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What Changes are Coming for AWP?

Average Wholesale Price (AWP) was the target of a lawsuit, and many rumors have circulated as to what will replace it, or if it even will even exist after September.  NCPA’s Executive Vice President and CEO, B. Douglas Hoey, R.Ph., MBA, did a great job of concisely answering the question in his NCPA Executive Update, and he gave permission for us to quote his response to the AWP question, “We’ve heard that AWP is going away by September. What’s the scoop? --Ohio”

This rumor has been circulating for quite some time and there is some truth to it. First, Data Bank will cease publishing their Blue Book AWP data field for all drugs no later than September 29, 2011. However, MediSpan intends to publish AWP (or a similarly determined benchmark price) until relevant industry or governmental organizations develop a viable, generally accepted alternative price benchmark to replace AWP. Thomson Reuters also continues to supply AWP as part of RED BOOK at least through 2011.

Folks have been talking about alternatives to AWP for at least a decade. Some deride AWP as standing for “Ain’t What’s Paid,” but it seems to me that it’s still a useful benchmark because payors have adjusted (actually, over adjusted in many instances) for the mark-up between cost and AWP. There is a push from some payors, including some state Medicaid programs, to use a different benchmark such as Actual Acquisition Cost (AAC), that in theory pays pharmacies their cost for the product, but adds a dispensing fee based on cost of dispense studies. In the states where it has been implemented, I’ve yet to talk with a pharmacist who says he or she likes the new system.

When states feel like they have no other option but to use AAC, NCPA advocates for assurance, legislatively or administratively, that the dispensing fee will be tied to a cost of dispense study done by a firm agreed to by pharmacy stakeholders. So, for now and maybe for the foreseeable future, AWP continues to serve its useful purpose.

 

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