CMS Price-Substitution Policy Saves $76M on Medicare Drugs Since 2013

Since 2013, the Centers for Medicare & Medicaid Services (CMS) has applied a price-substitution policy to reduce prescription drug costs for Medicare and its enrollees, achieving savings of $76 million. This policy targets drugs identified and referred by the Office of Inspector General (OIG), resulting in price substitutions for 91 drugs including 20 drugs in 2023, which saved $1.6 million in one year. The OIG conducts quarterly reviews of average manufacturer prices and average sales prices to identify potential pricing errors. When errors are detected, OIG notifies CMS to verify data accuracy with manufacturers, which is crucial to ensuring more drugs qualify for price substitutions and further cost reductions. The report emphasizes the ongoing collaboration between CMS and drug manufacturers to improve data accuracy and enhance the policy's impact on Medicare drug spending, while maintaining access to essential medications.