There's more than one price to a drug in America.
Everyone in America is talking about high drug prices…but what prices are they actually talking about? This info-graphic via GoodRx lays out the prices that are affixed to a prescription drug as it moves through the American supply chain.
The list price (WAC) is set by the drugmaker, covering research, production, and profits. Dismissed by industry as irrelevant given rebates, the WAC serves as an anchor point for contracting with wholesalers and pharmacies. And ultimately the determinant of what the patient pays and what the manufacturer nets.
The AWP is often referred to as the “ain't what's paid” price. Drugmakers start with charging a mark-up to wholesalers used to determine third-party reimbursement. The AWP is utilized by PBMs to capture “spread pricing” - the pocketed difference between what an insurer pays the PBM and the amount in-turn reimbursed to the pharmacy.
Reimbursements are based on AWPs, however pharmacies purchase drugs based on WAC prices.
The final step is at the retail level. Often referred to as the “cash price”, U&C prices reflect the cost of the drug to the consumer without the use of insurance.
Drugmakers aren't the only ones who profit from their medications. And tracking who pays what requires tracing the flow of prices.