1. (a) The Department will base its drug cost for compensable legend and nonlegend drugs for enrolled pharmacies as follows:

   1. (1) For brand name drugs:

      1. (i) The NADAC.
      2. (ii) If no NADAC is available, a WAC rate that equates to NADAC values published by CMS under subsection (c).

   2. (2) For generic drugs, the lowest of:

      1. (i) The NADAC.
      2. (ii) If no NADAC is available, a WAC rate that equates to NADAC values published by CMS under subsection (c).
      3. (iii) The FUL established by CMS.
      4. (iv) The State MAC established by the Department.
2. (b) The ingredient cost of a 340B purchased drug shall be based on the methodology set forth in subsection (a), except that payment for the drug cost shall not exceed the 340B ceiling price, as described in section 340B(a)(1) of the Public Health Service Act (42 U.S.C. § 256b(a)(1)).
3. (c) The Department will update the CMS-published NADAC in the Department’s claims adjudication system at least monthly.
4. (d) WAC rates adjusted to equate to NADAC values will be updated periodically, announced by publication of notice in the Pennsylvania Bulletin and made available on the Department’s website.
5. (e) The Department will determine the brand and generic WAC rates that equate to NADAC values by dividing the NADAC unit prices by the WAC unit prices, minus one, expressed as a percentage.
6. (f) The Department will utilize the CMS-determined FUL for multisource drugs in the payment methodology.
7. (g) The Department will establish State MAC rates when there are two or more manufacturers of generic alternatives to the brand name product to enable the Department to realize discounts from the brand price.
8. (h) State MAC rates will be updated quarterly and as needed to account for marketplace price changes and drug shortages.

9. (i) State MAC rates will be established by the Department as follows:

   1. (1) Tier 1: Greater of 150% of the lowest-cost generic and 120% of the second lowest-cost generic for unit costs ranging from $0 to $5.
   2. (2) Tier 2: Greater of 130% of the lowest-cost generic and 110% of the second lowest-cost generic for unit costs ranging from $5.01 to $20.
   3. (3) Tier 3: Greater of 120% of the lowest-cost generic and 110% of the second lowest-cost generic for unit costs greater than $20.01.
10. (j) The State MAC does not apply if the conditions are met as described in § 1121.53(b)(1) (relating to limitations on payment).

11. (k) The Department will base its drug cost for compensable legend and nonlegend drugs for enrolled licensed prescribers on the lower of:

    1. (1) For brand name drugs:

       1. (i) The provider’s usual and customary charge.
       2. (ii) The WAC + 3.2%.

    2. (2) For generic drugs:

       1. (i) The provider’s usual and customary charge.
       2. (ii) The WAC + 0%.
       3. (iii) The FUL.
       4. (iv) The State MAC.
12. (l) The Department will update the WAC for individual drugs at least on a monthly basis as it appears in a Nationally recognized pricing service.

Authority

The provisions of this § 1121.56a added under sections 201(2) and 403.1(a)(4) of the Human Services Code (62 P.S. § § 201(2) and 403.1(a)(4)).

Source

The provisions of this § 1121.56a added January 2, 2026, effective January 3, 2026, 56 Pa.B. 16.

Cross References

This section cited in 55 Pa. Code § 1121.51 (relating to general payment policy); 55 Pa. Code § 1121.55 (relating to method of payment); 55 Pa. Code § 1141.60 (relating to payment for medications administered or dispensed in the course of a visit); 55 Pa. Code § 1142.56 (relating to payment for medications administered or dispensed in the course of a visit); and 55 Pa. Code § 1144.54 (relating to payment for medications administered or dispensed in the course of a visit).