Average sales price, and how Medicare Part B pays for generic injectables

On Sept. 17, 2026, the Centers for Medicare & Medicaid Services posted the Part B drug payment limits that apply from Oct. 1 through Dec. 31, according to the agency's payment limit file page¹. The October 2026 file² lists 918 billing codes. One of them, J1885, covers ketorolac injection, an old generic painkiller given in clinics and emergency rooms. Its limit is 56.9 cents per 15 mg billing unit. In the October 2025 file³ it was 30.3 cents.

Ondansetron injection, a generic anti-nausea drug, fell over the same year, from 9.1 cents to 8.4 cents per milligram. Both figures come out of a formula Congress wrote in 2003, which pays most drugs given in a doctor's office or hospital outpatient department at 106 percent of their average sales price, or ASP.

For generics, the formula pools the brand and every copy under one code. This piece explains how ASP is calculated, how the quarterly files are built, why generics share a code with their brand, what GxRadar found comparing 13 generic injectables, and the add-on Congress set for biosimilars in 2022.

Where ASP plus 6 percent came from

Part B "covers a limited number of outpatient prescription drugs under certain conditions," Medicare.gov says¹⁰, usually drugs a patient would not give to themselves. Before 2004, Medicare paid for most of them at 95 percent of the average wholesale price, a list-based figure. Section 303 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003⁵ cut most of those payments to 85 percent of AWP for 2004 and added a new section 1847A to the Social Security Act, which moved most drugs to an ASP-based payment starting Jan. 1, 2005. The same act created Part D, as GxRadar's piece on the 2003 law explains.

Under the statute⁶, a manufacturer's ASP for each National Drug Code is its sales to all U.S. purchasers in a calendar quarter, divided by the units sold. The price is net of volume discounts, prompt pay discounts, cash discounts, free goods tied to a purchase, chargebacks and most rebates, though Medicaid rebates are not subtracted. Sales exempt from Medicaid's "best price" and sales at nominal prices are left out entirely.

Manufacturers must calculate ASP every quarter and submit it within 30 days of the quarter's close, according to CMS's ASP reporting page⁸. For the third quarter of 2026, which ended Sept. 30, the submission window closed Oct. 30.

How the quarterly files are built

CMS turns those NDC-level reports into a payment limit for each billing code under the Healthcare Common Procedure Coding System (HCPCS). Its March 2026 overview⁷ says most separately payable Part B drugs "have a payment limit of ASP plus 6 percent," and that when several NDCs share a code, CMS calculates a volume-weighted ASP. The payment for a claim is the lesser of the provider's actual charge or that limit.

Those figures run behind the market. A note at the top of the October 2026 file says its limits "are based on 2Q26 ASP data," meaning sales from April through June. A price change a manufacturer makes in July shows up in Medicare's payment in January at the earliest. The same file lists a coinsurance rate for each code. By GxRadar's count, 800 codes carry the standard 20 percent, 34 carry none, and 84 carry a lower rate. Medicare.gov¹⁰ explains that enrollees may pay less coinsurance for certain Part B drugs whose prices have risen faster than inflation.

Several exceptions sit beside the main rule, the CMS overview says. A new drug with no sales history is paid up to 103 percent of its wholesale acquisition cost. And if the HHS Office of Inspector General finds that a code's ASP exceeds its average manufacturer price by at least 5 percent in two straight quarters, or in three of the previous four, CMS can substitute a payment based on AMP. GxRadar's guide to WAC, AWP, NADAC, MAC and ASP compares these benchmarks side by side.

Why generics share a code with their brand

Federal law treats a drug as "multiple source" in a quarter when at least two products are rated therapeutically equivalent in FDA's Orange Book, are pharmaceutically equivalent and bioequivalent, and are sold in the United States during that quarter. (GxRadar explains the AB and AP ratings separately.) For those drugs, Medicare pays 106 percent of the volume-weighted average of every manufacturer's ASP in the code.

