Best Price / Medicaid Best Price (BP)
Definition
Medicaid best price is the lowest price a manufacturer charges any purchaser for a covered outpatient drug in the United States, regardless of package size. Manufacturers must report best price to CMS, and state Medicaid programs use it (along with AMP) to calculate the rebates manufacturers owe.
A critical feature of best price is that 340B prices are explicitly excluded from the calculation. This means that offering deeply discounted 340B prices to covered entities does not lower a manufacturer’s reported best price and therefore does not increase Medicaid rebate obligations. This exclusion is a key design feature of the 340B program that prevents manufacturers from being penalized for offering 340B discounts.
Best price is confidential and not publicly disclosed. It is included in the URA calculation for brand-name drugs: the URA is the greater of 23.1% of AMP or (AMP minus best price), plus a CPI-U adjustment.
Frequently Asked Questions
Why Best Price / Medicaid Best Price (BP) Matters
The exclusion of 340B prices from the best price calculation is fundamental to the program's design. It ensures manufacturers can offer 340B discounts without triggering increased Medicaid rebate obligations, which is essential for maintaining manufacturer participation in the program.
How Virtue 340B Uses It
Virtue 340B references best price in the context of explaining the 340B pricing framework and helping covered entities understand why manufacturers participate in the program.