital's being selected varied
by stratum, hospitals in different strata have different weights.
In calculating weights, we took account of two distinctive facts about our
survey: First, our sample is unusual in that we must treat it as a set of
separate samples-one for each SCOD-since the population of hospitals that
buy a drug or radiopharmaceutical in a particular HCPCS varies depending
on the SCOD. Some SCODs are bought by many hospitals, while others are
bought by relatively few hospitals. Second, we lacked a direct measure of
the number of hospitals in the population that bought a particular SCOD;
consequently, we used the number of hospitals that billed for that SCOD,
according to Medicare outpatient claims data, as a proxy or indirect
measure of the population's size.
We calculated the hospital weight as
where
o Wjh
denotes the hospital weight for the jth SCOD in the hth stratum,
o Njh denotes the population (the total number of hospitals) that,
according to Medicare outpatient claims, billed for the jth SCOD in the
hth stratum, and
o Rjh denotes the total number of hospitals in the hth stratum that
purchased the jth SCOD, according to their survey submissions.
This weight recognizes that not all hospitals responded to our survey,
since the weight's denominator is Rjh-the number of hospitals that
responded to the survey and indicated that they bought the jth drug.5
5Our formulation of the hospital weight is an adaptation of the usual
formulation, in which Njh is divided by njh , the number of hospitals in
the hth stratum that purchased the jth SCOD. Unlike Rjh, njh includes
hospitals that did not respond to the survey and consequently is not
appropriate for our purpose.
We made one adjustment to the hospital weight to take account of unusual
circumstances. In some cases, the total number of hospitals in a stratum
that reported purchasing a particular SCOD exceeded our population
estimates. This situation resulted from imperfections in the Medicare
claims data used as a proxy for purchase price. That is, in these cases
Rjh exceeds Njh. Since that situation is implausible, we adjusted the size
of the population derived from Medicare claims, as follows:
Rjh
'
N jh = Njh * Mjh
where
'
o N jh denotes the adjusted population and
o Mjh
represents the number of hospitals in the hth stratum that purchased the
jth SCOD, according to their survey submissions, and that submitted an
outpatient claim to Medicare for that drug.
This adjustment makes the size of the adjusted population larger than the
unadjusted population-the number of hospitals that billed Medicare for the
drug. Sampling statisticians call this adjustment "post-stratification."
Average Purchase Price Using Volume and Hospital Weights
To summarize hospitals' purchase prices for each SCOD-reflecting purchases
made, in many cases, at different prices and in different quantities-we
calculated an average purchase price for each SCOD. This average purchase
price for a particular SCOD is in effect a weighted average. To reflect
the differences among hospitals in purchase prices and purchase volumes,
we used both the hospital weights and purchase volume as weighting
variables in estimating the average purchase price.
The average purchase price is estimated from our sample data, based on the
following equation:
where
o Nh
represents the total number of hospitals in the hth stratum,
o nh
represents the size of the sample of hospitals in the hth stratum,
o y*jhi = Sk yjhik, which represents the total dollar amount of the jth
SCOD purchased by the ith hospital in the hth stratum, and
o x*jhi = Sk xjhik , which represents the total number of units of the
jth SCOD purchased by the ith hospital in the hth stratum.
The equation estimates the average purchase price of a SCOD as the ratio
of the total amount purchased in dollars to the total number of units
purchased. For example, a total purchase amount of $50,000 and a total
number of units purchased of 1,000 milligrams yields an average purchase
price of $50 per milligram.
Median Purchase Price Using Volume and Hospital Weights
In addition to the average purchase price, we calculated the estimated
median of each SCOD's purchase price. To calculate this median, we first
applied volume and hospital weights to each hospital's purchases of a
given SCOD; we then ranked the weighted hospitals' purchase prices from
lowest to highest and selected the midpoint of these prices.
