Pharmacies, Drug Stores, Chemists Industry Terminology

340B Drug Pricing Program

A U.S. federal program requiring manufacturers to sell outpatient drugs at discounted prices to eligible covered entities; community pharmacies often participate as contract pharmacies with strict compliance around duplicate discounts and diversion.

-Is this prescription eligible for 340B under our contract pharmacy agreement. -We need to prevent duplicate discounts between 340B and Medicaid. -The TPA handles our 340B claim split-billing and accumulators.

Acquisition Cost (AAC)

The pharmacy’s actual net cost to acquire a drug, after wholesaler discounts, rebates, and fees; used by some payers as a reimbursement benchmark.

-Our AAC on this NDC is higher than the MAC rate. -Reimbursement at NADAC approximates our AAC better than AWP. -After wholesaler rebates, the true AAC dropped 2%.

Adherence

The degree to which a patient takes medications as prescribed; commonly measured by PDC or MPR and tied to outcomes and payer quality metrics.

-The patient’s PDC for statins is 86%. -Med sync lifted our adherence on antihypertensives. -We targeted nonadherent diabetics for MTM outreach.

Adjudication (Real-Time Claims)

The real-time electronic processing of prescription claims through switches to PBMs/insurers, returning coverage, copay, rejects, and edits.

-The claim rejected at the switch during adjudication. -We saw an RTS edit in adjudication due to early refill. -COB was handled automatically during claim adjudication.

Adverse Drug Event (ADE)

Any harm experienced by a patient as a result of exposure to a medication, including side effects, overdoses, and interactions; central to safety and pharmacovigilance.

-We reported a suspected ADE to the prescriber. -DUR flagged a potential ADE from duplicate therapy. -Our CQI log tracks vaccine-related ADEs.

Average Wholesale Price (AWP)

A published benchmark price sometimes used in reimbursement formulas; often higher than pharmacies’ actual costs and not a true wholesale price.

-Contract pays AWP minus 15% plus a $2 dispensing fee. -AWP increases affected plan reimbursements. -AWP doesn’t reflect our true acquisition cost.

Beyond-Use Date (BUD)

The date after which a compounded or repackaged drug should not be used; determined by USP standards, formulation, and storage conditions, distinct from manufacturer expiry.

-This compounded cream has a 30-day BUD under USP <795>. -Repackaged tablets must be labeled with a new BUD. -Don’t confuse BUD with the manufacturer expiration date.

BIN/PCN/Group Number

Identifiers on an insurance card that route pharmacy claims (BIN), specify the processor (PCN), and identify the plan or employer group (Group).

-Enter the BIN and PCN from the card to route the claim. -The group number determines this plan’s formulary. -Wrong BIN caused an immediate reject.

Biosimilar Interchangeability

A regulatory designation allowing a pharmacist to substitute a biosimilar for its reference biologic (subject to state laws), similar to generic substitution for small molecules.

-The state allows substitution for an interchangeable biosimilar. -We checked the Purple Book for interchangeability. -Payer prefers an interchangeable insulin biosimilar.

Collaborative Practice Agreement (CPA)

A formal agreement between pharmacists and prescribers allowing pharmacists to initiate, modify, or discontinue therapy and order tests under specified protocols.

-Under our CPA we adjust hypertension meds. -The CPA authorizes pharmacists to order labs. -We’re expanding CPAs to include antiviral prescribing.

Cold Chain

Temperature-controlled storage and distribution for temperature-sensitive products like vaccines and biologics, with monitoring and documentation of excursions.

-Verify the data logger before accepting the vaccine shipment. -Store this biologic within the cold chain at 2–8°C. -Excursion documented—quarantine and contact the manufacturer.

Coordination of Benefits (COB)

The process of determining the order of payment when a patient has multiple coverages and submitting secondary claims to reduce out-of-pocket costs.

-Bill Medicare first, then submit COB to the secondary. -COB fixed the high copay after the secondary paid. -We need the patient’s updated primary for COB.

Controlled Substance Ordering System (CSOS)

DEA’s electronic system that enables secure digital ordering of Schedule II controlled substances, replacing paper Form 222 for many pharmacies.

-Use your CSOS certificate to order Schedule II opioids. -CSOS replaced most of our DEA 222 paper orders. -Our CSOS order failed validation and was rejected.

Controlled Substances (Schedules II–V)

Drugs regulated by the Controlled Substances Act, categorized by abuse potential and medical use; subject to strict prescribing, dispensing, storage, and recordkeeping rules.

-Lock up all Schedule II inventory and maintain perpetual logs. -PDMP checks are required before dispensing certain schedules. -EPCS is mandatory for CII prescribing in our state.

Days’ Supply

The number of days a dispensed quantity should last based on directions for use; used for adjudication, DUR checks, and refill timing.

-Calculate days’ supply for an inhaler using labeled actuations. -Payer rejected for an invalid days’ supply. -90-day fills improve adherence metrics.

DEA Form 222

A controlled form used to order or transfer Schedule II controlled substances; requires strict completion, retention, and reconciliation.

