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May
18

AWP isn’t going away

Average Wholesale Price – the much-declaimed pharmaceutical pricing metric – is not going away anytime soon.
Certainly not this fall, and very likely not next fall either.
AWP is published by several firms, including Wolters Kluwer. WK’s version, branded Medi-Span, was supposed to be sunsetted later this year, a result of a legal settlement. That is not going to happen, for the simple reason that buyers, sellers, pharmacies, PBMs, payers, Medicaid agencies and pharma can’t find a suitable alternative.
As WK stated, “Wolters Kluwer Health 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.”
While stakeholders did agree on using WAC (wholesale acquisition cost) as a potential substitute, WAC is suitable primarily for brand drugs, as it does not apply to multi-source (generic) drugs. It also suffers from some of the same problems as AWP – WAC is the “list price” and doesn’t reflect rebates, discounts, allowances, or other price concessions. That means, it really isn’t the actual price – here’s how one knowledgeable group put it:
“Wholesale Acquisition Cost” prices are currently available for many, but not all drugs. WAC may be susceptible to the same concerns that rendered AWP ineffective: it is a manufacturer-reported value not readily amenable to audit, and there is no reason for confidence that it could not ultimately be inflated well beyond any actual market price. Particularly since it has been defined in federal law as an “undiscounted list price” WAC would require continuous adjustments (markups or markdowns) by states based on acquisition cost surveys.”
There are also other AWP publishers which are not affected by the legal settlement. Gold Standard, and Thomson Reuters have not revealed any plans to stop publishing.
What does this mean for you?
AWP is here for the foreseeable future; it’s pretty flawed, but it’s better than any of the alternatives out there today.


5 thoughts on “AWP isn’t going away”

  1. Joe, didn’t I hear that the University College in Rochester NY was supposed to be the lead in a multi research attempt to establish new metrics for AWP?

  2. Joe, This is good news for the industry because as you correctly point out there is no alternative. However there is a second class action lawsuit being developed targeting the AWP with individual, primarily Medicare, payers as the plaintiffs. If that lawsuit comes to fruition as a class action don’t you think that could spell even bigger trouble for the use of the AWP?

  3. Tony – I believe there’s a project at several academic institutions in upstate NY focused on replacing the Ingenix UCR databases; I’m not familiar with any project re AWP.
    Then again, there may well be.
    Joe

  4. Joe, We have reviewed more literature that does not support the ongoing use of AWP, but rather alternatives such as Risk Evaluation and Mitigation Strategies (REMS) and Manufacturer Suggested Price (MSP).

  5. Manufacturer Suggested Price (MSP) – Wouldn’t the name alone scare most payers?
    Any thoughts on developing ASP pricing for common WC drugs like Medicare uses for Part B drugs? At least Medicare’s requirements of the manufacturer sound threatening enough to encourage them to be honest in their reporting which determines the pricing.

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Joe Paduda is the principal of Health Strategy Associates

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