A recent OIG report identifies 30 drug codes for which the Medicare average sales prices (ASP) exceeded the average manufacturer price (AMP) by at least 5% in the fourth quarter of 2010.  Of these codes, 15 had complete AMP data (i.e., AMP data for every drug product that CMS used to set reimbursement). If Medicare reimbursement for these 15 codes with complete AMP data had been based on 103% of the AMPs during the second quarter of 2011 (as is authorized by the statute), the OIG estimates that Medicare expenditures would have been reduced by $1.3 million in that quarter alone. The OIG notes that this is its 22nd report comparing ASPs to AMPs, and in these reports the OIG has consistently recommended that CMS develop a price substitution policy to lower reimbursement for drugs that exceed the 5% threshold. While CMS has not yet changed Part B drug reimbursement as a result of these studies, CMS’s proposed calendar year 2012 Medicare physician fee schedule rule would specify the circumstances under which AMP-based price substitutions would occur, beginning in the first quarter of 2012. If CMS’s proposed price substitution policy had been in effect, the OIG estimates that reimbursement amounts for 5 of the 15 drugs would have been reduced, saving approximately $554,000.  The OIG could not compare ASPs and AMPs for an additional 61 HCPCS codes because AMP data were not submitted for any of the drug products that CMS used to calculate reimbursement, even though manufacturers of 17% of those products had Medicaid drug rebate agreements generally requiring AMP submission.