CMS’s 2026 requirement for manufacturers to submit “reasonable assumptions” alongside ASP data formalizes the role of estimation in drug pricing, increasing scrutiny on how ASP is constructed and shifting reporting toward greater transparency and accountability.
Beginning in 2026, CMS is requiring pharmaceutical manufacturers to submit “reasonable assumptions” alongside their quarterly Average Sales Price (ASP) data. At first glance, this may seem like a procedural update.
But it is not, it represents a meaningful shift in how ASP is understood, validated, and ultimately enforced. For years, ASP has been treated as a calculated output, a number derived from sales and discounts.
But in reality, ASP has always depended on a series of judgments about timing, allocation, and classification. CMS is now formalizing that reality.
Manufacturers are no longer being asked only to report the number, they are being asked to explain how they arrived at it.
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At its core, ASP is simple: ASP equals total net sales divided by total units sold. But neither “net sales” nor “units” are as straightforward as they appear.
In practice, ASP is built on a foundation of estimates. Rebates may be paid months after the initial sale.
Chargebacks arrive with delays, discounts are embedded in contracts that span multiple products, and free goods blur the definition of what constitutes a “unit.”
As a result, manufacturers routinely rely on assumptions to construct ASP. These assumptions determine how future rebates are estimated, how bundled discounts are allocated, and how corrections are applied across reporting periods.
CMS has long allowed this flexibility, but is now requiring manufacturers to document it explicitly.
ASP is not just an internal pricing metric; it directly determines how much Medicare pays for physician-administered drugs under Part B. The standard reimbursement formula has historically been:
This payment system applies to a large and growing category of drugs, including:
Medicare Part B drug spending is substantial, well over $40–$50 billion annually in recent years, and continues to grow, driven largely by oncology and specialty biologics.
What makes ASP especially consequential is that small changes in ASP scale dramatically. A $10 change in ASP for a widely used oncology drug can translate into tens or even hundreds of millions of dollars in Medicare spending.
This is why CMS is increasingly focused on how ASP is constructed, not just what the final number is.
The rationale behind this requirement is rooted in both economics and policy.
First, ASP directly determines Medicare reimbursement. Even minor differences in assumptions, how rebates are estimated, how discounts are allocated, can materially affect federal spending and provider margins.
Second, the pricing environment has grown more complex. Over the past decade, the proliferation of portfolio contracts, value-based agreements, and the expansion of the 340B program have made ASP less of a simple average and more of a constructed estimate.
CMS is responding to this complexity by increasing transparency. Finally, there is an accountability dimension.
By requiring manufacturers to submit their assumptions, CMS is effectively moving from a system of “trust the number” to one of “show your work.” This creates a clearer audit trail and allows for more consistent enforcement across manufacturers.
Not all components of ASP are equally subjective. CMS has identified several areas in which assumptions play a critical role and where missteps are most likely to occur.
Bundled contracts are increasingly common in oncology and specialty therapeutics. Hospitals and health systems often negotiate discounts across a portfolio of drugs rather than on a single product basis.
The challenge is that ASP must be calculated for each individual drug. This requires manufacturers to allocate bundle discounts across products.
While proportional allocation based on list price is common, alternative approaches may be used depending on the contract. The difficulty is that these allocations are inherently artificial.
They create product-level prices that did not exist in the original transaction. The implications are significant.
Over-allocating discounts to one product can depress its ASP and affect reimbursement. Under-allocating can inflate ASP and invite scrutiny. Therefore, CMS requires manufacturers to document how these allocations are made and why.
Many price concessions are not known at the time of sale. Rebates tied to volume thresholds, market share agreements, or performance metrics may be realized months later—yet ASP must be reported quarterly.
Manufacturers must therefore estimate these future concessions, which introduces forecasting into what might otherwise seem like an accounting exercise. The quality of these estimates matters, as underestimating rebates can artificially inflate ASP, while overestimating them can suppress it.
CMS expects manufacturers to disclose how these estimates are generated, including the assumptions and data sources used. This is particularly important as rebate structures become more complex and tied to outcomes rather than simple volume.
