Wholesale Acquisition Cost (WAC)

Wholesale acquisition cost (WAC) is the manufacturer’s reported list price for a prescription pharmaceutical for sale to wholesalers.  Each manufacturer establishes its own WAC by using its own formula. Price-reporting services, such as First Databank and Medi-Span, publish WAC prices supplied to them by manufacturers in their pharmaceutical information databases. Pharmaceutical contracts between manufacturers and private payers typically use AWP or WAC as the reference price

 

The terms list price, catalog price, wholesale net price, book price, and direct price are used by some manufacturers as synonyms for WAC. Almost all single-source pharmaceuticals have a WAC price, but many generic pharmaceuticals, repackaged pharmaceuticals, or “house brands” do not because there is no legal requirement to report a WAC. Pharmaceuticals for which no WAC is reported may have a suggested wholesale price (SWP).

 

Like AWP, WAC is a suggested price that often does not represent what a wholesaler or end-provider actually pays for the pharmaceutical, because WAC does not include manufacturer incentives such as rebates, volume purchase agreements, and prompt-payment discounts. However, unlike AWP, WAC is statutorily defined in the U.S. Code:

The term “wholesale acquisition cost” means, with respect to a pharmaceutical or biological, the manufacturer’s list price for the pharmaceutical or biological to wholesalers or direct purchasers in the United States, not including prompt pay or other discounts, rebates or reductions in price, for the most recent month for which the information is available, as reported in wholesale price guides or other publications of pharmaceutical or biological pricing data.

 WAC is a lower price than AWP because it is applied earlier in the distribution process. Some Medicaid programs use WAC as an alternative to AWP in their branded drug reimbursement formulas. Pharmaceutical benchmark reporting services may show the relationship of AWP and WAC in a constant ratio for branded products for each manufacturer (for example a constant ratio of 1.20 or 1.25). Because of the proportionate relationship between WAC and AWP for branded products, entities that establish the WAC effectively establish the published AWP and thus impact payer reimbursement in AWP-based payment systems that use published AWP data. In the private sector, WAC is often the basis of manufacturer rebate calculations.

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