More precisely, the estimated median-based on the population cumulative
density function F for hospital purchase prices-is given by
X0.5 = inf { yjhik : F(yjhik ) >= 0.5 } ,
where
o X0.5 denotes the median estimate of hospital purchase price for a
particular SCOD,
o yjhik denotes the unit purchase price listed in the kth invoice record
submitted in our survey by the ith hospital in the hth stratum,
o F, the cumulative density function, is the probability that the
variable Y takes on a value less than or equal to a particular value (in
this case,
yjhik),
o inf { a :b } refers to the minimum value of a, which satisfies the
condition specified in b (in this case b is the condition that F(yjhik )
>= 0.5), and
o the estimated population cumulative density function, F, is defined as
Nh NhF(x) = { Sh Si Sk I(yjhik =< x) } / { Sh Si Sk } nh nh
In this equation for F(x), the hospital weights, Nh nh
, enter in both the
numerator and the denominator. The term I (yjhik =< x) equals 1 if yjhik
=< x
and is zero otherwise; that is, if the purchase price of a SCOD by a
hospital in the hth stratum is less than or equal to x (any specific
value), this term takes on the value of 1.
Confidence Intervals for Average Purchase Price and Median Purchase Price
To help assess the precision of our estimates of average and median
purchase prices, we calculated confidence intervals for each measure. A
confidence interval gives an estimated range of values, calculated from
sample data (our survey), that is likely to include the true average of
the population (in this case, the average purchase price for a particular
SCOD). As is commonly done, we calculated 95 percent confidence
intervals.6 The narrower the confidence interval around the average
calculated from sample data, the more precise the estimated average is
considered to be.
We obtained the 95 percent confidence intervals of our estimated average
purchase prices by using methods detailed in Cochran7 and Hansen, Hurwitz,
and Madow,8 since our estimates were calculated from our survey-that is,
from a stratified
9
sample. To calculate the confidence interval for our estimates of median
prices, we used the equations presented in Binder10 and Francisco and
Fuller.11 We estimated the average purchase prices, median purchase
prices, and the confidence intervals of both these averages and medians
using specialized software for survey data
12
analysis-SUDAAN(R).
6If independent samples are taken repeatedly from the same population, and
a confidence interval calculated for each sample, then a certain
percentage of the intervals will include the unknown average for the
population. The confidence level is often calculated so that the
percentage is 95 percent.
7W.G. Cochran, Sampling Techniques, 3rd ed., Wiley Series in Probability
and Mathematical Statistics, section 11.7 (New York, N.Y.: John Wiley &
Sons, 1977), 303.
8M.H. Hansen, W.N. Hurwitz, and W.G. Madow, Sample Survey Methods and
Theory, vol. I, Methods and Applications, Wiley Publications in
Statistics, sections 6.6 and 6.7 (New York, N.Y.: John Wiley & Sons, Inc.,
1953), 252-259.
9More precisely, this is a stratified cluster sample. "Cluster" refers to
the set of invoice records (for a given SCOD) reported by a hospital. The
size of a cluster varied widely among hospitals-from 1 invoice record for
a given SCOD to over 800 records.
10D.A. Binder, "Use of Estimating Functions for Interval Estimation from
Complex Surveys," Proceedings of the Survey Research Methods Section,
American Statistical Association (1991).
11C.A. Francisco and W.A. Fuller, "Quantile Estimation with a Complex
Survey Design," Annals of Statistics, 19 (1991), 454-469.
12B.V. Shah, B.B. Barnwell, and G.S. Bieler, SUDAAN: User's Manual,
Release 7.5, vols. 1 and 2 (Research Triangle Park, N.C.: Research
Triangle Institute, 1997). SUDAAN(R) is a registered trademark of the
Research Triangle Institute.
Advisory Panel
To provide us with advice on our methodology for collecting and analyzing
acquisition cost data concerning SCODs, we convened a panel of experts
with experience in pharmaceutical issues or in technical fields relevant
to our survey. The panel met twice: first, to consult with us on sample
design and the survey, and later to review our preliminary results. The
panelists included the chairman, Joseph P. Newhouse, PhD-John D. MacArthur
Professor of Health Policy and Management, Harvard University; Robert A.
Berenson, MD-Senior Fellow, Urban Institute; Ernst R. Berndt,
PhD-Professor of Applied Economics, Sloan School of Management,
Massachusetts Institute of Technology; Andrea G. Hershey, PharmD-Clinical
Coordinator, Pharmacy Residency Program Director, Union Memorial Hospital
(Baltimore, Md.); and Richard L. Valliant, PhD-Senior Research Scientist,
University of Michigan.