-Use a 222 to transfer Schedule II stock. -File executed 222s securely for two years. -Switch to CSOS to reduce DEA 222 paperwork.

Dispense As Written (DAW)

Codes used in claim submission indicating substitution instructions or circumstances, affecting whether generic or brand is dispensed and how it’s reimbursed.

-DAW 1 requires brand due to prescriber instruction. -Claim paid differently at DAW 2 patient request. -DAW 0 allowed generic substitution.

Dispensing Fee

A per-prescription professional fee paid to the pharmacy for dispensing services, separate from drug ingredient cost reimbursement.

-Contract pays NADAC plus a $10 professional dispensing fee. -Our fee schedule doesn’t cover compounding labor. -Negotiations aim to raise the dispensing fee for rural stores.

Direct and Indirect Remuneration (DIR) Fees

Medicare Part D-related post-adjudication fees or price concessions assessed by PBMs, often retroactively, tied to performance and network agreements.

-Retro DIR clawbacks hit our margins months later. -Improving star ratings lowered DIR. -We forecast DIR impact on Part D cash flow.

Drug Supply Chain Security Act (DSCSA)

U.S. law establishing track-and-trace, verification, and serialization requirements to enhance supply chain security for prescription drugs.

-Scan the 2D barcode to verify product under DSCSA. -We must exchange and maintain T3 docs for 6 years. -Investigate suspect product and quarantine per DSCSA.

Drug Utilization Review (DUR)

Prospective and retrospective review of medication use to detect issues like interactions, duplications, contraindications, or high doses before or after dispensing.

-DUR flagged a major interaction—contact prescriber. -Soft edit for high-dose alert overridden with note. -Retrospective DUR identified early refills.

Electronic Prescribing (eRx)

The electronic transmission of prescriptions from prescribers to pharmacies using NCPDP SCRIPT standards, improving accuracy and workflow; includes optional EPCS for controlled substances.

-eRx reduced transcription errors vs paper. -SCRIPT 2017071 upgrade improved cancel and RxChange. -Our system supports EPCS for controlled e-prescribing.

Formulary

A plan’s list of covered medications, often tiered by cost-sharing and subject to utilization management such as prior authorization or step therapy.

-The patient’s plan places GLP-1s on Tier 3. -A nonformulary drug requires PA. -Therapeutic alternatives are preferred on the formulary.

Generic Dispensing Rate (GDR)

The percentage of prescriptions dispensed as generics; a key performance and cost measure in payer contracts and pharmacy operations.

-Our GDR rose to 87% after automatic generic substitution. -Contract bonuses trigger above 85% GDR. -DAW 1 claims lower GDR.

Health Insurance Portability and Accountability Act (HIPAA)

U.S. privacy and security standards governing protected health information (PHI); requires safeguards, training, and proper disclosures.

-Verify identity before disclosing PHI. -Keep signed BAAs with vendors handling PHI. -Use secure messaging for HIPAA-compliant counseling.

Mail-Order Pharmacy

Centralized dispensing and shipping model, often for 90-day supplies of maintenance medications, leveraging automation and logistics.

-Convert to 90-day mail for maintenance meds. -Cold-chain mail requires insulated packaging. -Mail order impacts local store refill counts.

Maximum Allowable Cost (MAC)

A payer-established cap on reimbursement for multi-source generics; varies by plan and can lag market acquisition costs.

-The MAC is below our AAC on this generic. -File a MAC appeal due to price spike. -Plan switched to a new MAC list last quarter.

Medication Synchronization (Med Sync)

Coordinating a patient’s chronic medication refills to a single pickup date to improve adherence and workflow efficiency.

-Enroll the patient in med sync to align refills. -Med sync improved PDC for cholesterol meds. -We schedule monthly sync calls.

Medication Therapy Management (MTM)

A patient-centric service where pharmacists optimize medication regimens, educate patients, and resolve therapy problems, often reimbursed for eligible populations.

-Complete a CMR for eligible Part D members. -MTM identified a duplicative therapy to deprescribe. -Bill MTM interventions through the platform.

Medicare Part D

The U.S. outpatient prescription drug benefit for Medicare beneficiaries, administered by private plans with defined benefit phases and quality metrics.

-The patient moved into the coverage gap. -Star ratings affect our network status. -Plan finder helps choose a Part D plan each AEP.

National Average Drug Acquisition Cost (NADAC)

A CMS-published benchmark based on pharmacy invoice surveys, intended to approximate average acquisition cost for outpatient drugs.

-State Medicaid reimburses at NADAC plus a fee. -NADAC updates weekly. -NADAC better reflects our AAC than AWP.

National Council for Prescription Drug Programs (NCPDP)

Standards organization that develops pharmacy data exchange standards, including claim (Telecommunication) and e-prescribing (SCRIPT) formats.

-Our claims use the NCPDP Telecom D.0 standard. -SCRIPT 2017071 is an NCPDP standard. -Use NCPDP codes for DAW and rejection reasons.

National Drug Code (NDC)

A unique identifier for drug products in the U.S., comprising labeler, product, and package codes; required for billing, inventory, and traceability.

