Actual Acquisition Cost Survey

Survey of Retail Prices, Payment and Utilization Rates, and Performance Rankings

Section 1927(f) of the Social Security Act, added by the Deficit Reduction Act of 2005 (DRA) enacted in February 2006 and revised by the Patient Protection and Affordable Care Act of 2010 (ACA) enacted in March 2010, authorizes but does not require CMS to contract with a vendor to determine representative national average purchase prices of covered outpatient drugs available to consumers at retail community pharmacies (net of any discounts or rebates, to the extent that such information is available).

The vendor would base its determinations on “retail survey prices” that it would work with “retail community pharmacies, commercial payers, and States” to collect, on at least a monthly basis. The vendor’s monthly determinations of “average retail survey prices” for all covered outpatient drugs would be provided to CMS, then shared with the States, and those for multiple source drugs would be posted to a publicly available website.

In June 2010, CMS issued a Request for Proposal (RFP) seeking a contractor to develop a national database of retail community pharmacy cost data to be updated monthly and posted on the CMS website. The data would be acquired through a voluntary survey completed by retail community pharmacies and would include national averages of:

• Net ingredient cost of all covered outpatient drugs (“actual acquisition cost”)
• Retail price offered to consumers of all covered outpatient drugs, based on actual transactions

The database would compare the ingredient costs derived from the survey to both existing reference pricing used by States, such as Wholesale Acquisition Cost (WAC) and Average Wholesale Price (AWP), and retail pricing to highlight potential savings. An annual report would rank the nation’s top 50 prescribed drugs and compare state Medicaid reimbursement rates for those medications to the retail prices gathered in the survey. 

In an August 2010 letter to CMS, several trade associations representing retail community pharmacies including, the National Association of Chain Drug Stores, the National Community Pharmacists Association, the American Pharmacists Association and the Food Marketing Institute, objected to the RFP, on the grounds that: (1) the RFP did not reflect the requirement that the vendor’s surveys focus only on prices available to consumers at “retail community pharmacies”, thereby excluding mail-order, hospital outpatient, long-term care, and other non-retail community pharmacies, (2) the RFP exceeded CMS’s statutory authority by seeking to have the vendor survey pharmacies’ drug acquisition costs (rather than only prices available to consumers), and (3) CMS intended to post information from individual pharmacies on the publicly available website (rather than only “average” prices).

In a February 2011 letter to state governors, Health and Human Services Secretary Kathleen Sebelius offered several new ways for states to contain Medicaid costs without cutting eligibility, highlighting the survey as "a basis for determining state-specific rates, with results available later this year."

In July 2011, CMS annouced that they had chosen Myers & Stauffer as the consultant that will carry out the survey. CMS stated that external stakeholders, including pharmacy associations and others, will be invited to review the methodology for accuracy.

In August 2011, CMS held a stakeholder meeting where Myers & Stauffer presented the manner in which it will survey pharmacies and collect information and the methodology to calculate what CMS is calling the “National Average Drug Acquisition Cost” (NADAC) for each prescription drug. CMS plans to post the NADACs on its website so that state Medicaid programs may consider them when setting reimbursement amounts for prescription drugs.