In practice, the brand and all of its generics get one payment rate. "For brand drugs with generic competitors, Medicare Part B assigns both the brand product and its generic equivalents to the same billing code," the Medicare Payment Advisory Commission wrote in its July 2026 data book⁹. A clinic that buys a cheaper version is paid the same as one that buys a pricier one. MedPAC says this design "spurs price competition among generics and their associated brand products."

MedPAC's price index for Part B drugs other than biologics fell 32 percent from 2015 through 2024, which it attributed in part to patent expirations and generic entry, naming pemetrexed, a cancer drug, as an example. Total fee-for-service payments for separately payable Part B drugs still grew from $23.0 billion to $53.9 billion over that period, MedPAC found. MedPAC tied that growth to price changes, costly new launches and shifts in use.

What the October 2026 file shows for 13 generic injectables

GxRadar compared the October 2025 and October 2026 payment limits for 13 injectables that are widely sold as generics. Each limit is per billing unit, the quantity the HCPCS code defines. These are Medicare payment ceilings, not a clinic's purchase price. The implied ASP column divides the limit by 1.06 and assumes the standard formula applied. Shortage status comes from FDA's shortage database¹², as captured in GxRadar's shortage tracker on Nov. 3, 2026.

Nine of the 13 limits fell. Pemetrexed's dropped 72 percent in a year. Ketorolac's rose 88 percent, and its injectable form has been on FDA's shortage list since March 2018, according to the openFDA shortage records¹³ behind GxRadar's tracker. Carboplatin, whose 2023 shortage GxRadar covered in a separate piece, rose 25 percent. Shortages and price do not line up neatly in this small set. Heparin has been listed since 2017 and its limit dipped 3 percent.

CMS's January 2026 file⁴ fills in the middle of the year for some codes. Pemetrexed's limit was already $3.594 per 10 mg in January before falling to $1.230 by October, so most of the drop came after January.

A quarterly lag matters most during shortages, when acquisition prices can move faster than the payment limit. Injectables make up 71 percent of the drugs on FDA's current list by GxRadar's count, a pattern GxRadar examines in why sterile injectables dominate shortage lists. CMS has written one shortage carve-out into the ASP rules. When the inspector general identifies self-administered versions inside a code, CMS normally pays the lesser of the standard limit and one calculated without them. It skips that step when the drug is on FDA's shortage list, the reporting page⁸ says.

Inflation rebates and the biosimilar add-on

In 2022 the Inflation Reduction Act added two Part B provisions that treat generics and biosimilars differently. The first is the inflation rebate. Since January 2023, manufacturers have owed Medicare a quarterly rebate when a Part B drug's ASP grows faster than inflation, MedPAC's data book notes, and CMS describes the program on its inflation rebate page¹¹. The statute limits it to single-source drugs and biologics. Biosimilars are covered too, except those receiving the higher add-on described below, and multiple-source generics fall outside it. GxRadar's piece on Medicare inflation rebates covers who has been billed.

A second provision concerns the biosimilar add-on. A biosimilar is paid its own ASP plus 6 percent of the reference biologic's ASP, so the add-on does not shrink when the biosimilar undercuts the original. Section 11403 of the act raised that add-on to 8 percent for five years for "qualifying" biosimilars, defined in the statute⁶ as those whose ASP is not more than the reference product's. Biosimilars already paid under the formula on Sept. 30, 2022, got a five-year window starting Oct. 1, 2022. Those first paid between Oct. 1, 2022, and Dec. 31, 2027, get five years starting with their first quarter of payment. The October 2026 file lists 48 biosimilar codes in the Q5100 series. GxRadar explains how biosimilars differ from generics and the 2010 law that created them.

The next file will set limits for January through March 2027. It will rest on third-quarter 2026 sales, which manufacturers had until Oct. 30 to report. The October file went up two weeks before it took effect.