Which statement defines Average actual cost (AAC)?

Which statement defines Average actual cost (AAC)?

• A. The list price charged to wholesalers.
• B. Derived from the sales to all purchasers.
• C. The published average cost paid by the pharmacy to the wholesaler.
• D. The price the pharmacy pays after discounts.

Answer: (D)

Average actual cost is the net price the pharmacy pays to acquire drugs from a wholesaler after all discounts and allowances are applied. This reflects the true out-of-pocket cost per unit used for inventory and pricing decisions, since it captures the actual money leaving the pharmacy’s pocket once discounts, rebates, and other reductions are taken into account. That’s why the definition fits best: it’s the price the pharmacy pays after discounts, not the initial list price, not an average of sales to all purchasers, and not simply a published or assumed cost. For example, a drug with a list price higher than what the pharmacy ends up paying after negotiated discounts and rebates would have an AAC equal to that discounted net price.

Average actual cost is the net price the pharmacy pays to acquire drugs from a wholesaler after all discounts and allowances are applied. This reflects the true out-of-pocket cost per unit used for inventory and pricing decisions, since it captures the actual money leaving the pharmacy’s pocket once discounts, rebates, and other reductions are taken into account.

That’s why the definition fits best: it’s the price the pharmacy pays after discounts, not the initial list price, not an average of sales to all purchasers, and not simply a published or assumed cost. For example, a drug with a list price higher than what the pharmacy ends up paying after negotiated discounts and rebates would have an AAC equal to that discounted net price.