Issue Brief

No. 775

Average Wholesale Price for Prescription Drugs: Is There a More Appropriate Pricing Mechanism?
June 7, 2002


Dawn M. Gencarelli


This paper defines the average wholesale price (AWP), an important benchmark for prescription drug pricing and reimbursement. The paper briefly explains the AWP's various uses in the pricing of prescription drugs, highlights some of the problems that have emerged as a result of the way it is reported and used, and explores some of the possibilities for reform. The paper also contains a glossary of commonly used terms, as well as an appendix that lists the state Medicaid reimbursement formulas.

Related Materials

See also the entry for the related Forum Session.

In addition, more recent information on AWP is available in "One Pill, Many Prices: Variation in Prescription Drug Prices in Selected Government Programs" (Issue Brief 807, August 29, 2005).

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