Average Wholesale Price

Written by Norene Anderson
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The average wholesale price (AWP) plays a significant role in the pricing of prescription drugs and the reimbursement paid by insurance providers. The increasing costs for health care and prescription drugs demand a closer look at the drug pricing system for all types of payers. Some providers think they are not compensated properly for the dispensing of prescriptions drugs and utilize the AWP to determine the appropriate charge.

The original purpose of the average wholesale price of prescription medication was for the physicians and pharmacies to know the true average price. The data is obtained from distributors and manufacturers. The AWP is similar to a sticker price on a car. It is a common benchmark for all healthcare payers. The payments offered are computed on the AWP minus a pre-determined percentage.

The Dilemma of Obtaining Average Wholesale Price Information

The concept of the average wholesale price and its use in determining payment is not consistent across the board. Some entities receive more discount than others do. Some feel this is due in part by manufacturers of the prescription drugs not reporting actual wholesale pricing information. Efforts are underway to bring the AWP into a more consistent reporting media across the board.

Most companies depend on the AWP as the center point of pricing. Any changes in the use of the AWP will likely produce different results in the various settings. The reimbursement rates for Medicare and Medicaid are under particular scrutiny and need the consistency of dependable AWP lists for accurate payout of claims for prescription drugs. It is difficult to capture a true standard cost due to the wide variations across the states. There are rebates and discounts to consider in finding the best price scenario.

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