Medicaid Could Save Billions in Prescription Drug Costs With Increased Survey Participation

Mandating National Average Drug Acquisition Cost survey (NADAC) responses from all pharmacies could save more than $10 billion in the next decade, a new report says.

The NADAC report is compiled from data collected in a voluntary monthly survey conducted by the Centers for Medicare & Medicaid Services to establish benchmark prices for drugs in retail pharmacies.

Researchers estimate that Medicaid plans could see potential annual savings of $937 million if all retail pharmacies report acquisition prices to the NADAC survey and $155 million if NADAC surveys expanded to create prices for over 1600 more products.

The report, funded by Capital Rx and conducted by 3 Axis Advisors, compared pricing data in voluntary and compulsory NADAC reports between the third quarter of 2019 and second quarter of 2020. Because the NADAC survey is voluntary, researchers based compulsory data on that of Alabama, a state that has its own mandatory survey of prescription drug costs.

NADAC prices are lower than traditional pricing benchmarks that are based on manufacturer-set list prices, such as average wholesale price and wholesale acquisition cost (WAC). Most states use NADAC data to pay for prescription drugs covered by Medicaid, but the survey only has a response rate of approximately 20%, which limits its scope and pricing accuracy.

Researchers noted that Medicaid plans could save an average of 22% per drug with compulsory reporting. Nearly 1600 products included in Medicaid that do not have NADAC prices represent $3.7 billion in annual Medicaid costs. If they were to have a NADAC price, they could be discounted 4%, relative to WAC.

The study does not address additional potential savings for commercial payers, Medicare Prescription Drug Plans, or Medicare Advantage Plans.

—Maria Asimopoulos

Reference:
3 Axis Advisors. Issue brief: The billions in prescription drug savings from enhancements to NADAC. May 11, 2021. Accessed May 13, 2021. https://www.3axisadvisors.com/projects/2021/5/11/enhancements-to-nadac