Naional Drug Codes and Their Names, Grouped by HCPCS
Rank in
Medicare
spending on
drug
SCODs National Drug
HCPCS and description National Drug Code Code name
1 Q0136, Injection, Epoetin 59676-0302-01 Procrit(R) 2,000
Alpha (for unit/mL
non-ESRD use), per 1,000
units
59676-0302-02 Procrit(R) 2,000
unit/mL
59676-0303-01 Procrit(R) 3,000
unit/mL
59676-0303-02 Procrit(R) 3,000
unit/mL
59676-0304-01 Procrit(R) 4,000
unit/mL
59676-0304-02 Procrit(R) 4,000
unit/mL
59676-0310-01 Procrit(R) 10,000
unit/mL
59676-0310-02 Procrit(R) 10,000
unit/mL
59676-0312-01 Procrit(R) 10,000
unit/mL
59676-0320-01 Procrit(R) 20,000
unit/mL
59676-0340-01 Procrit(R) 40,000
unit/mL
50242-0051-21 Rituxan (R) 10
J9310, Rituximab, 100 mg mg/mL
50242-0053-06 Rituxan (R) 10
mg/mL
J2505, Injection, 55513-0190-01 Neulasta(R) 6
Pegfilgrastim, mg/0.6 mL
6 mg
4a Q9941, Injection, Immune Globulin, 00053-7486-05 Intravenous,
Lyophilized, 1 g 00053-7486-06
00053-7486-10
00078-0124-96
00944-2620-01
00944-2620-02
00944-2620-03
00944-2620-04
44206-0416-03
44206-0417-06
44206-0418-12
44206-0505-51
44206-0507-56
44206-0508-62
52769-0268-66
52769-0269-72
52769-0417-06
52769-0417-12
52769-0418-12
52769-0471-75
52769-0471-80
54129-0233-50
64193-0250-50
Gammar(R)-P IV 5 g
Gammar(R)-P IV 5 g Gammar(R)-P IV 10 g Sandoglobulin(R) 6 g Gammagard(R)
S/D 0.5 g Gammagard(R) S/D 2.5 g Gammagard(R) S/D 5 g Gammagard(R) S/D 10
g Carimune(R) NF 3 g Carimune(R) NF 6 g Carimune(R) NF 12 g Carimune(R) 1
g Carimune(R) 6 g Carimune(R) 12 g Panglobulin(R) 6 g Panglobulin(R) 12 g
Panglobulin(R) NF 6 g Panglobulin(R) NF 12 g Panglobulin(R) NF 12 g
Polygam(R) S/D 5 g Polygam(R) S/D 10 g Iveegam(R) 5 g Iveegam(R) EN 5 g
4a Q9943, Injection, Immune Globulin, 00026-0646-24 Gamimune (R) N 5% 10 g
Intravenous, Non-Lyophilized, 1 g
00026-0646-25 Gamimune (R) N 5% 12.5
g
00026-0646-71 Gamimune (R) N 5% 5 g
00026-0648-12 Gamimune (R) N 10% 1 g
00026-0648-15 Gamimune (R) N 10% 2.5
g
Rank in Medicare spending on drugSCODs HCPCS and description National Drug
Code National Drug Code name
00026-0648-20 00026-0648-24 00026-0648-71 49669-1613-01 49669-1614-01
49669-1622-01 49669-1623-01 49669-1624-01 61953-0003-03 61953-0003-04
68516-1623-01 68516-1624-01 Gamimune(R) N 10% 5 g Gamimune(R) N 10% 20 g
Gamimune(R) N 10% 10 g Venoglobulin(R)-S 5% 5 g Venoglobulin(R)-S 5% 10 g
Venoglobulin(R)-S 10% 5 g Venoglobulin(R)-S 10% 10 g Venoglobulin(R)-S 10%
20 g Flebogamma(R) 5% 5 g Flebogamma(R) 5% 10 g Venoglobulin(R)-S 10% 10 g
Venoglobulin(R)-S 10% 20 g
J1745, Injection, Infliximab, 10 mg 57894-0030-01 Remicade(R) 100 mg
Q0137, Injection, Darbepoetin alfa, 55513-0010-01 1 mcg (non-ESRD use)
