What is a NADAC pass-through PBM contract?

A NADAC pass-through contract is a PBM pricing structure in which the plan pays NADAC (the federal acquisition cost benchmark) plus a flat dispensing fee per claim, with the PBM compensation explicitly disclosed as a separate administrative fee. There is no spread, no MAC list discretion, and no hidden margin on generic drugs.

Pass-through contracts are increasingly demanded by large self-funded employers, state Medicaid programs, and union health-and-welfare funds. They eliminate the largest single source of plan overpayment on generics (spread) and replace it with a transparent fee-for-service structure.

The tradeoff: PBM administrative fees in pass-through contracts are typically higher than in spread contracts (because the PBM has to make its revenue somewhere). The net is usually favorable for plans with high generic utilization but should be modeled before switching.