-Submit the 11-digit NDC that matches the dispensed product. -The NDC’s labeler, product, and package segments must be correct. -DSCSA scanning reads the NDC in the 2D barcode.

National Provider Identifier (NPI)

A unique 10-digit identifier for healthcare providers and organizations used in HIPAA-standard transactions and billing.

-Use the pharmacy’s Type 2 NPI for claims. -Enter the prescriber’s Type 1 NPI. -Our immunization billing requires the pharmacist’s NPI.

Over-the-Counter (OTC)

Medications available without a prescription; subject to labeling and, for some products, additional sales restrictions.

-Recommend an OTC antihistamine. -Some OTCs are HSA-eligible. -Place pseudoephedrine behind the counter per law.

Patient Assistance Program (PAP)

Manufacturer or foundation-based programs that reduce patient out-of-pocket costs or provide free/discounted medications to eligible individuals.

-Enroll the patient in a manufacturer PAP to lower cost. -Use a foundation grant for OOP support. -Copay cards reduce cost on branded meds.

Pharmacy Benefit Manager (PBM)

Intermediaries that administer prescription drug benefits, process claims, manage formularies, negotiate rebates, and set network terms.

-The PBM manages our network contract and DIR. -PBM prefers this formulary alternative. -Prior auths are processed through the PBM portal.

Prescription Drug Monitoring Program (PDMP)

State-run electronic databases tracking controlled-substance dispensing to support appropriate use and detect misuse or diversion.

-Check the PDMP before dispensing opioids. -PDMP shows multiple prescribers for controlled meds. -Integrate PDMP into the workflow for efficiency.

Prior Authorization (PA)

A payer requirement to obtain approval before covering certain medications, typically involving clinical criteria and documentation.

-Submit PA with chart notes and labs. -The PA was denied for failing step therapy. -ePA shortened approval time to 24 hours.

REMS (Risk Evaluation and Mitigation Strategies)

FDA-required safety programs for certain medications to ensure benefits outweigh risks, potentially including prescriber/pharmacy certification and patient monitoring.

-iPLEDGE is a REMS for isotretinoin. -Clozapine REMS requires ANC monitoring. -Verify prescriber and pharmacy certification per REMS.

Specialty Pharmacy

Pharmacies focused on high-cost, complex therapies requiring specialty handling, prior authorizations, patient education, and outcomes tracking.

-Limited-distribution drug requires a specialty pharmacy. -Coordinate benefits investigation for a biologic. -Provide adherence coaching for oral oncolytics.

Step Therapy

A utilization management protocol requiring patients to try lower-cost or preferred alternatives before coverage of a higher-cost therapy.

-Plan requires step therapy—try preferred generic first. -The PA will fail without documented step failure. -We appealed the step edit with clinical notes.

Telepharmacy

The provision of pharmacy services at a distance using telecommunications for verification, counseling, and clinical services, subject to state regulations.

-Remote pharmacist verifies orders for the satellite site. -Provide counseling via telepharmacy to rural patients. -State regs permit remote checking under supervision rules.

Therapeutic Substitution

Replacing a prescribed drug with a different drug in the same class with similar efficacy and safety, typically under protocol or with prescriber approval.

-Substitute an ACE inhibitor per the P&T policy. -Requires prescriber consent unless covered by a CPA. -Payer prefers a therapeutic alternative on formulary.

Third-Party Payer

An insurer or plan (often via a PBM) that pays part or all of the cost of a prescription, as opposed to cash-paying patients.

-Bill the third-party payer first, then secondary. -The third-party changed its network reimbursement. -We’re out-of-network with that third-party plan.

Usual and Customary Price (U&C)

The pharmacy’s cash price to the general public for a prescription; many contracts limit reimbursement to no more than U&C.

-The claim paid at U&C which was lower than plan. -Update U&C when front-end pricing changes. -U&C must reflect our posted cash price.

USP <795> Nonsterile Compounding

Standards governing quality, processes, beyond-use dating, and documentation for nonsterile compounded preparations.

-Follow <795> for BUD and documentation on creams. -Calibrate equipment per <795>. -Maintain Master Formulation Records under <795>.

USP <797> Sterile Compounding

Standards for preparing sterile medications, covering facility design, environmental monitoring, personnel garbing, aseptic technique, and BUDs.

-Perform media fill and fingertip testing per <797>. -Classify rooms and monitor air/surfaces. -Assign BUDs based on sterility risk per <797>.

Vaccine Administration

Pharmacy-based immunization services, including assessment, administration, documentation, storage/handling, and payer billing.

-Pharmacists can administer ACIP-recommended vaccines. -Bill flu shots under medical or pharmacy benefit. -Document to the state IIS after vaccination.

Wholesaler Acquisition Cost (WAC)

The manufacturer’s list price to wholesalers or direct purchasers, before discounts; a common benchmark in contracts and pricing analyses.

-Contract sets brand reimbursement at WAC plus a fee. -WAC changes ripple through our cost model. -WAC differs from NADAC and AWP benchmarks.