The National Average Drug Acquisition Cost (NADAC) is the approximate invoice price pharmacies pay for medications in the United States. [1] This applies to chain and independent pharmacies but not mail order and specialty pharmacies. [1] Rebates pharmacies may receive after paying an invoice are not included. [1] The NADAC data is calculated by the Centers for Medicare and Medicaid Services. [1]
It was created in 2011, primarily through the collaboration and initiative of two pharmacists, Mike Sharp, former Indiana Medicaid Pharmacy Director and Joe Fine, Technical Pharmacy Director at CMS. By 2017, 45 State Medicaid Programs utilized the NADAC as their primary pharmacy payment benchmark. Subsequently, several transparent PBMs also began using it. The NADAC is widely regarded as the key innovation driver behind pharmacy pricing transparency.
The NADAC, despite being voluntary and not supported by any legislative framework, has enjoyed amazing success. Federal Mandatory NADAC statutory language was first developed by Eric Pachman, founder of 46brooklyn and Mike Sharp in 2019. Senator Ron Wyden’s efforts continue and the language remains in the 2025 Bipartisan Health Care Act (S.891). Passage of Federal mandatory participation language will be the next major improvement for the breadth and depth of monthly data acquired.
The NADAC is publicly available and all of the drug file compendia have adopted it in their standardized drug information and pricing benchmark files. The NADAC initiated the widespread cost-plus pharmacy migration when CMS added the provision of a "professional" dispensing fee (which includes counseling and other administrative services) for Fee-for-service Medicaid programs. [2]
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