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HRSA - Glossary of american pharmaceutical terms Category: Health and Medicine > Glossary of american pharmaceutical terms Date & country: 16/11/2010, USA Words: 38

Actual Acquisition Cost (AAC)
The net cost of a drug paid by a pharmacy. It varies with the size of container purchased (e.g., ten bottles of 100 tablets typically costs more than one bottle of 1,000 tablets) and the source of purchase (manufacturer or wholesaler). A drug's ACC includes discounts, rebates, charge backs and other adjustments to the price of the drug but excludes dispensing fees.

Average Manufacturer Price (AMP)
The average price paid to a manufacturer by wholesalers for drugs distributed to retail pharmacies. AMP was a benchmark created by Congress in 1990 in calculating Medicaid rebates and is not publicly available. FSS and 340B prices, as well as prices associated with direct sales to HMOs and hospitals, are excluded from AMP under the rebate program. The Congressional Budget Office estimates AMP to b...

Average Sales Price (ASP)
A new system created by Federal and State government prosecutors in settlements with pharmaceutical manufacturers TAP and Bayer to ensure more accurate price reporting. ASP is the weighted average of all non-Federal sales to wholesalers and is net of charge backs, discounts, rebates, and other benefits tied to the purchase of the drug product, whether it is paid to the wholesaler or the retailer.

Average Wholesale Price (AWP)
A national average of list prices charged by wholesalers to pharmacies. AWP is sometimes referred to as a "sticker price" because it is not the actual price that larger purchasers normally pay. For example, in a study of prices paid by retail pharmacies in eleven States, the average acquisition price was 18.3 percent below AWP. Discounts for HMOs and other large purchasers can be even greater. A...

Big 4
The four largest purchasers of pharmaceuticals within the Federal government Department of Veterans Affairs (VA), Department of Defense (DOD), Public Health Service (PHS), and Coast Guard. These four Federal agencies have the right to purchase their pharmaceuticals from the Federal Supply Schedule (FSS) like every other Federal agency. However, the Big 4 often get pricing below FSS on brand name ...

Bundled Sales
The packaging of drugs of different types, where the total price for the package is less than the purchase price of the drugs if purchased separately.

Coinsurance
The percent of the Medicare-approved amount that a Medicare beneficiary has to pay in addition to the deductible for Part A and/or Part B. In the Original Medicare Plan, the coinsurance payment is a percentage of the cost of the service (for example, 20%). In this example, coinsurance for a $100 x-ray would be $20.

Contracted Pharmacy
An arrangement through which a covered entity may contract with an outside pharmacy to provide comprehensive pharmacy services utilizing medications purchased under 340B.

Co-payment
In some Medicare health plans, this is the amount a Medicare beneficiary must pay for each medical service they receive. In the Medicare program, a co-payment is usually a set amount a beneficiary pays for a service, for example, $5 or $10 for a doctor visit.

Corporate Integrity Agreement (CIA)
An agreement between the Office of the Inspector General of the Department of Health and Human Services and a health care provider or other entity as part of a settlement for alleged civil wrongdoing relating to Federal health laws. The government may enter into a CIA with an entity instead of seeking to exclude the entity from Medicare, Medicaid, and other Federal health care programs. Each CIA i...

Covered Entities
The statutory name for facilities and programs eligible to purchase discounted drugs through the 340B Drug Pricing Program. Covered entities include certain disproportionate share hospitals owned by, or under contract with, State or local governments and 11 categories of facilities or programs funded by Federal grant dollars, including federally qualified health centers, AIDS drug assistance progr...

Deductible
The amount a Medicare beneficiary must pay before Medicare begins to pay. There is a deductible for each benefit period for Part A and each year for Part B. These amounts can change every year.

Dispensing Fee
Represents the charge for the professional services provided by the pharmacist when dispensing a prescription (including overhead expenses and profit). Medicaid and most direct pay insured prescription programs use dispensing fees to establish pharmacy payment for prescriptions. Dispensing fees do not include any payment for the drugs being dispensed.

Disproportionate Share Adjustment
An additional Medicare payment to hospitals which treat a high percentage of low-income patients. The factors used to calculate this adjustment are the sum of the ratios of Medicare Part A Supplemental Security Income (SSI) patient days to total Medicare patient days, and Medicaid patient days to total patient days in the hospital. In order to qualify for the 340B Program, a hospital must have a ...

DSH Payment
Additional payments in the Medicaid and Medicare programs that, along with local tax appropriations, help hospitals finance care to low income and uninsured patients.

Dual Eligibles
Persons who are entitled to Medicare (Part A and/or Part B) and who are also eligible for some form of Medicaid benefit.

Federal Ceiling Price (FCP)
The maximum price manufacturers can charge for FSS-listed brand name drugs to the Big 4 (VA, DOD, PHS, and the Coast Guard) even if the FSS price is higher. FCP must be at least 24 percent below the non-Federal average manufacturer price. FCP prices are not publicly available.

