No. NADAC does not include manufacturer rebates, wholesaler rebates, or any off-invoice discount a pharmacy receives after paying the invoice. The definition is explicit: the National Average Drug Acquisition Cost is the average invoice price pharmacies paid, measured by CMS through surveys of retail pharmacy invoices. So does NADAC include rebates? No. And that no is where every argument about the number starts.
Does NADAC include rebates: what the surveys actually measure
CMS surveys retail pharmacies, takes the invoice amounts they paid wholesalers and manufacturers, averages them simply, and publishes the result weekly on data.medicaid.gov. Chargebacks show up in the number, because they are baked into invoice prices. Rebates do not, because they arrive later, off the invoice, paid to different parties on different schedules. A 3 Axis Advisors analysis estimated that off-invoice rebates can reach 30 to 40 percent of invoice cost for larger pharmacies, partly offset by wholesaler terms that keep invoice prices up. Their conclusion was direct: NADAC should not be viewed as a reflection of pharmacy net costs.
So the pharmacy's true cost sits below NADAC, and nobody outside the industry knows exactly how far below. That gap is where the politics live. When pharmacies say NADAC-based reimbursement underpays them, they are right that rebates complicate the picture. When PBMs say NADAC overstates what pharmacies really pay, they are right about the direction and conveniently silent about the size. Both sides quote the same number. Neither side will show you theirs.
Why the missing rebates matter at the counter
For you, NADAC is an upper bound on what the pharmacy paid. If your copay is five times the NADAC price, the pharmacy did not pay five times the NADAC price, rebates or no rebates. The spread is your bargaining room, same as always. The rebate gap does not change the move. It only changes how loudly the industry argues about the number while you make it.
And if you want the number that does include the rebates? It does not exist in public. AMP, the Average Manufacturer Price, captures off-invoice manufacturer incentives, and it is not published for you to look up. The industry has the net numbers. You do not. NADAC is the best public window into the transaction. The room behind it stays private.
This is the same shape as every pricing argument in American health care. One side points at the gross number, the other at the net number, and both are technically correct, which is why the argument never ends. The grocery version: the shelf price of cereal versus what the store paid the distributor after slotting fees and volume discounts. You have never seen the second number. You were never supposed to.
So hold both thoughts. NADAC is the most honest public number in drug pricing, and it is also not the real number. Use it. Just read the label.
Frequently asked questions
Does NADAC include rebates?
No. NADAC is the average invoice price pharmacies paid to wholesalers and manufacturers. Manufacturer rebates and other off-invoice discounts paid after the invoice are not included.
What is the difference between NADAC and AMP?
NADAC is the average invoice price pharmacies paid, published weekly by CMS. AMP, the Average Manufacturer Price, is the price manufacturers charge wholesalers net of most off-invoice discounts, and it is not published the same way. Roughly speaking, AMP plus off-invoice incentives plus the wholesaler margin lands near NADAC.
Why do pharmacies say NADAC-based reimbursement underpays them?
Because rebates vary by wholesaler contract, and not every pharmacy gets them. A large chain with a 30 percent rebate does fine at NADAC; a small independent with no rebate can lose money on the same reimbursement.
Where is NADAC data published?
CMS publishes the NADAC files weekly on data.medicaid.gov, searchable by drug name, with per-unit prices by package size.
Look up your drug: compare what you pay against the NADAC Drug Price Lookup, then keep reading: NADAC vs. AWP: Why the Drug Price on Paper Can Be 123 Times the Real One · What Pharmacies Actually Pay for Generics · How to Use NADAC Data to Lower Your Prescription Price · Why Do Prescription Prices Vary So Much Between Pharmacies.
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