55513-0010-04
55513-0011-04
55513-0012-04
55513-0013-01
55513-0013-04
55513-0014-01
55513-0014-04
55513-0015-01
55513-0037-01
55513-0037-04
55513-0039-01
55513-0039-04
55513-0041-01
55513-0041-04
55513-0043-04
55513-0044-01
55513-0046-01
55513-0048-01
55513-0054-01
55513-0054-04
55513-0058-04
Aranesp(R) 25 mcg/mL
Aranesp(R) 25 mcg/mL Aranesp(R) 40 mcg/mL Aranesp(R) 60 mcg/mL Aranesp(R)
100 mcg/mL Aranesp(R) 100 mcg/mL Aranesp(R) 200 mcg/mL Aranesp(R) 200
mcg/mL Aranesp(R) 300 mcg/mL Aranesp(R) 40 mcg/0.4 mL Aranesp(R) 40
mcg/0.4 mL Aranesp(R) 60 mcg/0.3 mL Aranesp(R) 60 mcg/0.3 mL Aranesp(R)
100 mcg/0.5 mL Aranesp(R) 100 mcg/0.5 mL Aranesp(R) 150 mcg/0.3 mL
Aranesp(R) 200 mcg/0.4 mL Aranesp(R) 300 mcg/0.6 mL Aranesp(R) 500 mcg/mL
Aranesp(R) 150 mcg/0.75 mL Aranesp(R) 150 mcg/0.75 mL Aranesp(R) 25
mcg/0.42 mL
J9170, Docetaxel, 20 mg 00075-8001-20 Taxotere(R) 20 mg/0.5 mL
00075-8001-80 Taxotere(R) 80 mg/2 mL
J9045, Carboplatin, 50 mg
00015-3210-30 00015-3210-76 00015-3211-30 00015-3211-76 00015-3212-30
00015-3212-76 00015-3213-29 00015-3213-30 00015-3214-29 00015-3214-30
Paraplatin(R) 50 mg/5 mL Paraplatin(R) 50 mg/5 mL Paraplatin(R) 150 mg/15
mL Paraplatin(R) 150 mg/15 mL Paraplatin(R) 450 mg/45 mL Paraplatin(R) 450
mg/45 mL Paraplatin(R) 50 mg Paraplatin(R) 50 mg Paraplatin(R) 150 mg
Paraplatin(R) 150 mg
Rank in Medicare spending on drugSCODs HCPCS and description National Drug
Code National Drug Code name
00015-3215-29 00015-3215-30 00015-3216-30 00703-3244-11 00703-3246-11
00703-3248-11 00703-3266-01 00703-3268-01 63323-0167-20 Paraplatin(R) 450
mg Paraplatin(R) 450 mg Paraplatin(R) 600 mg/60 mL Carboplatin 50 mg/5 mL
Carboplatin 150 mg/15 mL Carboplatin 450 mg/45 mL Carboplatin 150 mg
Carboplatin 450 mg Carboplatin 150 mg
C9205, Injection, Oxaliplatin, per 00024-0596-02 EloxatinTM 50 mg 5 mg
00024-0597-04 EloxatinTM 100 mg
J3487, Injection, Zoledronic Acid, 00078-0350-84 Zometa(R) 4 mg 1 mg
00078-0387-25 Zometa(R) 4 mg/5 mL
J9201, Gemcitabine Hcl, 200 mg 00002-7501-01 Gemzar(R) 200 mg
00002-7502-01 Gemzar(R) 1 g
J9206, Irinotecan, 20 mg 00009-7529-01 Camptosar(R) 20 mg/mL 00009-7529-02
Camptosar(R) 20 mg/mL
J2324, Injection, Nesiritide, 0.25 mg 65847-0205-25 Natrecor(R) 1.5 mg
J9265, Paclitaxel, 30 mg
00074-4335-01 00074-4335-02 00074-4335-04 00172-3753-77 00172-3753-96
00172-3754-73 00172-3754-94 00172-3755-31 00172-3756-75 00172-3756-95
51079-0961-01 51079-0962-01 51079-0963-01 55390-0114-05 55390-0114-20
55390-0114-50 55390-0314-05 55390-0314-20 55390-0314-50 61703-0342-09
61703-0342-22 61703-0342-50 Paclitaxel 100 mg/16.7 mL Paclitaxel 100
mg/16.7 mL Paclitaxel 300 mg/50 mL Onxol(R) 6 mg/mL Onxol(R) 6 mg/mL
