What Is NADAC Pricing? The Complete Guide to National Average Drug Acquisition Costs

If you work in pharmacy, healthcare finance, or drug pricing research, you've almost certainly encountered the term NADAC. But what exactly is it, how is it calculated, and why does it matter?

This guide breaks down everything you need to know about the National Average Drug Acquisition Cost — from the survey methodology to how pharmacies and state Medicaid programs use it every day.

What Is NADAC?

NADAC stands for National Average Drug Acquisition Cost. It is a pricing benchmark published weekly by the Centers for Medicare & Medicaid Services (CMS) that represents the average price pharmacies pay to acquire prescription drugs from wholesalers and manufacturers.

Unlike other drug pricing benchmarks that rely on manufacturer-reported list prices, NADAC is based on an actual survey of what pharmacies are paying. This makes it one of the most transparent and market-reflective drug pricing references available.

How Is NADAC Calculated?

CMS contracts with Myers and Stauffer LC to conduct a weekly survey of retail pharmacy acquisition costs. Here's how the process works:

• ●Sample selection: A statistically valid sample of retail pharmacies is randomly selected each week, including independent pharmacies, chain pharmacies, and pharmacy cooperatives
• ●Invoice verification: Participating pharmacies submit actual invoice data showing what they paid for each drug
• ●Weighted averaging: The reported acquisition costs are weighted by volume to calculate a national average for each National Drug Code (NDC)
• ●Publication: Results are published weekly on the Medicaid.gov website and made available as downloadable data files

The survey covers drugs dispensed through retail community pharmacies. It does not include specialty pharmacies, hospital pharmacies, or drugs acquired through the 340B program.

Why NADAC Matters

For Pharmacies

NADAC directly affects pharmacy profitability. Many state Medicaid programs now use NADAC as the basis for pharmacy reimbursement — paying pharmacies the NADAC rate plus a professional dispensing fee. When NADAC rises, reimbursement rises. When it falls, margins tighten.

Understanding how your acquisition costs compare to the published NADAC rate helps you:

• ●Negotiate better pricing with wholesalers
• ●Identify drugs where you're paying above the national average
• ●Anticipate reimbursement changes before they hit your bottom line

For State Medicaid Programs

Before NADAC, most state Medicaid programs reimbursed pharmacies based on Estimated Acquisition Cost (EAC), typically calculated as a discount off Average Wholesale Price (AWP). The problem? AWP was a manufacturer-reported list price that often bore little resemblance to actual market prices.

CMS introduced NADAC in 2013 specifically to give states a more accurate, survey-based alternative. Today, the majority of state Medicaid programs have transitioned to NADAC-based reimbursement.

For Researchers and Analysts

NADAC provides a unique, longitudinal dataset of actual drug acquisition costs. With weekly updates going back over a decade, researchers can:

• ●Track drug price trends over time
• ●Analyze the impact of generic competition on pricing
• ●Compare pricing across therapeutic classes and manufacturers
• ●Study the effects of supply shortages on drug costs

If you already understand the benchmark and want a more applied workflow, continue with Drug Pricing Database for search and lookup workflows or How to Compare Drug Prices by Manufacturer for supplier analysis.

NADAC vs Other Drug Pricing Benchmarks

NADAC is one of several drug pricing benchmarks used in the U.S. healthcare system. Here's how they differ:

• ●

  NADAC — Average pharmacy acquisition cost, sourced from a weekly survey of actual pharmacy invoices. Updated weekly by CMS. The most market-reflective benchmark available.

• ●

  AWP (Average Wholesale Price) — A manufacturer-reported list price that historically served as the basis for pharmacy reimbursement. Often called "Ain't What's Paid" because it rarely reflects actual transaction prices.

• ●

  WAC (Wholesale Acquisition Cost) — The manufacturer's published list price to wholesalers before any discounts, rebates, or chargebacks. Think of it as the sticker price.

• ●

  MAC (Maximum Allowable Cost) — A ceiling price set by PBMs or state Medicaid programs for generic drug reimbursement. Varies by payer and is not publicly standardized.

The key difference: NADAC reflects what pharmacies actually pay, while AWP and WAC reflect what manufacturers say the price is. These can diverge significantly, especially for generic drugs where competitive discounting is common.

What Drugs Does NADAC Cover?

The NADAC survey covers drugs dispensed through retail community pharmacies, including:

• ●Generic drugs — the vast majority of surveyed products
• ●Brand-name drugs — both single-source and multi-source brands
• ●Over-the-counter (OTC) drugs — when dispensed by prescription

Each drug is identified by its National Drug Code (NDC), the unique 10-digit identifier assigned to every drug product sold in the United States. The NADAC dataset currently covers over 60,000 NDCs.

How to Use NADAC Data

Checking Current Prices

The simplest use case is looking up the current NADAC rate for a specific drug. On NADAC Intelligence, you can search by drug name, NDC, or manufacturer to find current per-unit pricing for any covered drug.

Tracking Price Changes

Drug prices don't stay static. Weekly NADAC updates mean prices can shift due to:

• ●New generic entrants increasing competition
• ●Supply shortages reducing availability
• ●Manufacturer pricing decisions
• ●Raw material cost changes

The Trends page shows the biggest price movers each week, helping you spot significant changes before they affect your costs.

Comparing Manufacturers

For multi-source generic drugs, the same active ingredient may be available from dozens of manufacturers at different price points. The Manufacturer directory and Drug Market pages let you compare pricing across all available options.

Analyzing by Therapeutic Class

Understanding pricing patterns within a therapeutic class helps with formulary decisions. You can see which classes have the most price volatility, which have strong generic competition, and where costs are concentrated.

Limitations of NADAC

While NADAC is the most market-reflective drug pricing benchmark available, it has some limitations worth noting:

• ●Retail pharmacies only — doesn't capture hospital, specialty, or 340B pricing
• ●National average — individual pharmacy costs vary by purchasing power, geography, and wholesaler contracts
• ●Survey lag — while published weekly, there is a short lag between invoice dates and publication
• ●Voluntary survey — participation is voluntary, though CMS uses statistical methods to ensure representativeness

Getting Started

NADAC Intelligence makes the NADAC dataset accessible and actionable. Search for any drug to see current pricing, historical trends, generic alternatives, and manufacturer comparisons — all for free.

For pharmacy buyers and analysts who need ongoing monitoring, price alerts and data exports are available through our premium plans.