Federal Supply Schedule (FSS)
The collection of multiple award contracts used by Federal agencies, U.S. territories, Indian tribes and other specified entities to purchase supplies and services from outside vendors. FSS prices for the pharmaceutical schedule are negotiated by the VA and are based on the prices that manufacturers charge their "most-favored" non-Federal customers under comparable terms and conditions. Because ...

Formulary
A preferred list of drug products that typically limits the number of drugs available within a therapeutic class for purposes of drug purchasing, dispensing and/or reimbursement. A government body, third-party insurer or health plan, or an institution may compile a formulary. Some institutions or health plans develop closed (i.e. restricted) formularies where only those drug products listed can be...

In-House Pharmacy
Pharmacy services which are housed within a covered entity's facility. The pharmacy must be part of the legal organization of the covered entity.

Manufacturer
For purposes of the 340B Program, manufacturer includes all entities engaged in (1) the production, preparation, propagation, compounding, conversion, or processing of prescription drug products, either directly or indirectly by extraction from substances of natural origin, or independently by means of chemical synthesis, or by a combination of extraction and chemical synthesis, or (2) the packagi...

Medicaid
A joint Federal and State program that helps with medical costs for some people with low incomes and limited resources. Medicaid programs vary by State, but most health care costs are covered if a beneficiary qualifies. The name of the program varies by State but is commonly referred to as the medical assistance program.

Medicaid Best Price
The lowest price paid to a manufacturer for a brand name drug, taking into account rebates, charge backs, discounts or other pricing adjustments, excluding nominal prices. Best price is a variable used in the Medicaid rebate statute to calculate manufacturer rebates owed to State Medicaid agencies. Prices charged to certain governmental purchasers are statutorily excluded from best price including...

Medicaid Rebate Net Price
The effective price paid for covered outpatient drugs by State Medicaid programs taking into account the manufacturer rebates received by States. The basic rebate for brand name drugs is the greatest of 15.1 percent of the AMP, or the difference between AMP and Medicaid best price. Rebates for generic drugs are 11 percent of the AMP. Manufacturers must pay a supplemental rebate on brand name drugs...

Medicare
The Federal health insurance program for people 65 years of age and older; certain younger people with disabilities; and people with End-Stage Renal Disease (those with permanent kidney failure who need dialysis or a transplant), sometimes called ESRD.

Medicare Part A
The part of Medicare that covers hospice care, home health care, skilled nursing facilities, and inpatient hospital stays.

Medicare Part B
The part of Medicare that covers doctors' services, outpatient hospital care, and other medical services that Part A doesn't cover such as physical and occupational therapy. Other examples include X-rays, medical equipment or limited ambulance service.

National Drug Code (NDC)
The NDC is the identifying drug number maintained by the Food and Drug Administration. Manufacturers that have executed Pharmaceutical Pricing Agreements (PPA) report quarterly information to the Office of Pharmacy Affairs by NDC number including labeler code, product code, and package size code.

Network Central Fill
A pharmacy distribution system in which a network member's in-house pharmacy fills prescriptions for the patients of the other network members. Please note that if drugs purchased under 340B are used, approval as a 340B Alternative Method Demonstration project might be required.

Office of Pharmacy Affairs
The Office of Pharmacy Affairs is the component within HRSA that administers the 340B Drug Pricing Program. OPA is located within the Division of Health Center Development in HRSA's Bureau of Primary Health Care.

Patient
An individual is considered a patient of a 340B covered entity (with the exception of State operated or funded AIDS drug assistance programs) only if

Pharmacy Affairs Branch
Previous name of The Office of Pharmacy Affairs.

Pharmacy Benefit Manager (PBM)
An organization that provides administrative services in processing and analyzing prescription claims for pharmacy benefit and coverage programs. PBM services can include

Pharmacy Plus Waivers
A program developed earlier this year by the Department of Health and Human Services to make it easier for States to expand prescription drug coverage to Medicare beneficiaries using 1115 waivers. By developing an 1115 application "template," HHS intends for the program to allow States to expand Medicaid coverage for prescription drugs to Medicare beneficiaries. Under the Pharmacy Plus program, ...

Premium
The monthly payment for health care coverage to Medicare, an insurance company or a health care plan.

VA National Contract Price
The price VA has obtained though competitive bids from manufacturers for select drugs in exchange for their inclusion on the VA formulary. Because the VA is entitled to FCP prices under Federal statute, VA national contract prices are even lower than FCP prices and are often the lowest prices in the nation. These prices are publicly available.

Wholesale Acquisition Cost (WAC)
The price paid by a wholesaler for drugs purchased from the wholesaler's supplier, typically the manufacturer of the drug. On financial statements, the total of these amounts equals the wholesaler's cost of goods sold. Publicly disclosed or listed WAC amounts may not reflect all available discounts.

Wholesaler
A company that serves as a bridge between a drug manufacturer and a covered entity. This means any entity (including a pharmacy or chain of pharmacies) to which the labeler sells the covered outpatient drug, but that does not relabel or repackage the covered outpatient drug.