Onxol(R) 6 mg/mL Onxol(R) 6 mg/mL Onxol(R) 100 mg/16.7 mL Onxol(R) 6 mg/mL
Onxol(R) 6 mg/mL Paclitaxel 30 mg/5 mL Paclitaxel 100 mg/16.7 mL
Paclitaxel 300 mg/50 mL Paclitaxel 30 mg/5 mL Paclitaxel 30 mg/5 mL
Paclitaxel 30 mg/5 mL Paclitaxel 30 mg/5 mL Paclitaxel 30 mg/5 mL
Paclitaxel 30 mg/5 mL Paclitaxel 100 mg/16.7 mL Paclitaxel 100 mg/16.7 mL
Paclitaxel 100 mg/16.7 mL
15 J9355, Trastuzumab, 10 mg 50242-0134-60 Herceptin(R) 440 mg
50242-0134-68 Herceptin(R) 440 mg
16 J9217, Leuprolide Acetate (for 00024-0222-05 Eligard(R) 22.5 mg
depot suspension), 7.5 mg
00024-0597-07 Eligard(R) 7.5 mg
00024-0597-22 Eligard(R) 22.5 mg
00024-0610-30 Eligard(R) 30 mg
Rank in
Medicare
spending on
drug
SCODs HCPCS and description National Drug Code National Drug Code
name
00024-0793-75 Eligard(R) 7.5 mg
00300-3346-01 Lupron Depot(R)
22.5 mg
00300-3642-01 Lupron Depot(R)
7.5 mg
00300-3683-01 Lupron Depot(R) 30
mg
17 J0256, Injection, Alpha 00026-0601-30 Prolastin(R)
1 - approx 500 mg
Proteinase Inhibitor -
Human,
10 mg
00026-0601-35 Prolastin(R)
approx 1000 mg
00053-7201-02 ZemairaTM approx
1000 mg
49669-5800-02 Aralast(R) approx
1000 mg
J9035,b Injection, 50242-0060-01 Avastin TM 100
Bevacizumab, mg/4 mL
10 mg
50242-0060-02 Avastin TM 400
mg/16 mL
J1441, Injection, 55513-0209-01 Neupogen (R) 480
Filgrastim (G- mcg/0.8 mL
CSF), 480 mcg
55513-0209-10 Neupogen (R) 480
mcg/0.8 mL
55513-0546-01 Neupogen (R) 480
mcg/1.6 mL
55513-0546-10 Neupogen (R) 480
mcg/1.6 mL
J1950, Injection, 00300-3641-01 Lupron Depot(R)
Leuprolide Acetate 3.75 mg
(for depot suspension),
per 3.75 mg
00300-3663-01 Lupron Depot(R)
11.25 mg
J9001, Doxorubicin Hydrochloride, all lipid formulations, 10 mg
17314-9600-01 Doxil(R) 2 mg/mL 17314-9600-02 Doxil(R) 2 mg/mL
J2353, Injection, Octreotide, depot
00078-0340-84 Sandostatin LAR(R) Depot 10 mg
form for intramuscular injection, 1 mg
00078-0341-84 Sandostatin LAR(R) Depot 20 mg 00078-0342-84 Sandostatin LAR(R)
Depot 30 mg
J9055,b Injection, Cetuximab, 66733-0948-23 ErbituxTM 100 mg/50 mL 10 mg
J9041,b Injection, Bortezomib, 63020-0049-01 Velcade(R) 3.5 mg 0.1 mg
J9350, Topotecan, 4 mg 00007-4201-01 Hycamtin(R) 4 mg 00007-4201-05
Hycamtin(R) 4 mg
J1440, Injection, Filgrastim (G-55513-0530-01 Neupogen(R) 300 mcg/mL CSF),
300 mcg 55513-0530-10 Neupogen(R) 300 mcg/mL
55513-0924-10 Neupogen(R) 300 mcg/0.5 mL
J1785, Injection, Imiglucerase, per 58468-1983-01 Cerezyme (R) 200 unit
unit
58468-4663-01 Cerezyme (R) 400 unit
28 J3396, Injection, Verteporfin, 58768-0150-15 Visudyne (R) 15 mg
0.1 mg
29 J9202, Goserelin Acetate Implant, 00310-0950-36 Zoladex (R) 3.6 mg
per 3.6 mg
