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N602 Remark Code: Redbook Maximum Allowance

N602 means the payer adjusted the charge to the Redbook maximum allowance. Red Book is a drug pricing compendium, so this remark usually applies to pharmaceuticals, with the allowance derived from the published price for the specific product.

Quick facts

Code
N602 (RARC N602)
Status
Active In use since July 15, 2013.
Code set
Remittance Advice Remark Codes (RARC)
Group codes
  • CO (Contractual Obligation): The amount above the Redbook-based allowance is a write-off for the billing provider or pharmacy.
Official description
Adjusted based on the Redbook maximum allowance.
X12 Remittance Advice Remark Codes, retrieved September 25, 2026
Last verified
against the official X12 list.

What N602 means

N602 appears when a payer prices a drug using Red Book, a published drug price reference, and limits payment to a maximum allowance derived from it. Your charge was higher than that allowance, so the payer reduced it.

You will see it most often on workers’ compensation and injury claims where the jurisdiction’s pharmacy fee schedule references a published drug price. Typical companions are CARC 45, CARC 90 (ingredient cost adjustment), or P12.

Common reasons for a low allowance

  • The NDC on the claim is not the product actually dispensed, or is a repackaged NDC priced differently.
  • Units or quantity don’t match the package size the price is based on.
  • The fee schedule formula applies a percentage to the published price plus a dispensing fee, which is lower than your charge.
  • Pricing date differences between the fill date and the version the payer used.

How to check it

  1. Verify the NDC, quantity, and unit of measure on the claim against the dispensing record.
  2. Look up the pricing rule for that payer or jurisdiction and calculate the expected amount.
  3. Correct the claim with resubmission code 7 if the NDC or quantity was wrong.
  4. Request repricing if your inputs were right and the payer’s calculation is off.

How to prevent problems

Keep NDC and package-size data accurate in your dispensing and billing systems, and review drug allowances on each remittance. An ERA analysis can surface repeated pricing reductions on the same products.

Codes that may appear with N602

  • CO-45 (Charge exceeds fee schedule/maximum allowable or contracted/legislated fee arrangement.): The charge exceeds the fee schedule or maximum allowable amount.
  • CO-90 (Ingredient cost adjustment.): Ingredient cost adjustment for pharmaceuticals.
  • CO-P12 (Workers' compensation jurisdictional fee schedule adjustment.): A workers' compensation jurisdictional fee schedule adjustment.
  • N592 (Adjusted because this is not the initial prescription or exceeds the amount allowed for the initial prescription.): Adjusted because the fill was not the initial prescription or exceeded the initial allowance.
  • N449 (Payment based on a comparable drug/service/supply.): Payment based on a comparable drug, service, or supply.
  • M119 (Missing/incomplete/invalid/ deactivated/withdrawn National Drug Code (NDC).): The National Drug Code is missing, invalid, deactivated, or withdrawn.

N602 FAQ

What is Red Book?

A commercial drug pricing reference that publishes prices, such as average wholesale price, for products identified by National Drug Code. Some fee schedules use it to price drugs.

Who uses Redbook pricing?

It is common in workers' compensation and other injury programs, where state rules may set drug payment as a formula based on a published price.

Why is my payment lower than expected?

Common reasons include a different NDC being priced than the one dispensed, a unit or quantity mismatch, or a formula applied to the published price.