NADAC (National Average Drug Acquisition Cost)

NADAC is the closest thing the country has to a true cost for a prescription drug. It is a survey run by CMS, the federal Medicare and Medicaid agency, that asks retail pharmacies what they actually paid their wholesalers for each drug. The results are published every week, free, for anyone to download. For a common generic, NADAC is often a few cents a pill. For a brand drug, it usually sits a little below the manufacturer's list price.

Why it matters: every other drug price benchmark is set by someone with a stake in the number. AWP is published by data companies working from manufacturer figures. MAC lists are set by PBMs. NADAC is the only one that comes from an invoice. State Medicaid programs use it to pay pharmacies, and a growing number of employers use it to check whether their PBM contract is fair. When I compare a plan's generic claims to NADAC, the pattern is usually the same: the plan paid $28 for a bottle of metformin that NADAC says cost the pharmacy $2.40. Multiply that across a few thousand fills a year and you can see why the newer pass-through PBMs and cost-plus pharmacies price everything as NADAC plus a stated fee.

The takeaway: before you argue with anyone about drug prices, look the drug up on NADAC. It takes a minute, it costs nothing, and it tells you what the pill really cost. Everything above that number is someone's margin.