Expansion of ASP Reporting Requirements

Yesterday, the Center for Medicare and Medicaid Services (CMS) released instructions and forms associated with the new Average Sales Price (ASP) reporting and certification obligations, effective with the Q1 2026 submission. These additional requirements for pharmaceutical manufacturers show CMS’s increasing scrutiny of bona fide service fees (BFSFs) and the “Reasonable Assumptions” previously made around such fees.

CMS did not define BFSFs and in fact, the longstanding four-part test still applies:

• Is the fee for a legitimate, itemized service

• Is this a service the manufacturer would otherwise perform

• Is any of the fee passed through to customers

• Does the payment represent fair market value (FMV)

With the Q1 ASP submission, for all existing fee arrangements including those entered into in Q1 2026, manufacturers must submit the following:

• Reasonable assumption documentation

• BFSF certification letters (no pass-through)

• FMV methodology descriptions

Reasonable Assumption Documentation

In the past, manufacturers often took the position of, “We believe this is a BFSF,” whereas now, they must be able to definitively prove it with supporting documentation, including the methodologies used to determine whether a fee qualifies as BFSF and evidence of periodic FMV reassessments. These are now auditable submissions to CMS so as with your Government Pricing submissions, it is important to have well-defined policies and procedures.

BFSF Certification Letters

One of the most operationally burdensome changes for manufacturers is the requirement to obtain a written certification from every fee recipient, confirming that any fee paid to them is not passed on, in whole or part, to customers, clients, or affiliates. If a fee recipient does not respond to the manufacturer’s request for this certification, it is up to the manufacturer how to handle it and this is one area where documentation of any assumptions is critical.

FMV Methodology Descriptions

CMS requires manufacturers to explain and justify their approach to determining FMV but has not provided formal standards to guide or assist manufacturers in this process. Manufacturers must maintain supporting documentation and analyses, and conduct periodic reviews of their contracts, processes, and assumptions, making this more of a documentation-driven, compliance exercise.

Impact on Manufacturers

With the new requirements, from an operational impact, manufacturers must be more vigilant about their cross-functional coordination when it comes to contracts. The value of collaboration cannot be overstated as these new requirements impact contracting, legal, GP, finance, and potentially other areas of the business as data collection and validation requirements continue to expand.

From a financial perspective, a change to the way any fees are treated in ASP may lower a manufacturer's ASP. Although there is not a direct impact on the bottom line, this could affect the sales of not only the manufacturer’s product but also to competitors’ products, potentially altering purchasing patterns. This could also affect commercial contracting strategies and, depending on a manufacturer’s policies, if a fee is determined to not meet the criteria to be “bona fide” for ASP, this could lower the product’s Average Manufacturer Price and/or Best Price. The downstream of these changes could be a change to the Medicaid Unit Rebate Amount.

If your organization has fallen behind on these requirements and/or you need more information, including with these new forms, please contact us. We will be happy to assist you.