NADAC vs. WAC vs. AWP: Which Benchmark Should Your Pharmacy Use?

If you have spent time reviewing drug pricing, you have encountered at least three different benchmarks: AWP, WAC, and NADAC. They are all used to reference drug prices, but they measure very different things and are useful for different purposes.

Here is a plain-English breakdown of each one.

AWP: Average Wholesale Price

AWP, or Average Wholesale Price, is one of the oldest drug pricing benchmarks. Despite its name, it does not reflect what wholesalers actually charge or what pharmacies actually pay. AWP was historically calculated by drug manufacturers and published by pricing databases, and has been widely criticized as an artificial benchmark that is not tied to real transaction data.

AWP has historically been used as the basis for PBM reimbursement formulas, typically expressed as AWP minus a percentage. For example, a PBM contract might reimburse a pharmacy at AWP minus 15 percent plus a dispensing fee.

AWP is useful for understanding your reimbursement formula and estimating what you will be paid for a given fill. It is not a reliable indicator of what you should be paying to acquire the drug.

WAC: Wholesale Acquisition Cost

WAC is the manufacturer's published list price to wholesalers and direct purchasers, before rebates, chargebacks, or negotiated discounts. It is set by the drug manufacturer and reported to pricing databases.

WAC is closer to a real transaction price than AWP, but it still represents a starting list price rather than what pharmacies actually pay on average. Large pharmacy chains and buying groups with negotiating leverage typically pay less than WAC after rebates and contract adjustments. Independent pharmacies without that leverage often pay closer to WAC.

WAC is useful as a reference point for evaluating distributor pricing, but it can overstate what the market is actually paying for a given drug.

NADAC: National Average Drug Acquisition Cost

NADAC is the benchmark published weekly by the Centers for Medicare and Medicaid Services. Unlike AWP and WAC, NADAC is based on actual invoice data collected from a nationally representative sample of retail community pharmacies. It reflects what pharmacies actually paid, not what manufacturers listed.

For most drugs, NADAC is the most accurate publicly available indicator of real-world acquisition costs. It is also freely available on Medicaid.gov, updated weekly, and covers both brand and generic medications.

NADAC is useful for evaluating whether your acquisition costs are in line with the market and for assessing whether a listing price on a peer-to-peer platform is competitive.

Which Benchmark to Use for What

For evaluating your reimbursement, AWP-based formulas are still common in PBM contracts, so understanding AWP for the drugs you dispense most is relevant to forecasting what you will be paid.

For evaluating your acquisition costs, NADAC is the most useful benchmark. Compare what you are paying to NADAC to see whether specific drugs are significantly above market. If they are, those are candidates for alternative sourcing.

For comparing distributor pricing, WAC gives you a manufacturer reference point, but NADAC is a better indicator of what you should actually be paying based on market-wide data.

For evaluating marketplace listings, on InStockRx, NADAC reference pricing is displayed alongside listings so buyers can assess whether a seller's price is reasonable relative to the national average. This removes the guesswork from evaluating a peer-to-peer purchase.

The Bottom Line

AWP is a reimbursement benchmark, not an acquisition benchmark. WAC is a manufacturer list price, not a market price. NADAC is the closest thing to a real-world acquisition cost benchmark available to independent pharmacies, and it is free.

If you are not already using NADAC as a reference point for evaluating your drug acquisition costs, it is worth adding to your regular review process.