National Average Drug Acquisition Cost (NADAC)

How It Works

NADAC was launched by CMS in November 2013 through contractor Myers and Stauffer LC as a transparent, survey-based alternative to AWP. Participating retail pharmacies (about 2,500 randomly sampled community pharmacies per monthly survey, excluding 340B covered entities and specialty pharmacies) report actual invoice prices, and CMS publishes weighted averages by 11-digit NDC on data.medicaid.gov every Wednesday. NADAC typically runs 15-25% below WAC for brands and dramatically below AWP for generics, where the gap can exceed 90%. For example, generic atorvastatin 20mg has a NADAC around $0.04 per tablet against an AWP often listed above $4.00. State Medicaid programs have widely adopted NADAC-based reimbursement: by 2024, more than 35 states use NADAC or NADAC-plus-professional-fee models for their fee-for-service Medicaid pharmacy payment. NADAC reveals the PBM spread: when a pharmacy acquires a generic at NADAC and the PBM reimburses at AWP-based contract rates, the difference goes somewhere, typically retained by the PBM through maximum allowable cost (MAC) pricing. The FTC 2024 interim staff report on PBM practices used NADAC benchmarking extensively to document spread pricing on specialty generics. NADAC is a public dataset, searchable and downloadable in full from Medicaid.gov, and it is the most accurate public benchmark for what a drug actually costs at the pharmacy loading dock.

Related Terms

• Average Wholesale Price (AWP), A benchmark price for drugs that historically served as the basis for pharmacy reimbursement, often called the "sticker price that nobody pays."
• Wholesale Acquisition Cost (WAC), The manufacturer's list price for a drug sold to wholesalers, often called the "sticker price" before any rebates or discounts.
• PBM Spread Pricing, A PBM business practice of charging a health plan more for a drug than the PBM reimburses the pharmacy, retaining the difference as profit.