The HHS Office of Inspector General (OIG) has issued a report entitled “Medicare Payments for Newly Available Generic Drugs.” The report notes that because of the timing of manufacturer reporting of quarterly average sales price (ASP) data to CMS and when those data are used to calculate payment amounts, there is a two-quarter lag between when sales occur and when Medicare payment amounts reflect those sales.  This lag can have a significant impact when newly-available generic drugs enter the market, since their ASPs can be substantially lower than their brand counterparts but Medicare payment can remain at the higher brand level for two quarters or more. According to the OIG, Medicare could have saved an estimated $111 million if “payment amounts reflected actual sales prices during the initial generic availability of 16 drugs,” representing 25% of total expenditures for these drugs during the period. The OIG recommends that CMS: (1) work with Congress to require manufacturers of first generics to submit monthly ASP data during the period of initial generic availability, and (2) if effective in alleviating the financial impact of the two-quarter lag, consider requiring monthly ASP submissions for all Part B-covered drugs. CMS did not concur with the OIG, noting increased administrative burdens associated with monthly ASP reporting requirement and the potential that it actually would result in price increases.