As announced last year, the Dispensary of Hope medication valuation reporting is changing from AWP to WAC.
Average Wholesale Price (AWP) has been used for over 40 years by pharmacies as the basis of reimbursement, both for government and private payers. When the Dispensary of Hope began, we distributed mostly branded samples donated by local physicians. At the time, AWP was a more accurate valuation of brand name drugs, which is why we used this metric. As the Dispensary of Hope has grown into a national charitable distributor of donated medication directly from drug manufacturers, AWP is no longer the best representation of actual market prices. In relation to generic medication in particular, AWP is compared to shopping for a new car and the "sticker price" you see displayed in the window.
For these reasons, we will begin using a different pricing metric, Wholesale Acquisition Cost (WAC), and no longer report distributed medication values as AWP. In the past several years, WAC has gained more favor in use since WAC is more precise and relates the price that wholesalers actually pay when purchasing drugs from manufacturers. The definition of WAC is set in federal statute and explains the meaning as the actual cost manufacturers charge the wholesaler, whereas AWP is not fully defined.
We will begin reporting in only WAC, starting July 1, 2017.
Here are examples of how WAC compares to AWP:
We began the internal transition to WAC on July 1, 2016 and any reports with data prior to that date will NOT include WAC valuation. Please keep in mind that pricing is only one valuation method. We also encourage you to continue to track additional health outcome measures.