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Federal Upper Limit

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Affordable Care Act – Federal Upper Limit

The Affordable Care Act revised the Federal Upper Limit (FUL) provisions to require that the Secretary of Health and Human Services calculate the FUL as no less than 175 percent of the weighted average (determined on the basis of utilization) of the most recently reported monthly average manufacturer prices (AMP) for pharmaceutically and therapeutically equivalent multiple source drug products that are available for purchase by retail community pharmacies on a nationwide basis. In accordance with these provisions, the Centers for Medicare Medicaid Services (CMS) issued a proposed rule (CMS-2345-P) that the FUL would be calculated as 175 percent of the weighted average of AMPs.

In accordance with the final regulation with comment (CMS-2345-FC), we established an exception to the FUL calculation which allows for the use of a higher multiplier to calculate the FUL based on acquisition costs for certain multiple source drugs. Specifically, we finalized an exception to calculating the FUL at an amount equal to 175 percent of the weighted average of the most recently reported monthly AMPs for pharmaceutically and therapeutically equivalent multiple source drugs in instances where that amount is less than the average retail community pharmacies acquisition cost for such drugs as determined by the most current national survey of such costs. In situations where the FUL is less than the average retail community pharmacies acquisition cost, we will establish the FUL using a higher multiplier so that the FUL amount would equal the most current average retail community pharmacies acquisition cost as determined by the most current national survey of such costs.

To implement this revision when we calculate the FUL each month, we intend to use the most current monthly National Average Drug Acquisition Cost (NADAC) pricing files. See the Methodology and Data Elements Guide below for further information on the calculation of the Affordable Care Act FUL.

We published the draft Affordable Care Act FUL calculated in accordance with CMS-2345-FC for two months before finalizing the FUL. The final Affordable Care Act FUL was effective on April 1, 2016 to coincide with the effective date of CMS-2345-FC. States had up to 30 days from the April 1, 2016 effective date to implement the FUL. Thereafter, the FUL will be updated monthly on the Medicaid.gov website, and will be effective on the first date of the month following the publication of the update. States will, likewise, have up to 30 days after the effective date to implement the FUL. Below is the link to the draft January 2016 and February 2016 Affordable Care Act FUL and the Methodology and Data Elements Guide used to calculate the Affordable Care Act FUL. To view the finalized FUL monthly files, please visit the  Pharmacy Drug Pricing page.

In an effort to improve the timeliness of the data CMS receives from drug manufacturers each month, CMS is posting the active drugs that have been reported by participating drug manufacturers as of the most recent rebate reporting period under the Medicaid Drug Rebate Program (MDRP) along with an indication of whether or not the required AMP was reported for each drug. All drugs are identified in the file by the 11-digit National Drug Code (NDC), product name, labeler name, and reported (R) or not reported (NR). Please note that, due to confidentiality provisions found in section 1927(b)(3)(D) of the Social Security Act, this file does not contain actual AMP values; rather, it simply notes whether or not CMS received an AMP for each drug included in the file. Finally, the only terminated drugs included in this file are those that are being terminated within the month represented in the file, or those with a termination date in the future.

Federal Upper Limit Prior to the Affordable Care Act

Before the Affordable Care Act FUL became effective, the prior FUL was calculated using the methodology at 42 CFR 447.332 (Transmittal No 37 - November 20, 2001 (PDF, 90.39 KB) and FUL Changes Made To Transmittal No. 37 (PDF, 278.95 KB)), as in effect on December 31, 2006, under the authority of the Medicare Improvements for Patients and Providers Act of 2008 will no longer be in effect

CMS previously issued a draft Affordable Care Act FUL, also known as the AMP-based FUL (for review and comment only), for multiple source drugs, including the draft Methodology and Data Elements Guide (PDF, 103.65 KB), used to calculate the draft FUL, beginning in September 2011, based on the methodology in CMS-2345-P issued in February 2012. The draft AMP-based FUL (ZIP, 173.96 MB)) was calculated as 175 percent of the weighted average of AMPs, as proposed in CMS-2345-P.  CMS also calculated a draft three-month rolling average (3-MRA) FUL (3-MRA Webinar (PDF, 244.07 KB)), including a draft Methodology and Data Elements Guide (PDF, 95.99 KB), used to calculate the draft FUL beginning in October 2012. The draft 3-MRA FUL (ZIP, 18.79 MB) was calculated using the weighted average of the current and two previous monthly draft AMP-based FUL. The draft AMP-based FUL methodologies were never finalized since the final methodology described above was implemented after the publication of CMS-2345-FC.

Effective December 15, 2010, CMS no longer applied the FUL to B-rated drugs.

For questions about the FUL program or data, please e-mail FUL@cms.hhs.gov

Disclaimer: Please note that the information provided on this web page does not bind or obligate the Centers for Medicare and Medicaid Services (CMS).  The statements included on this web page are intended to provide information on the Federal Upper Limit and do not in any way revise or modify the requirements set forth in Section 1927 of the Act, the national drug rebate agreement (NDRA), subsequent program releases, or regulations.

Page last updated on March 10, 2021