Functions & Formulae

Each applied formula has its own function page, with a signature, implementations, and tests.

340B ceiling price function

c(AMP,URA) = P_340B

Maps a covered outpatient drug's average manufacturer price and its Medicaid unit rebate amount for the preceding calendar quarter to the maximum price a covered entity can be required to pay for the smallest unit of the drug. The statute sets the ceiling as AMP reduced by the rebate percentage, the Medicaid rebate per unit divided by AMP, which is AMP minus the unit rebate amount.

  • 340B ceiling price per unit with the penny floor

    P_340B = max(AMP - URA, 0.01)

    42 CFR 10.10(a) sets the ceiling price as the AMP from the preceding calendar quarter for the smallest unit of measure minus the URA, calculated to six decimal places; HRSA publishes it rounded to two. Under 10.10(b), a calculation below 0.01 dollars gives a ceiling price of 0.01 dollars, the penny pricing policy.

  • Medicaid unit rebate amount for a single-source or innovator drug

    URA = max(AMP - BP, 0.231 * AMP) + max(AMP - AMP_b * CPI_t / CPI_b, 0)

    The unit rebate amount that enters the ceiling price is the basic rebate plus the additional inflation rebate. For a single-source or innovator multiple-source drug the basic rebate is the greater of AMP minus best price and 23.1% of AMP. The additional rebate is the amount, if any, by which AMP exceeds the drug's base-period AMP increased by the rise in the consumer price index for all urban consumers since the base period. The 100% of AMP cap on the total applied only to rebate periods before 1 January 2024, so since then URA can exceed AMP.

  • Spread between reimbursement and the 340B price

    S = R - P_340B; S_share = (R - P_340B) / R

    The revenue a covered entity keeps on a unit bought at the ceiling price is the payer's reimbursement for the unit minus the price paid. The spread depends on the payer's payment rule, not on the 340B statute, so the same ceiling price produces different spreads across payers; a unit dispensed to a Medicaid fee-for-service patient must not also attract a Medicaid rebate.