00310-0951-30 Zoladex (R) 10.8 mg
00310-0960-36 Zoladex (R) 3.6 mg
00310-0961-30 Zoladex (R) 10.8 mg
30 J1626, Injection, Granisetron 00004-0239-09 Kytril(R) 1 mg/mL
Hydrochloride, 100 mcg
00004-0240-09 Kytril(R) 1 mg/mL
Rank in
Medicare
spending on
drug
SCODs HCPCS and description National Drug Code National Drug
Code name
00029-4149-01 Kytril(R) 1
mg/mL
31 J0585, Botulinim Toxin 00023-1145-01 Botox(R) 100
Type A, per unit
unit
32 J0207, Injection, 17314-7253-03 Ethyol(R) 500 mg
Amifostine,
500 mg
58178-0017-03 Ethyol(R) 500 mg
33 J2430, Injection, Pamidronate 00703-4075-19 Disodium, per 30 mg
00703-4085-11
00703-4085-91
55390-0127-01
55390-0129-01
55390-0157-01
55390-0159-01
55390-0204-01
55390-0604-01
61703-0325-18
63323-0734-10
63323-0735-10
Pamidronate Disodium
30 mg/10 mL
Pamidronate Disodium
90 mg/10 mL
Pamidronate Disodium
90 mg/10 mL
Pamidronate Disodium
30 mg
Pamidronate Disodium
90 mg
Pamidronate Disodium
30 mg
Pamidronate Disodium
90 mg
Pamidronate Disodium
30 mg/10 mL
Pamidronate Disodium
30 mg/10 mL
Pamidronate Disodium
6 mg/mL
Pamidronate Disodium
30 mg/10 mL
Pamidronate Disodium
90 mg/10 mL
J9390, Vinorelbine Tartrate, per 00703-4182-01 10 mg 00703-4182-91
00703-4183-01
00703-4183-91
10019-0970-01
10019-0970-02
55390-0069-01
55390-0070-01
59911-5958-01
59911-5959-01
Vinorelbine Tartrate 10 mg/mL Vinorelbine Tartrate 10 mg/mL Vinorelbine
Tartrate 10 mg/mL Vinorelbine Tartrate 10 mg/mL Vinorelbine Tartrate 10
mg/mL Vinorelbine Tartrate 10 mg/mL Vinorelbine Tartrate 10 mg/mL
Vinorelbine Tartrate 10 mg/mL Vinorelbine Tartrate 10 mg/mL Vinorelbine
Tartrate 10 mg/mL
35 J2993, Injection, Reteplase, 57894-0040-01 Retavase (R) 2x18.1 mg
18.1 mg
57894-0040-02 Retavase (R) 18.1 mg
36 J9293, Injection, Mitoxantrone 44087-1520-01 Novantrone (R) 2 mg/mL
Hydrochloride, per 5 mg
44087-1525-01 Novantrone (R) 2 mg/mL
44087-1530-01 Novantrone (R) 2 mg/mL
58406-0640-03 Novantrone (R) 2 mg/mL
Rank in
Medicare
spending on
drug
SCODs HCPCS and description National Drug Code National Drug
Code name
58406-0640-05 Novantrone (R) 2
mg/mL
58406-0640-07 Novantrone (R) 2
mg/mL
37 J9185, Fludarabine 00703-5854-01 Fludarabine
Phosphate, Phosphate 50 mg
50 mg
50419-0511-06 Fludara (R) 50 mg
38 C1305, Apligraf(R) , per 09978-0001-99 Apligraf(R)
44 square
centimeters
39 J9395, Injection, 00310-0720-25 Faslodex (R) 125
Fulvestrant, 25 mg mg/2.5 mL
00310-0720-50 Faslodex (R) 250
mg/5 mL
J3100, Injection, 50242-0038-61 TNKaseTM 50 mg
Tenecteplase,
50 mg
J9305,b Injection, 00002-7623-01 Alimta(R) 500 mg
Pemetrexed,
10 mg
J9160, Denileukin 64365-0503-01 Ontak(R) 150
Diftitox, 300 mcg mcg/mL
J0180,b Injection, 58468-0040-01 Fabrazyme (R) 35
