Average Wholesale Price (AWP) is defined as:

Average Wholesale Price (AWP) is defined as:

• A. The average wholesale cost of a drug before the addition of markups and dispensing fees
• B. The price charged to patients at the counter
• C. The manufacturer’s suggested retail price
• D. The cost to produce the drug

Answer: (A)

AWP is a published benchmark price that reflects the average price wholesalers charge a pharmacy for a drug, before any additional markups or dispensing fees are added. It serves as a reference point for reimbursement and formulary pricing, but it isn’t the actual amount a pharmacy pays after discounts or the amount a patient ultimately pays at the counter. It’s also not the manufacturer’s suggested retail price, nor the cost to manufacture the drug. In practice, pharmacies often pay less than AWP due to rebates and negotiated discounts, which is why AWP can overstate the real cost.

AWP is a published benchmark price that reflects the average price wholesalers charge a pharmacy for a drug, before any additional markups or dispensing fees are added. It serves as a reference point for reimbursement and formulary pricing, but it isn’t the actual amount a pharmacy pays after discounts or the amount a patient ultimately pays at the counter. It’s also not the manufacturer’s suggested retail price, nor the cost to manufacture the drug. In practice, pharmacies often pay less than AWP due to rebates and negotiated discounts, which is why AWP can overstate the real cost.