The Centers for Medicare & Medicaid Services (CMS) recently published its Proposed 2026 Physician Fee Schedule Rule (Proposed Rule), with extensive implications for drug pricing, Average Sales Price (ASP) calculations, and Fair Market Value (FMV) calculations.

Background
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Manufacturers must calculate and submit ASP on a quarterly basis to CMS, which then uses ASP to determine the applicable reimbursement rates under the Medicare Part B program. ASP is calculated as the weighted average price provided to commercial customers, with certain exceptions. Among other requirements, price concessions (i.e., volume discounts, prompt pay discounts, chargebacks, rebates or other reductions in price that a manufacturer provides to purchasers) must be deducted from the ASP calculation (thereby lowering the ASP), while Bona Fide Service Fees (BFSFs) need not be deducted from ASP.

Companies that inaccurately classify a price concession as a BFSF may face allegations that they artificially inflated the ASP - which in turn may have several results, including:

Medicare overpayments and subsequent costly ASP restatements