Academic Detailing of Prescribers
Fact-based information about prescription drugs provided by credentialed clinicians to physicians and other prescribers. Traditional “detailing” refers to the process pharmaceutical manufacturer sales representatives use to promote their brand-name drugs.

Actual Rebate Amount Per Mail Script
Actual dollar amount of rebate for each mail-service prescription.

Actual Rebate Amount Per Retail Script
Actual dollar amount of rebate for each retail prescription.

Annual Deductible
Amount a plan member pays before reimbursement begins.

Annual Out-of-Pocket (OOP) Limit
The cap on the total amount a plan member pays.

Average Wholesale Price (AWP)
The published or suggested cost of pharmaceuticals charged to a pharmacy by a large group of pharmaceutical wholesalers. The AWP is the basis for most third-party prescription reimbursement. It is analogous to a sticker price on a new automobile. Pharmacies do not pay for their drugs using the AWP. A markup of wholesale acquisition cost (WAC) is the current method.

AWP Discount % – (AWP Minus X%)
The negotiated amount a drug plan pays to pharmacies for the ingredient cost of a prescription and commonly expressed as a percentage off of Average Wholesale Price.

Biotech Drugs (Specialty Drugs)
Drugs manufactured through biologic processes to treat chronic, complex or life-threatening conditions. Also called specialty drugs.

Brand Drug
Prescription drug covered by patent exclusivity.

Carve-in
Pharmacy benefit program administered by the same company as medical benefit.

Carve-out
Different companies administer drug and medical benefit programs.

Copayment Relief or Waivers
Reduced or zero-dollar copayments commonly used as incentives for plan members to use generic drugs and adhere to medication regimens.

Diabetic Supplies
Medical materials used for treatment of diabetes, specifically glucose meter strips, syringes, and needles.

Disease Management
A systematic approach to providing care to a population of patients with a specific disease. Patient and provider education, pharmaceutical care, continuous quality improvement, practice guidelines, patient monitoring, outcomes assessment, and case management all play key roles in disease management.

Dispensing Fee
Contracted amount in a traditional third-party prescription plan that is paid to the pharmacy in addition to the negotiated ingredient cost of the prescription.

Dollar Limit on Coverage
Price cap for amount of money plan will pay for prescription benefit.

Dose Optimization
Pharmacist-driven program to ensure patients are taking the best dosages and strengths of a given medication to manage costs of drug therapy.

Drug Utilization Review (DUR)
The process of evaluating physicians’ prescribing patterns and/or patient drug utilization to determine the appropriateness of therapy. Three types are: prospective (before prescription dispensing), concurrent (at point of dispensing), and retrospective (after drug therapy is complete).

Experimental/Investigational Drugs
Prescription drugs being tested in clinical trials that may or may not be approved for sale by the U.S. Food and Drug Administration.

Fully-insured Plan
Plan that delegates financial risk of benefit claims to a third party.

Generic Drug
Chemically equivalent copy designed from a brand-name drug where the patent has expired. Generics are typically less expensive and sold under the chemical name of the drug, not the brand name.

Generic Sampling
Providing samples of generic drugs to medical offices and clinics to encourage the prescribing of generic drugs when medically appropriate.

Gross Cost of Script
Total cost of a prescription = AWP - AWP Discount + Dispensing Fee + Member Cost - Share Payment.

Growth Hormones
Prescription hormone supplements used to treat patients with growth deficiencies.

Guarantee Rebate Per Mail Script
Pharmacy benefit manager guarantees a flat-dollar amount of rebate for each mail-service prescription.

Guarantee Rebate Per Retail Script
Pharmacy benefit manager guarantees a flat-dollar amount of rebate for each retail prescription.

Injectables
Prescription drugs that are injected by patient or provider. Often used as a synonym for high cost specialty or biotech drugs because most are administered via injection.

Lifestyle Drugs
Drugs that are not medically necessary but used to improve the quality of life.

Mail Cost Share (90-day Supply)
Cost share amount for 90 days of a prescription therapy typically dispensed at a mail-order pharmacy. Some plan designs may allow for this at a retail pharmacy.

Maintenance Prescriptions
Drugs used to treat chronic diseases or conditions.

Managed Care Organization (MCO)
An organization that finances and delivers a wide variety of health care services through a network of preferred providers.

