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Focus on Regulation

CMS Moves Forward with National Average Drug Acquisition Cost (NADAC) Survey and Publication

CMS has announced the implementation of the NADAC survey.  Under this initiative, a CMS contractor will conduct monthly surveys of retail pharmacies nationwide to determine a national weighted average invoice price for retail pharmacy drugs, and then publish and update those “NADACs” on at least a monthly basis on the CMS website.  CMS believes NADACs will be a better indicator of pharmacy acquisition costs than other currently available published price figures, such as Average Wholesale Price (or AWP), and hopes state Medicaid programs will adopt NADAC as the basis for pharmacy reimbursement rates.  The expectation is that use of NADAC for this purpose will generate savings for  both the federal government  (which reimburses states for at least 50% of their Medicaid expenditures) and the state Medicaid programs .  

CMS first proposed the creation of NADACs last summer.  Stakeholders submitted comments regarding that proposal and the current implementation plan, detailed in a “Draft Methodology” document included on the CMS website, responds to that stakeholder input.  CMS appears poised to implement the NADAC survey immediately, with survey requests going out to pharmacies as early as today, June 1.  Surveys are due within 14 days, which puts CMS in the position to potentially release its first NADAC file at the end of June, for states to use effective July.

Publication of NADACs would represent a significant move toward price transparency in the retail pharmacy marketplace.  The public availability of these prices means that private payers and manufacturers also will gain insight into current retail prices, and potentially use those data for their own commercial purposes as well.

CMS is accepting comments on its Draft Methodology until June 21, 2012, at RPS@cms.hhs.gov.

Further detail is available through a Hogan Lovells Health Alert published on June 4, 2012.