As you head out for the holiday, you may want to stop by the Centers for Medicare & Medicaid Services (“CMS”) website to check out CMS’s latest gift – the posting of the final National Average Drug Acquisition Cost (“NADAC”) Files.  Along with the final NADAC files posted today (November 27, 2013), CMS has posted a number of other documents, including a NADAC “Q&A” document.   CMS previously stated that “We expect that states may consider the NADAC as a reference price when setting their [Medicaid] reimbursement methodology.”  The final NADAC files will be updated weekly.

As you may recall, under the Deficit Reduction Act of 2010 (the “DRA”), CMS was directed to contract a vendor to determine “retail survey prices for covered outpatient drugs that represent a nationwide average of consumer purchase prices for such drugs, net of all discounts and rebates (to the extent any information with respect to such discounts and rebates is available).”  42 U.S.C. § 1396r-8(f).  In 2011, CMS awarded Myers and Stauffer a contract to perform such surveys.  While CMS indefinitely discontinued the National Average Retail Price (or “NARP”) survey of consumer prices in July of this year, CMS has continued to have Myers and Stauffer survey pharmacy acquisition costs (the NADAC survey). The NADAC is determined by Myers and Stauffer based on a random voluntary monthly national sample of 2,000-2,500 independent and chain pharmacies’ invoice purchase records.  Specialty pharmacies are not included in the survey.  Somewhat controversially, the NADAC does not take into account any off-invoice discounts, rebates or price concessions.

While NADAC survey prices have been publicly available since October 2012, these files were previously released in “draft”, and thus states were not permitted to use them for purposes of Medicaid provider reimbursement.  The “finalization” of such files means that many states will likely seek to revise Medicaid payment methodologies (which are generally based on “estimated acquisition costs”) to use the NADAC as a basis for some outpatient drug reimbursement formulas.  This may result in a move away from Average Wholesale Price- and/or Wholesale Acquisition Cost-based formulas, each of which are used widely by states today.  However, the implementation by states may take time, as CMS has acknowledged in the Q&As that a state intending to use NADAC as a basis for payment would need to submit a state Medicaid plan amendment (which can sometimes be a lengthy process).  A handful of states (including Alabama, Colorado, Idaho, Iowa, Louisiana, and Oregon) have already implemented their own “actual acquisition cost”-based reimbursement systems, based on state surveys separate from the NADAC.  In addition, the public availability of the files means that other payors, including private payors, may seek to use this data in setting pharmacy reimbursement.

Happy Thanksgiving!!

Posted by Kathleen Peterson

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