Actual Acquisition Cost (AAC)
Definition
Actual Acquisition Cost (AAC) is a pricing metric that represents what pharmacies or covered entities actually pay for drug products, as determined through surveys or direct reporting. CMS and some state Medicaid programs use AAC as the basis for pharmacy reimbursement, replacing older benchmarks like AWP that did not reflect actual prices.
In the 340B context, AAC is relevant for covered entities that operate pharmacies billing Medicaid. If a state uses AAC-based reimbursement, the covered entity’s pharmacy may be reimbursed at a rate based on what pharmacies typically pay for the drug—which may be higher than the 340B price the entity actually paid, generating savings.
Understanding the reimbursement methodology used by each state Medicaid program is important for covered entities that carve in Medicaid and bill for 340B-acquired drugs.
Frequently Asked Questions
Why Actual Acquisition Cost (AAC) Matters
AAC-based reimbursement affects the economics of 340B drug purchasing for covered entities billing Medicaid. Understanding how AAC is calculated and applied in each state helps covered entities evaluate their program economics.
How Virtue 340B Uses It
Virtue 340B helps covered entities understand state Medicaid reimbursement methodologies and their implications for 340B program economics.