7 Sep 2021
- Wholesale acquisition cost (WAC): The price the wholesaler pays the manufacturer. Generally considered the ‘list’ price. This price is under the control of a manufacturer.
- Average wholesale price (AWP): The price at which a wholesaler sells product to others in the supply chain (hospitals or pharmacies for example). AWP is independent of whatever price concession deals a manufacturer might make with hospitals or other purchasers. AWP is generally estimated by companies that provide “pricing files” to insurers or PBMs so they can know how much to reimburse pharmacies, hospitals, clinics, etc. for dispensed drugs. AWP of the pricing files is thought to be higher than what dispensers actually pay. Therefore, many payers reimburse pharmacies something like AWP-17 percent or lower – reflecting what they believe to be the cost that needs to be reimbursed.
- Actual acquisition cost (AAC): Increasingly health plans and other large payers are trying to ascertain what pharmacies and other dispensers actually paid to get the drug in stock. Payers want to reduce the extent to which dispensers profit on the drug price and move profit or revenue to the professional fees associated with the dispensing of the drug.