Free goods present another area of complexity. Programs such as “buy ten, get one free” effectively reduce the price per unit, even though no explicit discount is recorded.
The key distinction is whether the free goods are contingent on a purchase. If they are, they must be included in ASP calculations because they alter the effective price.
If they are not, such as in patient assistance programs, they may be excluded. The challenge lies in classification.
Mischaracterizing free goods can materially affect both the numerator and denominator in the ASP calculation. CMS therefore requires manufacturers to clearly describe how such programs are treated.
In a system where many payments are delayed, the timing of cash flows matters. A rebate paid six months after a sale is not economically equivalent to one paid immediately.
The concept of the time value of money allows manufacturers to account for this difference by discounting future payments to their present value. While the impact on ASP is often modest, the principle is important, as it ensures that ASP reflects the economic reality of transactions within the reporting period.
CMS requires manufacturers to explain how they incorporate timing into their calculations. This includes the discount rates used and the treatment of different types of delayed payments.
Sales to 340B-covered entities must be included in ASP, even though they occur at significantly discounted prices. This inclusion has long been a point of contention.
On one hand, 340B transactions are real sales to providers and therefore part of the market. On the other hand, the prices are derived from statutory formulas and can be substantially lower than commercial prices.
Manufacturers must ensure that 340B discounts are properly reflected without double counting. Given the growing share of oncology drugs flowing through 340B channels, this assumption has a meaningful impact on ASP.
Returns, credit re-bills, and other corrections often occur after the original sale. The key question is whether these adjustments should be applied to the current reporting period or attributed back to the period in which the original transaction occurred.
Applying corrections to the wrong period can introduce volatility into ASP and obscure underlying trends. CMS expects manufacturers to adopt consistent policies and document their approach.
The requirement to submit reasonable assumptions elevates ASP reporting from a back-office function to a strategic capability. It demands coordination across multiple functions, including pricing, contracting, finance, and compliance.
Organizations that treat ASP as a governed model—complete with documented assumptions, validation processes, and audit trails, will be better positioned to manage risk. Those that rely on fragmented processes or implicit knowledge may find themselves exposed.
Consistency is critical. CMS is less concerned with which specific method a manufacturer uses and more concerned with whether that method is applied consistently and can be justified.
At a deeper level, this requirement reflects a broader trend in healthcare policy: the push toward greater transparency in pricing.
ASP sits at the intersection of market dynamics and public reimbursement. It influences not only how much Medicare pays but also how providers make treatment decisions and how manufacturers structure contracts.
By requiring visibility into the assumptions behind ASP, CMS is effectively acknowledging that pricing in today’s pharmaceutical market cannot be understood through transactional data alone. It must also account for the models and judgments that shape that data.
For manufacturers, the message is clear. ASP is no longer just a number to be reported; it is a narrative to be explained.
The assumptions behind ASP, how discounts are allocated, how future rebates are estimated, and how timing is handled are now subject to scrutiny. They must be documented, defensible, and consistently applied.
In an environment in which ASP directly influences tens of billions of dollars in Medicare Part B drug spending each year, the stakes are high. But so is the opportunity.
Manufacturers that invest in robust ASP governance will not only meet compliance requirements but also gain a clearer understanding of their own pricing dynamics. In the end, the shift is as much philosophical as it is procedural.
CMS is not simply asking for better data, it is asking for better explanations.
And in a system as complex as pharmaceutical pricing, those explanations matter just as much as the numbers themselves. Manufacturers must submit both ASP data and their reasonable assumptions on a quarterly basis through the ASP Data Collection System.
About the Author
Thani Jambulingam, PhD, is a professor in food, pharma and healthcare at Erivan K. Haub School of Business, Saint Joseph’s University, Philadelphia. He is a pharma and healthcare strategist and his work focuses on AI-enabled decision frameworks, emerging technologies, and commercial strategy. He can be reached at tjambuli@sju.edu.
Reference
Centers for Medicare & Medicaid Services. Manufacturer submission of average sales price (ASP) data for Medicare Part B drugs and biological and supporting regulations (CMS-10110). OMB Control No. 0938-0921; ICR Ref. No. 202512-0938-022. Published January 8, 2026. Accessed March 19, 2026.
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