Agalsidase Beta, mg
1 mg
58468-0041-01 Fabrazyme (R) 5
mg
Q0166, Granisetron 00004-0237-09 Kytril(R) 2 mg/10
Hydrochloride, mL
1 mg, oralc
00004-0241-26 Kytril(R) 1 mg
00004-0241-33 Kytril(R) 1 mg
00029-4151-05 Kytril(R) 1 mg
J2469,b Injection, 58063-0797-25 Aloxi(R) 0.25
Palonosetron Hcl, mg/5 mL
25 mcg
50419-0355-10 CamPath(R) 10
J9010, Alemtuzumab, 10 mg mg/mL
50419-0355-12 CamPath(R) 10
mg/mL
47d Q9942, Injection, Immune Globulin, 00053-7486-05 Intravenous,
Lyophilized, 10 mg 00053-7486-06
00053-7486-10
00078-0124-96
00944-2620-01
00944-2620-02
00944-2620-03
00944-2620-04
44206-0416-03
44206-0417-06
44206-0418-12
44206-0505-51
44206-0507-56
44206-0508-62
52769-0268-66
52769-0269-72
52769-0417-06
52769-0417-12
52769-0418-12
52769-0471-75
52769-0471-80
54129-0233-50
64193-0250-50
Gammar(R)-P IV 5 g
Gammar(R)-P IV 5 g Gammar(R)-P IV 10 g Sandoglobulin(R) 6 g Gammagard(R)
S/D 0.5 g Gammagard(R) S/D 2.5 g Gammagard(R) S/D 5 g Gammagard(R) S/D 10
g Carimune(R) NF 3 g Carimune(R) NF 6 g Carimune(R) NF 12 g Carimune(R) 1
g Carimune(R) 6 g Carimune(R) 12 g Panglobulin(R) 6 g Panglobulin(R) 12 g
Panglobulin(R) NF 6 g Panglobulin(R) NF 12 g Panglobulin(R) NF 12 g
Polygam(R) S/D 5 g Polygam(R) S/D 10 g Iveegam(R) 5 g Iveegam(R) EN 5 g
Rank in Medicare spending on drugSCODs HCPCS and description National Drug
Code National Drug Code name
47d Q9944, Injection, Immune Globulin, 00026-0646-24 Intravenous,
Non-Lyophilized, 10 mg
00026-0646-25
00026-0646-71
00026-0648-12
00026-0648-15
00026-0648-20
00026-0648-24
00026-0648-71
49669-1613-01
49669-1614-01
49669-1622-01
49669-1623-01
49669-1624-01
61953-0003-03
61953-0003-04
68516-1623-01
68516-1624-01 Gamimune(R) N 5% 10 g
Gamimune(R) N 5% 12.5 g Gamimune(R) N 5% 5 g Gamimune(R) N 10% 1 g
Gamimune(R) N 10% 2.5 g Gamimune(R) N 10% 5 g Gamimune(R) N 10% 20 g
Gamimune(R) N 10% 10 g Venoglobulin(R)-S 5% 5 g Venoglobulin(R)-S 5% 10 g
Venoglobulin(R)-S 10% 5 g Venoglobulin(R)-S 10% 10 g Venoglobulin(R)-S 10%
20 g Flebogamma(R) 5% 5 g Flebogamma(R) 5% 10 g Venoglobulin(R)-S 10% 10 g
Venoglobulin(R)-S 10% 20 g
J7190, Factor VIII (Antihemophilic 00026-0665-20 Koate(R)-DVI 250 unit
Factor, Human) per I.U. 00026-0665-30 Koate(R)-DVI 500 unit
00026-0665-50 Koate(R)-DVI 1000 unit
00053-7656-01 Monoclate-P(R) 250 unit
00053-7656-02 Monoclate-P(R) 500 unit
00053-7656-04 Monoclate-P(R) 1000 unit
00944-2935-01 Hemofil(R) M 200-1000 unit
49669-4600-01 Alphanate(R) 250-500 unit
49669-4600-02 Alphanate(R) 1000-1500 unit
52769-0460-01 Monarc-MTM 250-1100 unit
J0130, Injection, Abciximab, 10 mg 00002-7140-01 Reopro(R) 2 mg/mL
(R)
J0850, Injection, Cytomegalovirus 60574-3101-01 CytoGam
