A little-known Medicare mechanism for catching overpriced drugs has trimmed $78 million from Medicare Part B drug spending since 2013, according to a federal watchdog that has been running the checks quarterly for more than a decade. The savings come from a price-substitution policy that swaps out an inflated manufacturer price for a lower one already on file, a fix that lands directly on what Medicare and its beneficiaries pay at the pharmacy counter or infusion clinic.
How Auditors Arrived At $78 Million Across 101 Drugs
The Department of Health and Human Services’ Office of Inspector General reports that “CMS has lowered prescription drug costs by $78 million by applying its price-substitution policy to 101 drugs identified and referred by OIG” since the policy began in 2013, according to the OIG’s report on 2024 average sales price data, issued September 21, 2026. That $78 million figure is cumulative across 13 years of the policy running, not a single-year total, and it covers 101 individual drugs OIG has flagged for a price fix out of the far larger universe of drugs Medicare Part B covers.
For 2024 specifically, the most recent full year of data the report examines, price substitutions applied to 14 drugs saved Medicare and its enrollees $1.6 million, the same OIG report states. That per-year figure is a small slice of the $78 million total, underscoring that the bulk of the cumulative savings built up gradually, one flagged drug at a time, over the more than a decade the mechanism has been running.
Where the help is written down: OIG’s price-substitution fix lowers what Medicare pays for 101 specific drugs, but a Part B enrollee still owes standard cost-sharing on whatever price applies to a given prescription. See the medication and cost tracker in The Medicare Cost & Coverage Protection Kit.
How The Price-Substitution Check Actually Works
OIG runs a quarterly analysis comparing a drug’s average sales price, the figure manufacturers report and that Medicare uses to set the Part B payment rate, against average manufacturer price data, per the same OIG report. When a drug’s average sales price runs too high relative to certain cost thresholds, OIG flags it and refers it to the Centers for Medicare & Medicaid Services, which can then substitute a lower price for Medicare’s payment calculation. That process is what produced the 101 flagged drugs and the resulting reduced spending since 2013, rather than a one-time rule change or a new law.
The average sales price system this fix runs on top of is itself a standing, quarterly mechanism: CMS updates the Part B drug payment rates it publishes every January, April, July and October, calculating each drug’s Medicare payment as the average sales price plus a set percentage under federal regulation, according to CMS’s own ASP pricing-files page. OIG’s price-substitution referrals work inside that existing quarterly cycle rather than replacing it, correcting specific drugs where the reported average sales price appears too high before the next quarterly rate takes effect. CMS’s page also notes that a payment limit may not be published for every drug manufacturers report, meaning some drugs are priced by local Medicare contractors case by case rather than through the standard quarterly file OIG’s review draws on.
What The Savings Mean At The Pharmacy Counter
Because a Medicare Part B beneficiary typically owes 20% coinsurance on the Medicare-approved amount for a covered drug, a lower substituted price reduces both what Medicare’s trust fund pays and what comes out of a beneficiary’s own pocket for the same dose. The OIG report frames the 2024 savings explicitly as benefiting “Medicare and its enrollees” together, meaning the $1.6 million figure for that year is not solely a program-side accounting adjustment; part of it reflects lower coinsurance bills for people actually receiving those 14 drugs. For a retiree managing a chronic condition that requires an infused or injected medication billed under Part B, a price correction on the specific drug prescribed can shave real dollars off a routine bill, even when the person never sees the underlying average-sales-price math that produced it.
Why 31 Drugs Never Got A Price Fix
The same report found that “potential errors in the average manufacturer price data submitted to CMS prevented OIG from determining whether 31 drugs qualified for a price substitution,” a gap OIG flags as limiting how much further the mechanism could reduce spending. That means the $78 million total likely understates what the policy could have saved had all 31 of those drugs’ manufacturer data been reliable enough to evaluate. OIG’s report does not recommend a specific fix in this round but points to continued CMS-manufacturer collaboration on data accuracy as the path to resolving those gaps, according to the report’s own findings.
The 31-drug gap also illustrates why the $78 million figure is best read as a floor rather than a full accounting of what price substitution could achieve: OIG can only refer a drug for a price fix once its own analysis of the manufacturer data behind that drug clears, and a data error blocks that analysis before OIG ever reaches a substitution decision one way or the other. That distinction separates “OIG checked and found no substitution was warranted” from “OIG could not check at all,” a difference the report is explicit about but that a beneficiary’s own drug bill would never reveal on its own.
The Data Gap Behind The Savings Number
OIG’s price-substitution policy has lowered Medicare Part B drug spending across 101 drugs since 2013, correcting 14 more of them using 2024 pricing data alone. What the report leaves unresolved is the 31 drugs OIG could not evaluate because of manufacturer data errors, meaning the specific drug a Part B enrollee is prescribed may or may not be one that has actually had its price corrected.
The Medicare Cost & Coverage Protection Kit includes 51 state Medicare cost-help packs and a medication and cost tracker built for exactly that kind of drug-by-drug bill-checking, alongside the prior-authorization appeal steps for a denied or overpriced claim.
Open the medication and cost tracker in The Medicare Cost & Coverage Protection Kit.
This article was produced with AI assistance and checked against the primary sources linked above.
David M. Keller is a finance writer based in Columbus, Ohio, covering personal finance and consumer-focused economic topics. He earned his degree in journalism from Ohio University and began his career reporting on local business and economic trends for a regional media outlet. Since then, he has contributed to a variety of online publications, focusing on clear, practical coverage of topics such as cost of living, debt, and everyday financial decision-making.
