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<strong>CMS</strong>-1403-FC<br />

difference from AWP pricing was calculated using<br />

acquisition costs. However, in 2006 when we moved to ASP<br />

pricing for ESRD drugs, we recalculated the difference from<br />

AWP pricing using ASP prices.<br />

In addition, section 1881(b)(12)(F) of the Act<br />

requires that beginning in CY 2006, we establish an annual<br />

update to the drug add-on to reflect the estimated growth<br />

in expenditures for separately billable drugs and<br />

biologicals furnished by ESRD facilities. <strong>This</strong> growth<br />

update applies only to the drug add-on portion of the<br />

case-mix adjusted payment system.<br />

The CY 2008 drug add-on adjustment to the composite<br />

rate is 15.5 percent. The drug add-on adjustment for 2008<br />

incorporates an inflation adjustment of 0.5 percent. <strong>This</strong><br />

computation is explained in detail in the CY 2008 PFS final<br />

rule with comment period (72 FR 666280 through 66282).<br />

a. Estimating Growth in Expenditures for Drugs and<br />

Biologicals for CY 2009<br />

In the CY 2007 PFS final rule with comment period<br />

(71 FR 69682), we established an interim methodology for<br />

annually estimating the growth in ESRD drugs and biological<br />

expenditures that uses the Producer Price Index (PPI) for<br />

pharmaceuticals as a proxy for pricing growth, in<br />

conjunction with 2 years of ESRD drug data, to estimate per<br />

166

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