Average Sales Price (ASP)

Key facts

Legal basis

Social Security Act Section 1847A, added by the Medicare Modernization Act of 2003

Regulation

42 CFR Part 414, Subpart J

Reported

Quarterly by manufacturers to CMS

Standard Part B payment

106 percent of ASP for most separately payable drugs

Published as

Quarterly ASP pricing files organized by HCPCS code

What is Average Sales Price?

ASP is the basis for Medicare Part B payment for most drugs administered in physician offices and hospital outpatient departments. Manufacturers calculate it for each National Drug Code (NDC) by dividing total U.S. sales, net of price concessions, by the number of units sold in the quarter.

CMS converts NDC-level ASPs into a payment limit for each Healthcare Common Procedure Coding System (HCPCS) billing code, such as a J-code, and publishes the limits in quarterly pricing files. Payment rates lag the underlying sales data by about two quarters.

Manufacturers with a Medicaid drug rebate agreement must report ASP, and the Consolidated Appropriations Act, 2021 extended reporting to manufacturers of Part B drugs without such an agreement starting in 2022.

How ASP is calculated and paid

The calculation and payment rules follow the statute and 42 CFR Part 414:

• Included price concessions: volume discounts, prompt pay discounts, cash discounts, free goods contingent on a purchase, chargebacks and rebates other than Medicaid rebates.
• Excluded sales: sales exempt from Medicaid Best Price, such as 340B and Federal Supply Schedule sales, and sales at a nominal charge.
• Payment: most drugs are paid at ASP plus 6 percent, while qualifying biosimilars are paid at their own ASP plus a percentage of the reference product ASP.
• New drugs: when ASP data are not yet available, Medicare can pay based on Wholesale Acquisition Cost (WAC).

Why ASP matters

ASP is one of the few public, government-published prices that reflects manufacturer net pricing across commercial buyers. Analysts use it to track net price erosion after biosimilar or generic entry and to compare competing infused and injected products.

For providers, the spread between acquisition cost and ASP plus 6 percent drives buy-and-bill margins, which shapes site-of-care decisions for oncology, rheumatology and ophthalmology drugs. Because sequestration reduces Medicare payments, the effective add-on providers receive is lower than 6 percent.

The Inflation Reduction Act of 2022 added more ASP-linked rules, including Part B inflation rebates when prices rise faster than inflation and manufacturer refunds for discarded amounts of drugs from single-dose containers.