What's the difference between AWP, MAC, and NADAC?

AWP, MAC, and NADAC are three different reference prices used in PBM contracts, each computed differently.

AWP (Average Wholesale Price) is a list price published by First Databank or other third-party drug-pricing compendia. It is NOT the actual price anyone pays. AWP is typically 20-25% above the manufacturer's wholesale acquisition cost. Most legacy PBM contracts price as AWP minus a percentage discount (e.g. AWP - 18% for brand, AWP - 84% for generic).

MAC (Maximum Allowable Cost) is a per-NDC reimbursement ceiling set by the PBM, used primarily for generic drugs. The PBM publishes a MAC list internally and pays pharmacies the lesser of MAC or AWP-X%. MAC values are PBM-discretion — not publicly disclosed in most contracts — which is the primary mechanism by which spread is generated on generics.

NADAC (National Average Drug Acquisition Cost) is the only one of the three that reflects actual acquisition cost. It's published weekly by CMS based on survey data from retail pharmacies. NADAC is typically far below AWP for generics and slightly below WAC for brands.

Only NADAC is independently audited and publicly available. The other two are proprietary or industry-published reference prices that don't represent real transaction costs.