Immune Globulin, Intravenous
(Human), per vial
J1327, Injection, Eptifibatide, 5 mg 00085-1136-01 Integrilin(R) 0.75
mg/mL 00085-1177-01 Integrilin(R) 2 mg/mL 00085-1177-02 Integrilin(R) 2
mg/mL
J9214, Interferon, Alfa-2B, 00085-0120-02 Intron(R) A 5 million units
Recombinant, 1 million units 00085-0285-02 Intron(R) A 25 million units
00085-0539-01 Intron(R) A 50 million units
00085-0571-02 Intron(R) A 10 million units
00085-0647-05 Intron(R) A 3 million units
00085-1110-01 Intron(R) A 18 million units
00085-1133-01 Intron(R) A 10 million units/mL
00085-1168-01 Intron(R) A 6 million units/mL
00085-1179-02 Intron(R) A 10 million units/mL
00085-1235-01 Intron(R) A 5 million units/0.2 mL
00085-1242-01 Intron(R) A 3 million units/0.2 mL
Rank in Medicare spending on drugSCODs HCPCS and description National Drug
Code National Drug Code name
00085-1254-01 Intron(R) A 10 million units/0.2 mL
53 C9201, Dermagraft(R), per 37.5 38172-0202-00 Dermagraft(R) 5 cm x 7.5
cm square centimeters
Sources: GAO survey and CMS.
Note: ESRD = end-stage renal disease, mL = milliliter, mg = milligram, g =
gram, mcg = microgram, I.U. = international unit, cm = centimeter.
aOn April 1, 2005, CMS replaced J1563, Injection, Immune Globulin,
Intravenous, 1g, with two new codes: Q9941 and Q9943. J1563 was ranked
fourth in total Medicare spending on SCODs from January 1, 2004, to
September 30, 2004.
bOn January 1, 2005, CMS replaced C9214, C9215, C9207, C9213, C9208, and
C9210 with J9035, J9055, J9041, J9305, J0180, and J2469, respectively. The
ranks for the new codes correspond to the ranks in total Medicare spending
on SCODs from January 1, 2004, to September 30, 2004, for the former
codes.
cThe complete description for HCPCS Q0166 is "Granisetron Hydrochloride, 1
mg, Oral, FDA Approved Prescription Anti-Emetic, for Use as a Complete
Therapeutic Substitute for an IV Anti-Emetic at the Time of Chemotherapy
Treatment, Not to Exceed a 24 Hour Dosage Regimen."
dOn April 1, 2005, CMS replaced J1564, Injection, Immune Globulin,
Intravenous, 10 mg, with two new codes: Q9942 and Q9944. J1564 was ranked
47th in total Medicare spending on SCODs from January 1, 2004, to
September 30, 2004.
Comments from the Department of Health and Human Services
GAO Contact and Staff Acknowledgments
GAO Contact
Phyllis Thorburn, (202) 512-7012
Acknowledgments
Dae Park, Jonathan Ratner, Anna Theisen-Olson, Kaycee Misiewicz, Thomas
Walke, Martha Kelly, Suzanne Worth, Hannah Fein, Richard Lipinski, Daniel
Ries, Mike Thomas, Elizabeth T. Morrison, and Todd Anderson contributed to
this report.
(290352)
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