Is a prescription drugs term referring to the average price at which wholesalers sell drugs to physicians, pharmacies, and other customers.
Source: Dawn M. Gencarelli (June 7, 2002). "Average Wholesale Price for Prescription Drugs: Is There a More Appropriate Pricing Mechanism?" (pdf). National Health Policy Forum. Retrieved on 2007-03-09.

A term that is often used interchangeably with specialty pharmacy and biologics; drugs that utilize cutting-edge technologies with the goal in many cases to slow disease progression and ultimately achieve remission in certain therapeutic areas. Example: monoclonal antibodies that bind to and neutralize foreign invaders, interferons that obstruct the ability of a cell to reproduce, and antisense drugs that interfere with the communication process that tells a cell to produce an unwanted protein.
Source: EMD Serono, Inc.  (2009).  EMD Serono Injectables Digest Managed Care Strategies for Management of Specialty Pharmaceuticals (5th ed.).  Rockland, Massachusetts.)

This term refers to pre-adjudication review services for high-cost drugs and related services claims. Comprehensive Claims Review focuses on identifying and eliminating excessive and duplicate billing for both medical and pharmacy claims, and may be either automated or customized based on client-specific parameters.

Among many other measures, this Act passed by congress saves $40 billion over five years from domestic entitlement programs through slowing the growth in spending for Medicare and Medicaid. The Deficit Reduction Act provides flexibility to states to make significant reforms to their Medicaid programs and intends to reconnect the healthy populations of states to the larger health insurance system, transform long-term care from an institutionally-based, provider-driven system to a person-centered and consumer-controlled model. This Act requires National Drug Codes (NDCs) for claim submissions from all clinics.

A service commonly offered by pharmacy benefits managers (PBMs) that provides an automated review of the prescribed drug product for potential contraindications related to drug-drug, drug-age, or drug-gender issues.

A nationally recognized accreditation authority for entities engaged in e-health activities of electronic healthcare transactions and management of healthcare information. It is an independent not-for-profit accrediting agency which grew out of the 1993 Workgroup for Electronic Data Interchange (WEDI) Network Architecture and Accreditation Technical Advisory Group. EHNAC began accrediting clearinghouses in 1995.

Activities include authorization and claims management, care management programs and analytic tools in carrying out the administration, coordination, and related logistics of delivering services and drugs to patients.

Healthcare Common Procedure Coding System – HCPCS Level II code sets are also referred to as alpha-numeric codes because they consist of a single alphabetical letter followed by four numeric digits. A J-code, for example, is the HCPCS code that is commonly associated with pharmaceutical products.

Health Insurance Portability and Accountability Act of 1996 – (HIPAA, Title II) – requires the Department of Health and Human Services (HHS) to establish national standards for electronic healthcare transactions and national identifiers for providers, health plans, and employers. It also addresses the security and privacy of health data.

Commonly known as a diagnosis code, the ICD-9 is the ninth version of the International Classification of Diseases and Related Health Problems (commonly known by the abbreviation ICD) which was released in 1979. The ICD-9 converts verbal descriptions of diseases, injuries, and procedures into numbers. The current ICD-9-CM has been revised to incorporate changes in the medical field.

A J-code is just one of the many HCPCS codes that were originally developed to report injectable drugs that generally cannot be self-administered such as, chemotherapy, immunosuppressive drugs, and inhalation solutions as well as some orally-administered drugs. Still frequently used by many medical providers, this early billing system cannot provide the level of billing detail required to closely monitor the true costs of drug therapy and to control and accurately pay for the precise medication that was administered to the patient.

Maximum Allowable Cost – The highest unit price at which a drug will be paid.

The medical benefit covers a broad range of services—e.g., in-patient, X-rays, diagnostics, office visits—for common chronic and acute conditions. Many states and other insurers may not realize, however, that some medical pharmacy services and procedures are covered under the medical benefit, and many of these claims are classified as Specialty Pharmacy. For example, products such as Herceptin or Rituxan for cancer, and Flolan or Remodulin for pulmonary hypertension, are typically administered in the physician’s office, an infusion suite, or in the patient’s home and are often covered under a traditional medical plan benefit. The cost of drugs and services that qualify under the medical benefit are expected to outpace drugs paid under the traditional pharmacy benefit by the year 2012.

Accurate and detailed, National Drug Codes (NDCs) use a unique 11-digit number that identifies the manufacturer labeler, strength, dosage form, formulation, and package size of the medication that is being administered. NDCs are used to bill for drug products.

High-cost drugs used to treat less common diseases that affect smaller populations (Gaucher Disease, for example, affects only about 3,000 people in the U.S.), are often referred to as “orphan” drugs. Without traditional market pressure from competitors and/or the availability of a generic equivalent, costs can remain high. Some orphan drugs generate more than $1 billion a year—a blockbuster by industry standards. 
Source: How Drugs for Rare Diseases Became Lifeline for Companies; Wall Street Journal; November 15, 2005.

Pharmacy Benefit Manager , or PBM, typically contracts directly with an insurer (e.g., a health plan or large employer) to manage its pharmacy benefit, sending medications either through retail or mail outlets, and applying a series of other drug management tools or technologies.

Medications prescribed by physicians for common chronic and acute conditions are normally covered by a pharmacy benefit. These drugs are usually purchased through retail or mail order providers, and are typically self-administered. Many insurers work directly with a PBM and have access to information and management strategies for drugs paid under the pharmacy benefit. However, because PBMs specialize in managing only retail and mail drugs covered under the pharmacy benefit, most states, insurers, or large employers do not have programs in place to track and manage the products and services that are covered under the medical benefit and delivered in the patient’s home or the physician’s office. This area is expected to increase most dramatically over the next six to eight years.

Pertains to the dollar amount that is given back to the PBMs or insurer from a drug manufacturer. Since PBMs typically have a larger purchasing pool for prescription drugs, they can often negotiate rebates on behalf of their clients with drug manufacturers.

Per Member Per Month

Per Member Per Year

Once narrowly defined as home infusion therapy drugs used to treat rare genetic diseases such as Gaucher’s or multiple sclerosis (MS), this $77 billion a year segment of the healthcare arena is now generally characterized by low volume/high dollars, chronic conditions, and complex care issues that must be managed to ensure a positive outcome. Covering both injectable and infusion therapies, drug costs are high ($6,000 or more per patient per year) and often require specialized delivery and administration on an ongoing basis to treat such major conditions as rheumatoid arthritis, Crohn’s, Hepatitis C, and allergic asthma. These are drugs that often require more complex administration and care, with total costs of therapy reaching as high as $350,000 per patient per year. The combination drug/device therapies included in this category typically require intense clinical and administrative oversight to ensure proper administration for a chronic condition: hemophilia, infertility, various autoimmune disorders, and any number of different types of cancer. In addition to the drug itself (e.g., injectables, infusion, and some oral meds), medical supplies, home medical equipment, nursing care, and affiliated healthcare services delivered outside a hospital environment or physician’s office can include whatever is required to ensure full compliance with the prescribed therapy—from an IV pump and sterile gauze to daily home nursing visits to assist the patient in administering the drug. Services related to high-touch drugs can often add an additional 25% over-and-above the cost of the drug—sometimes as much as $75 per day of therapy (vs. 2% of the drug amount of traditional retail pharmacy).

Software as a Service is a model of software deployment whereby a provider licenses an application to customers for use as a service on demand.