LESSON 12: AWP and WAC Pricing Benchmarks

What does AWP stand for?

AWP stands for Average Wholesale Price.

What does WAC stand for?

WAC stands for Wholesale Acquisition Cost; WAC is linked to AWP.

What is the MSRP for pharmaceuticals?

MSRP is the same as AWP for pharmaceuticals; MSRP is an unreliable price that is artificially inflated.

What is list price?

List price is the price at which the good is advertised; list price IS SIMILAR to "sticker price" used in the automobile industry; it makes it look like you're getting a discount.

Who sets the list price for drugs?

The industry for AWP regarding drugs is set by two parties: the manufacturer and the wholesaler.

What is the difference between list price and invoice price?

Invoice price is what the dealer paid for the automobile; when they sell it they use "sticker price" (list price); usually the AWP is negotiated (discount) when you are paying for the ingredient.

When do you pay sticker price for a car?

You only pay sticker price when there is a shortage.

What is the Redbook?

Redbook is a publication that makes a list of AWP for everything sorted in the market and different things that are FDA approved; this includes different formulations and different sizes in number of pills; each product has its own NDC (national drug code); every FDA-approved product in the Redbook has a published AWP.

What benchmark is used when manufacturers sell to wholesalers?

When manufacturers sell products directly to wholesalers they use a benchmark called WAC (Wholesale Acquisition Cost).

What benchmark is used when wholesalers sell to pharmacies?

When wholesalers are selling to pharmacies they use the AWP benchmark.

What is AWP compared to the final price?

AWP is the highest price you will pay; it is an artificially inflated price according to some industries.

What is an NDC?

NDC stands for National Drug Code; every FDA-approved product has its own unique NDC; different formulations and different pill counts have different NDC codes.