Average manufacturer price, the confidential number behind Medicaid drug rebates

In its October 2026 federal upper limit file, CMS put the weighted average manufacturer price of a generic 10 mg lisinopril tablet at 0.94 cents, according to the ACA Federal Upper Limits dataset⁷ on data.medicaid.gov. That same month, retail pharmacies paid an average of 1.81 cents for the tablet, according to the agency's NADAC survey.

That 0.94 cents is an average across makers. What any one manufacturer reported cannot be published: federal law makes each company's average manufacturer price, or AMP, confidential, per the Medicaid drug rebate statute¹.

AMP is one of the least visible prices in the US drug system and one of the most used. It sets the size of the rebates manufacturers pay state Medicaid programs, decides whether a generic owes an inflation penalty, anchors the federal cap on Medicaid generic payments, and feeds the Medicare inflation rebates created in 2022. Below are the legal definition, the ways Medicaid uses it, and how it differs from list prices and pharmacy invoice costs, along with GxRadar's comparison of published AMP averages against NADAC for 41 common generics.

What the law counts as AMP

Section 1927(k)(1) of the Social Security Act defines AMP as "the average price paid to the manufacturer for the drug in the United States by" wholesalers for drugs distributed to retail community pharmacies, and by retail community pharmacies that buy directly from the manufacturer, according to the statute's text¹. Customary prompt-pay discounts to wholesalers and bona fide service fees are excluded.

A regulation spells out the rest. 42 CFR 447.504² lists more than two dozen kinds of sales and payments left out of AMP, among them sales to hospitals, HMOs, long-term care pharmacies, mail-order pharmacies, clinics and government pharmacies; Medicaid rebates themselves; and rebates and payments to pharmacy benefit managers. What remains is meant to track sales into the retail pharmacy channel, the same channel GxRadar describes in how a pill gets from the factory to the pharmacy.

Manufacturers in the Medicaid Drug Rebate Program report a quarterly AMP within 30 days after each quarter ends, plus monthly AMPs and the units behind them; the statute makes the figures subject to audit by the HHS inspector general. CMS says about 780 manufacturers take part in the rebate program¹¹.

Confidentiality is written into the same section. Information manufacturers report "is confidential and shall not be disclosed" in a form that reveals a specific company's prices, the law¹ says, with listed exceptions. One exception lets HHS post the weighted average of recent monthly AMPs for multiple-source drugs. CMS's federal upper limit page⁸ notes that, because of these rules, its public file on AMP reporting shows only whether a company reported an AMP for each product, never the value.

How Medicaid rebates are built on it

Medicaid rebates are calculated per unit from AMP. For generics, which the program calls noninnovator multiple-source drugs, the basic rebate is 13 percent of AMP, a level in effect since 2010 under the statute. For most brand-name drugs it is the greater of 23.1 percent of AMP or the difference between AMP and the drug's best price, as KFF's March 2026 brief³ summarizes; generics have no best-price test.

Both types also owe an inflation component when AMP rises faster than the consumer price index. Generics were added by the Bipartisan Budget Act of 2015, starting with rebate periods in the first quarter of 2017, according to the HHS inspector general⁵. For most older generics, the statute uses the quarter beginning July 1, 2014, as the baseline. CMS's worked example⁴ shows how much that can add.

In that example the generic's total rebate is about 44 percent of its current AMP. Before the change, the inspector general had estimated in a December 2015 report⁵ that Medicaid would have collected $1.4 billion more from 2005 through 2014 on the top 200 generics if the brand-drug inflation rule had applied, after finding that 22 percent of the quarterly generic AMPs it reviewed rose faster than the statutory inflation factor. For brand-name drugs, total rebates were capped at 100 percent of AMP until Jan. 1, 2024, when the cap ended under a 2021 amendment, as the statute's current text and KFF³ both reflect.

Other formulas that start from AMP

Medicaid's federal upper limit for multiple-source generics is set at no less than 175 percent of the weighted average of recent monthly AMPs, per the same statute. Medicare's Part D inflation rebates, created by the Inflation Reduction Act, use an annual manufacturer price that ASPE describes as a calculation based on AMP and units reported under the Medicaid statute, in its October 2023 brief¹². FDA economists also used AMP data in a 2019 study⁶ of how generic prices fall as competitors enter, noting that AMPs are more directly under manufacturers' control than pharmacy invoice prices.

How AMP differs from WAC and NADAC

That WAC definition comes from the Medicare Part B statute¹⁰, and the NADAC description from CMS's December 2024 methodology⁹. FDA's 2019 paper⁶ added one more difference: AMP leaves out wholesale distributors' markups, which a study it cited put at 19 percent for generics and 1 percent for brands. GxRadar's guide to drug price benchmarks sets these beside AWP, MAC and ASP.

What the published averages show

GxRadar matched the October 2026 FUL file⁷ to the NADAC series for the generics on our price pages and found 41 with a matching product group. For 32 of them the weighted average AMP was below NADAC, the order you would expect if pharmacies pay a wholesaler's markup on top of the manufacturer's price. For nine it was above.

Those two series measure different transactions, weighted different ways, and CMS does not explain individual gaps in these files. The average AMP blends every therapeutically equivalent version reported for the group, weighted by units sold, while NADAC comes from surveyed pharmacy invoices. For very cheap tablets, small differences in either can produce large percentage gaps.

Medicare's AMP-based Part D measure runs on a 12-month clock that starts each Oct. 1, according to ASPE¹², so the period that will decide the next round of Medicare inflation rebates began on Oct. 1, 2026. Our article on the Inflation Reduction Act and generics explains why few generics are caught by it, and how Medicaid pays for generics covers the pharmacy side.