Glossary F – FD

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False Average Sales Price (ASP) – ASP is the weighted average of all non-Federal sales to wholesalers and is the net of chargebacks, discounts, rebates, and other benefits tied to the purchase of the drug product, whether it is paid to the wholesaler or the retailer. This relatively new payment system requires manufacturers to report the ASP each quarter for the vast majority of Medicare Part B covered outpatient drugs and biologicals not paid on a cost or prospective payment system basis. Some pharmaceutical companies report false average sales prices, typically by failing to include certain transactions and/or kickbacks in the calculation. Some manufacturers targeted physicians and other healthcare providers with an off-invoice discount. The off-invoice discount lasts for a part of the year, such as the first half. The manufacturer does this to allow ASP to catch up with the new price so that there remains a spread between the physician acquisition cost of Drug X and the Medicare reimbursement amount for Drug X. Manufacturers also give “wholesaler prompt pay discounts.” Upon information and belief, these discounts are off-invoice and not taken into account when a given manufacturer calculates its Average Sales Price (ASP). As a result, the weighted average sales price calculated by CMS becomes artificially inflated, resulting in millions of dollars in overpayment in Medicare reimbursement. See Pharmaceutical Fraud in this Glossary.

False Certification Cost Report – See Cost Report Certification in this Glossary

False Claims Act – See Pharmaceutical Fraud in this Glossary.

False Coding Fraud – See Upcoding in this Glossary

False Cost Report Reimbursement – See Cost Report Fraud in this Glossary

FDA Pediatric Rule – If a new drug will have significant use amongst children the FDA can order a manufacturer to conduct pediatric clinical trials prior to the marketing of the drug. Unless the manufacturer can meet an exception, pediatric safety and effectiveness data must be included not only in NDAs (New Drug Applications) and BLAs (Biologic License Application) but also in supplemental applications for new active ingredients, new indications, new dosage forms, new dosing regimens, and new routes of administration. The manufacturer is typically required to conduct at least one clinical investigation in pediatric age groups (including neonates in appropriate cases) in which a drug is anticipated to be used. There are currently several government False Claims Act investigations involving the off-label promotion of prescription pharmaceuticals for use in children, although the manufacturer had not obtained FDA approval for the pediatric population. In some cases the manufacturer had sought a pediatric indication but was refused by the FDA. See Pharmaceutical Fraud in this Glossary