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Drug Glossary




Advanced Control Formulary.

Actual Rebate Amount Per Script

The rebate dollar amount for each prescription examined.

Acute Medication

A drug typically taken for less than 30 days and not subject to refill.


The extent to which a patient conforms with the health care provider’s treatment regimen.

Adherence - Medication Possession Ratio (MPR)

The ratio of actual days’ supply dispensed to the potential days of use from an initial fill date until the end of the reporting period.

Advanced Control Specialty Formulary (ACSF)

A formulary that consists of only specialty medications and has very few exclusions.

Affordable Care Act (ACA)

Health care reform legislation enacted in March 2010 with the aim to make affordable health insurance available to more people.

Age-Adjusted Trend

Applies the client’s prior-period age distribution to the client’s current period spend, then uses the age-adjusted current cost per member per year to calculate the trend.


Account Manager.


A process that can be initiated by a patient and/or provider to review a previous benefit determination. There are three levels to appeals:

  • First Level (Coverage Determination): Ensures the claim adjudicated according to plan setup.
  • Second Level: For an approval previously deemed not covered. Coordinated by CVS/caremark when an external provider and the participant’s current provider determine coverage together. This level can only be initiated by a provider.
  • Third Level: Review of claim of approval that was previously denied by plan setup and through second level appeals. This appeal is coordinated by CVS/caremark and occurs between a different external provider and the patient’s current provider. This level can only be initiated by a provider.

Assignment of Benefits

An arrangement when a patient requests that their medical benefit payments be made directly to a designated provider or facility, such as a physician or hospital.

Authorized Voting Representative

The person delegated by a plan sponsor group to vote on National CooperativeRx issues, such as electing board members.

Average Eligible Members

Average number of eligible members participating during the time period.

Average Manufacturer Price

Average price paid by wholesalers to manufacturers for drugs distributed to pharmacies.

Average Wholesale Price

A surrogate marker of drug price, which does not include rebates or discounts.



Business Associate Agreement. It states an entity cannot share the protected health information of another entity.


The top percentage of ranked clients.


A biological medical product that is typically less expensive and a highly similar replica of a reference biologic product.


Book of Business. A group of members specifically assigned to one person or entity.

Brand Name

A drug sold under a trademark product name.

Bridge Supply

A five-day supply of a medication that a patient must receive at a CVS pharmacy; the balance is delivered via mail order.



Confidentiality Agreement.


A team of clinical experts led by a pharmacist or nurse specifically trained in the patient’s condition and available 24/7.

Carrier Number

A four-digit number assigned to each member group by CVS/caremark.

Carve-Out Pharmacy Benefit

A benefit that occurs when employers choose to separate their prescription drug benefit from their medical insurance plan to better control costs.


An avenue in which a prescription medication is dispensed to a patient. This includes retail, mail, maintenance choice, specialty or direct (paper claim).


A persistent or constantly recurring illness.


Cooperative Member Agreement. It officially declares a member joined National CooperativeRx and defines the level of membership.


Centers for Medicare and Medicaid Services. A government group that oversees and issues regulations.


A cost share structure where the member pays a percentage of the total cost and the plan sponsor pays the rest.


The degree to which a plan member follows his or her health care provider’s medication instructions.

Compound Drug

Created when a pharmacist combines or mixes one or more ingredients to fill a prescription when the combination is not commercially available.


Refers to National CooperativeRx.

Coordination of Benefits

The way a plan member’s claims are processed when the member is covered under more than one health plan. This helps determine which health plan pays the claims in which order to prevent the total benefits costing more than the total expenses.


A cost share structure in which the member pays a fixed amount and the plan sponsor pays the rest.

Cost Share

The amount that members contribute to the cost of prescriptions covered by their plan. May be a set dollar amount or a percentage of total cost.

Coverage Gap

Part of Medicare Part D. Occurs when a participant has reached a certain out-of-pocket threshold. During this time, the participant is responsible for a higher portion of their drug costs. This amount changes annually.


Client Requirements Document. The master implementation document is specific to CVS/caremark and is used to set up a member’s benefit plan.



The amount the participant must pay before there is coverage by the plan sponsor.

Disease Management

A system that manages the condition of a population of patients with a chronic illness.

Dispense as Written (DAW)

A prescription notation that states the brand name drug should be dispensed despite the availability of a generic equivalent.

  • DAW 1: A prescription order from a prescriber that states the brand name drug is medically necessary and no substitution is allowed.
  • DAW 2: A prescription order from a prescriber that allows for a generic substitution, but the patient requests the brand name drug to be dispensed.

Dispensing Fee

A fee paid to the pharmacy to cover the cost of services provided by the pharmacist when dispensing a prescription.

Drug Benefit Design

Plan setup that determines medication coverage and utilization management requirements.

Drug Class

A group of medications that may possess similar chemical structures, work the same way, or are designed to treat the same condition.



Employee Retirement Income Security Act.

Extended Days’ Supply Network (EDS)

A special network that offers better pricing and no dispensing fees for prescriptions.



US Food and Drug Administration.

Federal Reinsurance

A payment received to offset costs and spread risk associated with supporting Medicare programs to minimize danger of monetary loss.

FSA-Eligible Items

Items that may be purchased using FSA funds.


