Average wholesale price
Average Wholesale Price (AWP)
Average Wholesale Price (AWP) is a benchmark that has been used in the United States for the pricing and reimbursement of prescription drugs for third-party payers such as private insurers and government programs. The AWP may also be used in contract negotiations and benefit design by various entities within the healthcare system.
Pronunciation
Average: /ˈævərɪdʒ/ Wholesale: /ˈhoʊlseɪl/ Price: /praɪs/
Etymology
The term "Average Wholesale Price" is derived from the English language. "Average" comes from the Latin word "averagium", meaning "a certain rate or tax". "Wholesale" is a compound of "whole" and "sale", indicating the sale of goods in large quantities. "Price" comes from the Latin word "pretium", meaning "value or worth".
Related Terms
- Pharmacy Benefit Manager (PBM)
- Direct Price (DP)
- Suggested Wholesale Price (SWP)
- National Average Drug Acquisition Cost (NADAC)
- Maximum Allowable Cost (MAC)
Definition
The Average Wholesale Price is a prescription drug pricing benchmark that represents the manufacturer's suggested price for a drug sold to wholesalers or direct purchasers. However, it does not necessarily reflect the actual transaction price.
Usage
The AWP is often used as a reference point in drug pricing and reimbursement. It is used by Pharmacy Benefit Managers (PBMs), insurance companies, and government agencies to determine the reimbursement amount for prescription drug claims. It is also used in contract negotiations between these entities and pharmacies or other healthcare providers.
Criticism
The AWP has been criticized for not accurately reflecting the actual transaction prices for prescription drugs, as it is often higher than the actual cost of the drug. This has led to legal and regulatory actions, and the development of alternative pricing benchmarks such as the National Average Drug Acquisition Cost (NADAC) and Maximum Allowable Cost (MAC).
External links
- Medical encyclopedia article on Average wholesale price
- Wikipedia's article - Average wholesale price
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