In the United States, the average wholesale price (AWP) is a

prescription drug A prescription drug (also prescription medication or prescription medicine) is a pharmaceutical drug that legally requires a medical prescription to be dispensed. In contrast, over-the-counter drugs can be obtained without a prescription. The rea ...

term referring to the average price for medications offered at the

wholesale Wholesaling or distributing is the sale of goods or merchandise to retailers; to industrial, commercial, institutional or other professional business users; or to other wholesalers (wholesale businesses) and related subordinated services. In ...

level. The metric was originally intended to convey real pricing information to third-party payers, including government prescription drug programs. Commercial publishers of drug pricing data such as Red Book have published AWP data since at least 1970. The pricing information is "based on data obtained from

manufacturers Manufacturing is the creation or production of goods with the help of equipment, labor, machines, tools, and chemical or biological processing or formulation. It is the essence of secondary sector of the economy. The term may refer to a range ...

distributors A distributor is an enclosed rotating switch used in spark-ignition internal combustion engines that have mechanically timed ignition. The distributor's main function is to route high voltage current from the ignition coil to the spark plugs ...

, and other suppliers." However, despite the data source, published AWPs are generally inflated by 20% relative to actual

market prices A price is the (usually not negative) quantity of payment or compensation given by one party to another in return for goods or services. In some situations, the price of production has a different name. If the product is a "good" in the ...

wholesale acquisition cost Wholesale acquisition cost is the price of a medication set by a pharmaceutical manufacturer in the United States when selling to a wholesaler. Generally 20% is added to create the average wholesale price. References Drug pricing {{pharma ...

for prescription drugs. For decades, AWP has been used to determine third-party

reimbursement Reimbursement is the act of compensating someone for an out-of-pocket expense by giving them an amount of money equal to what was spent. Companies, governments and nonprofit organizations may compensate their employees or officers for necessary a ...

throughout the

health care Health care or healthcare is the improvement of health via the prevention, diagnosis, treatment, amelioration or cure of disease, illness, injury, and other physical and mental impairments in people. Health care is delivered by health profe ...

industry because third party payers have no other reliable method of obtaining real market prices as most contracts contain confidentiality clauses. Reimbursement amounts are typically based on AWP minus some percentage. As a result of published AWPs often exceeding real prescription drug prices, many states have brought lawsuits against pharmaceutical manufacturers and others, alleging fraud and violations of

consumer protection laws Consumer protection is the practice of safeguarding buyers of goods and services, and the public, against unfair practices in the marketplace. Consumer protection measures are often established by law. Such laws are intended to prevent business ...

History

It was created in 1969.

References

{{Reflist Pharmaceutical industry Pharmacy in the United States Pharma Drug pricing

History

See also

References