Any Formula may Vary subject to Maximum Limits of Law
Plans can use any method, combination of methods and modify methods with -% or +% of Terms, subject to state and federal limitations
- Maximum allowable cost (MAC) (Workers Comp): A price ceiling, similar to the FUL, established at the state level (Typical Highest Price That Can Be Charged)
- Usual and customary price (U&C): The average cash price paid at a retail pharmacy (Cash Price no PBM discount) Price varies from Loss Leaders to Most profit for the Pharmacy
- Average wholesale price (AWP): The price pharmacies pay for drugs from their wholesale supply distributors. Average mark up pricing is supplied by Medi-Span and First Databank
- Wholesale acquisition cost (WAC): An estimate of the manufacturer’s list price for a drug to wholesalers or other direct purchasers, not including discounts or rebates. This price is defined by federal law
- Average manufacturer price (AMP): The price a manufacturer charges wholesalers or pharmacies that purchase directly from the manufacturer after discounts. This price is defined by federal law
- Average sales price (ASP): A calculation of the weighted average of manufacturer’s sales price for a drug for all purchasers, net of price adjustments. This price is defined by federal law
- NADAC:Â Â NADAC stands for “National Average Drug Acquisition Cost.” It is a pricing benchmark used in the U.S. to determine the average cost that retail pharmacies pay to acquire prescription drugs. NADAC is published by the Centers for Medicare & Medicaid Services (CMS) and is updated regularly based on voluntary pharmacy surveys.
It is used by Medicaid programs, insurance companies, and policymakers to establish fair and transparent drug reimbursement rates, ensuring pharmacies are reimbursed based on actual acquisition costs rather than inflated list prices.
- Estimated acquisition cost (EAC): An estimate of the price generally paid by providers for a drug. Formula specific for each state as defined by the state Medicaid agency       Â
- Average Actual Cost (AAC): An estimate of retail pharmacy acquisition costs for drugs through a review of actual pharmacy invoices
- Dispensing fee: The amount reimbursed to the pharmacy to cover the charge for professional services and overhead costs
- National Drug Code (NDC): An Il-digit code used by Medicaid to identify a drug based on its manufacturer, strength, and package size. Plans can use any method, combination of methods and modify methods with -% or +% of Terms, subject to state and federal limitations
- Federal Upper Limit (FUL): A price ceiling used by the Centers for Medicare and Medicaid Services (CMS) to control prices for certain medications paid to pharmacies
- Insurance Company & Self Insured PBM Plans: Plans can use any method, combination of methods and modify methods with -% or +% of Terms, subject to state and federal limitations
- Advantage Medicare and Medicaid Insurance Company PBM Plans: Plans can use any method, combination of methods and modify methods with -% or +% of Terms, subject to state and federal limitations
- eRxJustice (PBC) Public Benefit Company (PBM) Pharmacy Benefit Manager: Plans use pricing formula designed to be acceptable to all Courts Judgements Limitations, Federal and State requirements and reasonable non-controversial pricing.