Tyrone Is At It Again Godfather!

I came across the single best explanation of AWP or Average Wholesale Price and I want to share it with you.

It is offered by Wolters Kluwer in response to complaints in the marketplace about the lack of transparency inherent in PBM pricing benchmarks. Its brand, Medi-Span, is one of the largest AWP price reporting services in the country.

Click here to read: Wolters Kluwer Health Average Wholesale Price (AWP) Policy. I’ve said it before, negotiating prescription drug costs based primarily upon list price discounts is misguided. Instead, cost should be negotiated based upon a price benchmark which delivers radical transparency.

Because it reflects only a list price and not actual acquisition cost, AWP alone is unreliable. In many claims transactions, the same can also be said for MAC pricing. If plan sponsors are not sophisticated purchasers, AWP discount guarantees can lead to excessive overpayments.

By sophisticated, I’m suggesting plan sponsors create and negotiate their own pricing benchmarks, for example. This level of competency demands plan sponsors be well-versed in PBM contracts and plan design among other components.

Simply put, education is the most logical and effective foundation for achieving maximum cost-effectiveness when managing pharmacy benefits.

All the best,

Tyrone D. Squires, MBA, CPBS
Managing Director

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