What does AWP stand for in drug pricing terminology?

AWP stands for Average Wholesale Price, which is a key term used in drug pricing. This pricing metric is often utilized as a benchmark for the pricing of pharmaceuticals. It represents the average price that wholesalers charge pharmacies for a drug before any discounts, rebates, or other price adjustments are applied.

AWP serves several functions in the healthcare sector, especially regarding reimbursement rates set by insurers for various drugs. It is commonly used in contracts and negotiations between pharmacies, wholesalers, and insurers to establish a baseline for pricing and to determine the levels of discounts or reimbursements.

Understanding AWP is crucial for entities involved in the 340B program and other drug pricing schemes, as it impacts how much entities pay for medications and influences their overall cost management strategies.