A list of preferred medications that are covered under a drug benefit plan, based on specific plan setup. The trademarked formularies specific to CVS/caremark exist on a continuum:

  • Opt-out: An open formulary that offers no exclusions.
  • Standard Control: Exclusions are introduced in this formulary.
  • Advanced Control Formulary: This formulary offers the third highest number of exclusions.
  • Value Formulary: Built-in utilization management is introduced in this formulary and offers the highest number of exclusions.


Flexible Spending Account.

FSA-Eligible Items

Items that may be purchased using FSA funds.



A pharmaceutical drug that is comparable to a brand name drug in quality and performance, but is typically less expensive than its brand name counterpart.

Generic Dispensing Rate (GDR)

The percent of payable prescriptions dispensed as generic drugs.

Generic Substitution Rate (GSR)

The rate of generic dispensing that occurs whenever generics are available.

Gross Cost

Total member cost plus total participant cost.

Gross Cost PMPM

Gross cost divided by average eligible participants per month.

Gross Cost Trend

Gross Cost PMPM for current time period divided by Gross Cost PMPM for prior time period.

Guaranteed Rebate per Mail Script

Dollar amount of guaranteed rebates for a prescription delivered by mail service.

Guaranteed Rebate per Retail Script

Dollar amount of guaranteed rebates for retail prescription.



High Deductible Health Plan.


Health Savings Account.


Lifestyle Drug

An optional drug used to improve one’s quality of life rather than treat or manage a medical condition.

Long-Term Medication

Medication taken for longer than three months. Does not apply to new maintenance medications.


Mail Service

Part of a drug benefit plan that allows for delivery of maintenance medications to a patient’s home. It is common for medications to be supplied in larger quantities and at a lower cost than at a retail pharmacy.

Mail Service Cost Share

Cost share amount for a set days’ supply of a prescription normally delivered by mail service. May be a dollar amount or a percentage of the total prescription cost.

Maintenance Choice

The option for a member to fill a 90-day supply of maintenance medications at a CVS retail location at the mail service discount. The member pays the mail order cost share.

Maintenance Medication

A prescription typically taken on a regular basis to treat a chronic condition.

Maximum Allowable Cost

The maximum amount a plan will pay for generic drugs with three or more manufacturers.

Maximum Out-of-Pocket

The maximum dollar amount that a member will pay for medical and/or pharmacy services under their plan.

Member or Member-Group

A self-insured employer group that has chosen National CooperativeRx for their pharmacy benefit needs.

Multi-Source Brand (MSB)

A brand name drug that is available from multiple manufacturers and usually has a generic equivalent.

Multi-Tier Copay

A structure in a drug benefit plan that has more than one copay tier.



Non-Disclosure Agreement. It states that information cannot be shared.

Net Cost

Plan sponsor total amount paid.

Net Cost PMPM

Net cost divided by average eligible participants per month.

Net Trend

Net Cost PMPM for current time period divided by Net Cost PMPM for prior time period.


A group of pharmacies that will accept a person’s prescription benefit ID card.

Nonformulary Drugs

These drugs will not always appear on the formulary list but may still be a covered product.

Nonpreferred Brands

Brand name drugs that are not included on a plan’s preferred drug list.


Over-the-Counter (OTC) Medications

Medicines that can be purchased at retail stores without a prescription.



A person who is covered under a plan sponsor’s pharmacy benefits plan. CVS/caremark often refers to a participant as “member.”


Net earnings distributed to members in dividends.


Per employee per month/per employee per year.


Participating Group Addendum. The National CooperativeRx PGA often accompanies the Master Contract with our PBM vendor and requires a signature for a new member to join.

Pharmacy Benefit Manager (PBM)

A third-party administrator of prescription drug programs for employers, health plans and other plan sponsors. Their main responsibilities are to develop the formulary, negotiate rebates with drug manufacturers and pay prescription drug claims. CVS/caremark is a PBM.


Per member per month/per member per year.

Preferred Brands

Brand name drugs that often appear on the formulary list and are a covered benefit.


The health care provider who legally writes a prescription for a patient.

Prior Authorization (PA)

A review to ensure a medication or procedure is used for the right patient at the right time.


Per utilizing member per month/per utilizing member per year.



A credit returned to members based on utilization. National CooperativeRx distributes 100% of rebates back to members.

Rebate True-Up

Rebate dollar amount that is above the minimum guarantee.

Retail Cost Share

Cost share amount for up to a one-month supply of prescriptions from a retail pharmacy. May be a set dollar amount or a percentage of the total prescription cost.



Strategic Account Executive.

Short-Term Medication

Medication that is typically used for 30 days or less.

Single-Source Brand (SSB)

A brand name drug that is available from a sole manufacturer.


Summary Plan Description.

Specialty Gross PMPM

Specialty total gross cost divided by average eligible participants per month.

Specialty Medications

Prescriptions used to treat specific chronic and/or genetic conditions. Each PBM sets their own specialty drug list as there is no industry standard.

Specialty Percentage of Total Gross Cost

Specialty total gross cost divided by total gross cost.


Third-Party Administrator

A claims processor who may be owned by a large insurance carrier and specializes specifically in pharmacy or other areas.


A structure that determines cost levels for prescription drugs, with Tier 1 typically consisting of generic drugs (least expensive) and brand name drugs in higher tiers.


An open and honest form of communication between an organization and its members, where all revenue is fully disclosed including rebate amounts, formulary management fees, pricing, etc.

Trend Components

Trend is the long-term pattern of a time series. Pharmacy trend components provide a breakdown of price inflation, utilization and drug mix.



National CooperativeRx’s former legal name.


Person reading the label of a prescription drug
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