Key Features of NADAC and How It Compares to TRxADE’s PAC, Pharmacy Acquisition Cost Benchmark

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According to the CMS, “the purpose of NADAC is to create a new national price benchmark that is more reflective of the prices that pharmacies pay to acquire prescription and over-the-counter drugs. The NADAC will be available for consideration by the States and public at large, to assist with individual pharmacy reimbursement methodology.

  1. The Level at Which NADAC Will Be Calculated and Reported

Under “Level of Reporting,” CMS states that NADACs “will be calculated at the drug grouping/drug category/pharmacy type level, and reported at the 11-digit National Drug Code (NDC) level.” The drug grouping is based on the active ingredient(s), strength, dosage form, and route of administration. NDCs for drugs that are therapeutically and pharmaceutically equivalent will belong to the same drug grouping.”

CMS Releases Draft Methodology for Calculating NADAC calculated at the NDC-9 level (subject to some exceptions, where NADACs would be calculated for a broader or more narrow group than the NDC-9 family) and then reported at the NDC-11 level. However, the draft methodology document is not entirely clear in certain respects, as outlined below.

NADAC “will be calculated at the drug grouping/drug category/pharmacy type level.” Putting aside pharmacy type, this suggests that NADACs will be calculated across the NDC9 family and then the same NADAC value would be listed for all the NDC-11s in the NDC-9 family. However, CMS states that in some cases, additional parameters are included in the definition of a drug grouping. For example, package size will be included for additional delineation when there is demonstrated variance of acquisition costs among package sizes for drugs in which the most cost effective package size cannot be purchased and easily repackaged for dispensing (e.g., topical creams and ointments).

NADAC surveys will include “chain” and “independent” pharmacies. Although the draft methodology document states that NADACs are calculated at the grouping/ category/pharmacy type level, the illustrative charts do not show separate NADAC values for chain pharmacies and independent pharmacies. Instead, the NADAC for a particular grouping/category is suggesting that the acquisition costs for chain and independent pharmacies are blended at a 70%/30% basis.

  1. Pharmacies Included in NADAC

NADAC will be based on acquisition costs of “retail community pharmacies, which will include independent community pharmacies and chain pharmacies.” Pharmacies will be identified as “chain” or “independent” based on a national self-reported pharmacy identification database. Pharmacy participation in a NADAC survey is voluntary.

Conclusion:

NADAC is a national acquisition benchmark undertaken by the federal government under the Affordable Care Act that will be published by the CMS so the public at large will have access and knowledge as to the generic benchmarks. It seems conceivable that NADAC will be utilized to determine acquisition cost at the Medicaid, Medicare and third party level. The generics are averaged as indicated above and the surveyed and compiled data is invalid by the time it is published. TRxADE’s PAC is an extremely valid generic pharmacy product cost on a real-time basis to the NDC level. PAC benchmarks are derived solely from the independent retail pharmacy and are not swayed by chain store data.