An Abbreviated New Drug Application (ANDA) contains data for the review and ultimate approval of a generic drug product. Generic drug applications are called “abbreviated” because they are generally not required to include preclinical (animal) and clinical (human) data to establish safety and effectiveness. Instead, a generic applicant must scientifically demonstrate that its product is bioequivalent (i.e., meaning that it has the same amount of active ingredient, and performs essentially identically to the innovator drug). Once approved, an applicant may manufacture and market the generic drug product to provide the public with a safe, effective, low-cost alternative.

Actual Acquisition Cost is the state Medicaid agency’s determination of pharmacy providers’ actual prices paid to acquire drug products marketed or sold by a specific manufacturer. AAC is the current Medicaid benchmark to set payment for drug ingredients

 

ACA, also known as Obamacare, is the comprehensive health care reform legislation enacted in 2010 that makes insurance more affordable for low- to moderate-income Americans and addresses health insurance coverage, health care costs, and preventative care.  The Act: (1) provides consumers with premium tax credits or subsidies to lower the cost of insurance for those with incomes between 100 and 400% of the federal poverty level (FPL) for those entering the ACA marketplace; (2) expands the Medicaid program to cover all adults with income below 138% of the FPL in states that have expanded their Medicaid programs; and (3) supports specific medical care delivery methods designated to lower costs of health care.   The ACA marketplace, called the Exchange, is where ACA health plan sponsor offerings are sold.

 

A plan design option in which health plan sponsors (see definition under “plan sponsor”) lower costs by excluding coverage for certain, typically very high-cost, specialty medications. Working with the plan sponsor, alternative funding vendors inform patients that their benefits have changed and direct them to seek their medications from manufacturer patient assistance programs (PAPs). If a patient is not eligible for a manufacturer’s PAP, the patient may pay out of pocket (OOP), try to find funding through a foundation, have to rely on a secondary insurer (Medicare or Medicaid), or not receive treatment.

A policy that allows an interested pharmacy that is willing to accept the network participation terms and conditions of the plan sponsor to participate as an in-network contract pharmacy. AWP also refers to policies requiring PBMs and health plan sponsors to include such a pharmacy in their networks. This policy limits the use of performance-based metrics to assess the pharmacy and impacts the ability of the plan network administrator to exclude or terminate underperforming pharmacies or those not equipped to manage complex medications.

A term that is used interchangeably with NADAC. (See NADAC)

The average price paid to the manufacturer by wholesalers and pharmacies that purchase directly from a manufacturer. AMP, which is defined under federal law, is used to calculate drug rebates under the Medicaid drug rebate program. As of 2024, there no longer is any limit or cap on Medicaid drug rebates, so manufacturers who have large price increases may now be at risk for paying rebates above the total cost of the drug, which may further incentivize manufacturers to launch drugs at higher prices.

A manufacturer’s average sales price to all purchasers, net of discounts, rebates, chargebacks, and credits applied during the sales process for drugs and biologicals covered under Medicare Part B. ASP is calculated by dividing the total revenue earned by the total units sold.

AWP is an average price, or “sticker price” or “list price” for a drug sold by wholesalers to retail pharmacies, physicians, and other retail purchasers before any discounts or concessions. AWP, which is not a government-regulated price, often serves as the basis for payment negotiations between wholesalers and retail pharmacies. AWP, which is reported by commercial publishers of drug pricing data, such as First DataBank and Thomson Medical Economics, is based on information obtained from manufacturers, wholesale distributors, and other suppliers.