Average Wholesale Price (AWP)
A benchmark price for drugs that historically served as the basis for pharmacy reimbursement — often called the "sticker price that nobody pays."
How It Works
AWP was once the dominant pricing benchmark in the U.S. drug supply chain, but it has been widely criticized as inflated and disconnected from actual transaction prices. AWP is typically 20-25% above the wholesale acquisition cost (WAC). Despite its name, AWP does not reflect any actual wholesale transaction. Many payers have moved to other benchmarks like the National Average Drug Acquisition Cost (NADAC) or actual acquisition cost (AAC). However, AWP persists in some contracts and state Medicaid programs.
Related Terms
- Wholesale Acquisition Cost (WAC) — The manufacturer's list price for a drug sold to wholesalers — often called the "sticker price" before any rebates or discounts.
- National Average Drug Acquisition Cost (NADAC) — A CMS-published benchmark reflecting the actual average price pharmacies pay to acquire drugs from wholesalers.
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About This Definition
This definition is part of the DrugPrice Drug Pricing Glossary — 34 terms explaining how prescription drug pricing works in the United States. All definitions are written in plain language for patients, caregivers, journalists, and healthcare professionals.