National Average Drug Acquisition Cost (NADAC) Survey

Center for Medicaid and CHIP Services
January 1, 2018
Dear Pharmacy Owner / Manager:
As you are aware, changes in the availability of drug pricing benchmarks necessitate that many State
Medicaid programs evaluate alternative pricing methods for use in reimbursing pharmacies for drugs that
they dispense. Because of these changes, we have the unique opportunity to work together to recognize
the contributions pharmacists make to the health of Medicaid recipients through the realignment of drug
ingredient reimbursement for estimating pharmacy’s acquisition costs, and the provision of reasonable
Medicaid dispensing fees that consider professional services performed by pharmacists.
The Centers for Medicare and Medicaid Services (CMS) is working with State Medicaid programs, with
input from national pharmacy associations and many other stakeholders, regarding the design and
development of a National Average Drug Acquisition Cost (NADAC) reference file. We expect that the
NADAC reference file will represent a new pricing benchmark based on the national average costs that
pharmacies pay to acquire Medicaid covered outpatient drugs. This pricing benchmark will be based on
drug acquisition costs collected directly from pharmacies through a nationwide survey process. This
survey will be conducted on a monthly basis to ensure that the NADAC reference file remains current and
up-to-date.
CMS envisions that the NADAC reference file will provide State Medicaid agencies with an additional
pricing reference which they can use to evaluate their current drug reimbursement methodologies. If a
Medicaid program chooses to utilize the NADAC reference file for drug ingredient reimbursement, we
expect that States will simultaneously evaluate their Medicaid dispensing fee.
One of the primary goals of this program is to create and maintain an up-to-date NADAC reference list
for Medicaid covered outpatient drugs reflecting the average price paid for drugs by entities (e.g.,
independent pharmacies and chain pharmacies in the United States). The drug acquisition cost survey
process has been designed to minimize the administrative burdens on pharmacies that participate and to
streamline the process of obtaining drug cost data from pharmacies.
CMS has contracted with Myers and Stauffer LC, a national certified public accounting firm that provides
professional accounting, consulting, data management and analysis services to government-sponsored
healthcare programs. Myers and Stauffer has extensive experience working with State Medicaid
pharmacy programs and collecting acquisition costs directly from pharmacies. Under this CMS contract,
Myers and Stauffer has developed a methodology for collecting drug acquisition costs and calculating the
NADAC reference file prices for covered outpatient drugs.
A meeting with stakeholders was held on August 4, 2011 at the CMS offices in Baltimore, during which
the proposed methodology for the NADAC was presented. Since that meeting, further stakeholder input
has been received and considered in the final design and development of the drug acquisition cost survey
and NADAC reference file initiative. Additional information and routine updates will be available from
the http://www.Medicaid.gov website.
Over
OMB Control #0938-1041

Pharmacy Owner/Manager
January 1, 2018
Page 2

Your pharmacy has been randomly selected to participate in this month’s survey. We are requesting that
you provide a copy of the selected purchase invoices for drugs purchased by your pharmacy. The attached
survey instructions prepared by Myers and Stauffer outline the survey process for submitting one (1)
month’s worth of drug invoices by fax, mail, or electronic submission. Since 2,000 to 2,500 pharmacies
nationwide are randomly selected to participate in the survey each month, the probability that your
pharmacy will be selected again during the year is 5% or less. Based on the contractor’s experience, it is
estimated to take less than 30 minutes of non-pharmacist time to assemble and submit the requested
information.
It is important to note that all drug purchase price information submitted for this project will remain under
the control of CMS, will only be used for the purposes described above, and will remain secure to the
extent provided by law, consistent with Exemption 4 of the Freedom of Information Act (FOIA).
Accordingly, neither CMS nor Myers and Stauffer will release invoice information and pharmacy
identification that is submitted voluntarily and is identified by you as proprietary, except as is required by
law.
By participating in the survey, you will have the opportunity to ensure that the market conditions facing
your pharmacy are represented in the calculation and evaluation of the NADAC. One of the goals of the
NADAC program is to account for the prices that pharmacies pay to acquire drugs.
To accomplish this goal, information from your pharmacy is necessary. Your participation in this
endeavor is strongly encouraged and greatly appreciated.
This Retail Price Survey represents an opportunity for Medicaid pharmacies to participate in an initiative
to determine a reference price representing the acquisition cost of drugs. Please note that current Federal
regulations require State Medicaid programs to consider the professional services performed when setting
their dispensing fee rates.
Please contact the Help Desk operated by Myers and Stauffer LC at (855) 457-5264 should you have any
questions regarding this survey.
Sincerely,

Michael Nardone
Director,  Disabled  and  Elderly  Health  Programs  Group  
Center for Medicaid and CHIP Services
Centers for Medicare & Medicaid Services

OMB Control #0938-1041