Medicine:Average wholesale price (pharmaceuticals)

In the United States, the average wholesale price (AWP) is a prescription drug term referring to the average price for drugs purchased at the wholesale 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. According to the Red Book, published by Truven Health Analytics, the pricing information is "based on data obtained from manufacturers, distributors, and other suppliers." However, despite the data source, published AWPs can be grossly inflated relative to actual market prices for prescription drugs. For decades, AWP has been used to determine third-party reimbursement throughout the health care 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 dramatically exceeding real prescription drug prices, many states have brought lawsuits against pharmaceutical manufacturers and others, alleging fraud and violations of consumer protection laws.

References

• Dawn M. Gencarelli (August 29, 2005). "One Pill, Many Prices: Variation in Prescription Drug Prices in Selected Government Programs" (pdf). National Health Policy Forum. http://www.nhpf.org/library/issue-briefs/IB807_DrugPricing_08-29-05.pdf. Retrieved 2009-08-06.