Maximum Allowable Cost (MAC)
The unit price that has been established for a generic drug. The same MAC price applies to all versions of identical generic drugs. MAC prices were created because the cost of identical generic drugs may differ from distributor to distributor.

MAC Pricing Applied
MAC list used to price generic prescriptions.

Maximum Annual Benefit (MAB)
Total amount of expenses a plan will pay in a 12-month period.

Multi-source Brand
A drug product manufactured by more than one company or source. Multi-source is commonly used to describe a brand drug where generic equivalents are available.

Net Cost (after copayments) of Script
Total amount paid for prescription less the cost sharing amounts.

Nonformulary Drugs
Drugs not included on plan’s drug list or formulary.

Nonpreferred Brands
Brand-name drugs not included on plan’s preferred drug list.

Oral Contraceptives
Prescription drugs used to avoid pregnancy.

Other Coverage Limitation(s)
Plan design limits on prescription coverage such as number of days supply allowed.

Other Nonsedating Antihistamines
Prescription allergy drugs that typically do not cause drowsiness.

Outbound Telephone Calls
Calls made to plan members as part of disease or care management programs to encourage compliance with treatment.

Over-the-counter (OTC) Drug
U.S. Food and Drug Administration-approved drugs that do not require a prescription to be purchased.

Pharmacy Benefit Manager (PBM)
Organization dedicated to providing prescription benefit management services to employers, health plans, third-party administrators, union groups, and other plan sponsors. A full-service PBM maintains eligibility, adjudicates prescription claims, provides clinical services, contracts and manages pharmacy network, and provides management reports.

Pill Splitting
Cutting prescription medications in half to double the number of days supply from one prescription. This practice, which decreases total cost of the drug therapy, is commonly used to manage the cost of cholesterol-reducing medications.

Preferred Brands
Brand-name drugs included on plan’s preferred drug list.

Preferred Drug List
List of drugs available to plan members with a lower copayment than drugs not on list.

Prescriber Profiling
Assessment of prescribing patterns to identify areas to manage utilization and cost of prescription drugs. Drug claim data is cut by prescriber (physician, physician assistant or nurse practitioner) to identify outliers in prescribing patterns.

Prescription Drug Plan (PDP)
U.S. Centers for Medicare & Medicaid Services-certified drug benefit program for the Medicare-eligible population.

Prior Authorization
A process where the prescription claim is initially denied, but provides a mechanism for the claim to be covered via criteria established by the managed care organization (MCO) or the pharmacy benefit manager (PBM). This requires action from the physician, pharmacist, or patient to obtain coverage.

Quantity Limits
Limit on the number of pills or dosages allowable per claim.

Refill Too Soon Supply Limit
A system edit that rejects a drug claim if a refill is requested before a predefined number of days have passed since the initial fill date of prescription.

Retail Cost Share (30-day Supply)
Cost share amount for 30 days of a prescription therapy dispensed at a retail pharmacy.
%: Cost sharing amount is a percentage of total prescription cost.
$ Min: Minimum cost sharing amount.
$ Max: Maximum cost sharing amount.

Retin A®
Brand-name dermatology drug commonly prescribed for cosmetic purposes.

Retiree Drug Subsidy
Amount of money the U.S. Centers for Medicare & Medicaid Services pays employers to subsidize employers’ funding of drug benefits for Medicare-eligible employees and retirees.

Retrospective DUR
Drug utilization review conducted after a prescription is adjudicated.

Self-insured Plan
Plan that assumes financial risk for benefit claims.

Single-source Brand
A drug product manufactured by one company or source.

Specialty Drugs (Biotech Drugs)
Drugs manufactured through biologic processes to treat chronic, complex or life-threatening conditions.

Specialty Pharmacy Benefit
Coverage of drugs manufactured through biologic processes to treat chronic, complex or life-threatening conditions.

Step Therapy
Treatment guidelines used to recommend drug therapy beginning with the least expensive therapy. More expensive therapies are only used when the patient fails to respond to the first-line drug.

Therapeutic Substitution
A pharmacist-initiated change in a dispensed drug when a medically equivalent drug is available for the prescription presented. State prescribing laws address the required physician permission for substitutions.

Wholesale Acquisition Cost (WAC)
The price used by a pharmaceutical manufacturer to sell prescription products to a wholesaler; also known as Wholesale List Price.

Wraparound Coverage
Drug benefit coverage provided by employers to Medicare-eligible employees and retirees to supplement Medicare Part D coverage.

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