A single source drug is a covered outpatient drug that is produced or distributed under an original new drug application (NDA) approved by the FDA, including drugs marketed by cross-licensed producers under the same NDA. Single source drugs are typically brand-name drugs without generic equivalents.
In the 340B and Medicaid rebate context, single source drugs are subject to a specific URA formula: the URA is the greater of 23.1% of AMP or (AMP minus best price), plus a CPI-U inflation adjustment. This formula generally results in deeper discounts for single source drugs compared to generics.
Single source drugs are often the highest-cost drugs in a covered entity’s formulary and represent significant savings opportunities under the 340B program. Many specialty drugs and biologics are single source drugs.
Frequently Asked Questions
What is a single source drug?
A single source drug is a brand-name drug produced under an original FDA-approved NDA without generic equivalents. It is subject to a specific URA formula in the 340B and Medicaid rebate programs.
Why do single source drugs have deeper 340B discounts?
The URA formula for single source drugs (greater of 23.1% of AMP or AMP minus best price, plus CPI-U) typically results in a larger URA relative to AMP compared to generic drugs, producing a lower ceiling price and deeper discount.
Are all brand-name drugs single source drugs?
Not necessarily. Brand-name drugs may be classified as single source or innovator multiple source drugs depending on their NDA status. The distinction affects which URA formula applies.
Why Single Source Drug Matters
Single source drugs typically represent the highest-value 340B savings opportunities. Covered entities with high volumes of single source drug dispensing benefit significantly from the program. Understanding the URA formula for single source drugs helps covered entities evaluate their savings potential.
How Virtue 340B Uses It
Virtue 340B helps covered entities understand their drug mix and optimize their programs to capture maximum savings on single source drugs within compliance boundaries.
