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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