What WAC pricing means and how it compares with AWP and ASP

WAC pricing and how it compares with AWP, ASP, NADAC and MAC

WAC pricing means wholesale acquisition cost: a manufacturer's list price for a drug or biological to wholesalers or direct purchasers in the United States, before prompt pay or other discounts, rebates or reductions in price (statutory definition). That WAC price is a sticker price (OIG) that Medicare Part B, Medicaid, the drug price negotiation program and some state transparency laws still use as a reference point (CMS overview, Medicaid.gov, CMS fact sheet, Oregon DFR).

What does WAC mean?

It is the list price for the most recent month, as reported in wholesale price guides. 42 CFR 414.902 points back to the statute. Manufacturers report it to compendia such as First Databank, IBM Micromedex Red Book and Medi-Span (HHS OIG, December 2022).

WAC is not a paid price. ASPE says WAC "does not represent actual transaction prices and does not include discounts, rebates, or other reductions in price" (ASPE, October 2023). OIG found WAC above ASP for all 30 high-expenditure Part B drugs it reviewed, with ASPs 0.5% to 68% below WAC (OIG). CMS says WAC is typically higher than ASP (CMS overview, March 2026).

Who uses WAC pricing

Medicare Part B

Part B pays most separately payable drugs at 106% of ASP (42 CFR 414.904). WAC is the cap or the fallback in these cases:

• For a single source drug, the payment limit is "the lesser of 106 percent of the average sales price for the product or 106 percent of the wholesale acquisition cost" (42 CFR 414.904(d)(1)).
• For a new drug without enough sales to compute ASP, the initial period cannot exceed a full calendar quarter. From January 1, 2019, payment is an amount not to exceed 103% of WAC (42 CFR 414.904(e)(4)). Older sources that cite 106% of WAC for this period predate 2019.
• The biosimilar add-on is 6% of the lesser of the reference product's ASP and WAC, or 8% during a qualifying biosimilar's five-year period. WAC is the base only when it is lower than ASP (42 CFR 414.904(j)).
• For some drugs missing from the Part B payment limit file, Medicare Administrative Contractors may use 106% of the lesser of the lowest-priced brand WAC and the median generic WAC. They may also use published WAC or invoice pricing (CMS overview, March 2026).

If a manufacturer reports neither ASP nor WAC, CMS can use WAC from other public sources to calculate 106% of WAC for the Part B inflation rebate (42 CFR 427.302). Part D inflation rebates use an annual manufacturer price, not WAC (ASPE).

WAC in pharmacy reimbursement

State Medicaid programs often put WAC in the pharmacy ingredient-cost formula, as one option in a lower-of test with NADAC. In CMS's table for the quarter ending September 2022, Alabama used WAC minus 4% for brands and WAC plus 0% for generics. Arkansas and Texas used WAC when NADAC was missing (Medicaid.gov).

State formulas change, so check the current state plan before relying on these 2022 figures. Manufacturers paid under the Part B ASP rules must also report WAC with their Medicaid price data, and WAC is not confidential (42 U.S.C. 1396r-8). In Part D, 42 CFR 423.501 lists wholesale acquisition cost, average wholesale price and maximum allowable cost as examples of a "prescription drug pricing standard".

Medicare drug price negotiation

CMS's 2027 fact sheet compares maximum fair prices with list prices that "represent the Wholesale Acquisition Costs (WACs)" for a 30-day supply, using calendar-year 2024 fills, not necessarily today's WAC (CMS fact sheet). Ozempic, Rybelsus and Wegovy are listed at a $274 maximum fair price against a $959 list price, a 71% discount.

The Standard Default Refund Amount manufacturers may pay pharmacies is "the difference between Wholesale Acquisition Cost (WAC) and MFP", using compendia WAC on the claim's date of service (CMS pharmacy FAQ, April 2026, Q9).

State WAC transparency laws

Oregon requires an annual report when the price was $100 or more for a one-month supply and increased by 10% or more. Its new-drug threshold is $950. Brand increases need 60 days' notice at 10% or more, or $10,000 or more. Generic notice applies at 25% or more and at least $300 (Oregon DFR).

WAC vs AWP

AWP means average wholesale price. OIG says AWP "is not defined in law or regulation and fails to account for prompt pay or other discounts, rebates, and reductions" (OIG, 2011), so no federal rule sets AWP as WAC plus a fixed markup. CMS takes AWP from reference sources such as RedBook and Medi-Span (CMS overview).

In pharmacy, AWP means the "List price from a wholesaler to a pharmacy". MACPAC says "WAC is less than AWP as AWP includes costs added on after wholesale distribution." States historically paid "AWP minus 15 percent" or "WAC plus 5 percent", in MACPAC's examples (MACPAC, 2018).

Medicare still uses AWP in a few places: flu, pneumococcal, hepatitis B and COVID-19 vaccines are paid at 95% of AWP (42 CFR 414.904(e)(1)). OPPS drugs without a HCPCS code yet are also paid at 95% of AWP (CMS overview).

WAC vs ASP, AMP and NADAC

ASP, average sales price, is the manufacturer's quarterly US sales divided by units sold, per 11-digit NDC, net of volume, prompt pay and cash discounts, free goods, chargebacks and rebates other than Medicaid rebates (42 CFR 414.804). Compared with AWP, ASP comes after most price concessions. The ASP pricing guide covers the quarterly files.

AMP, average manufacturer price, is "the average price paid to the manufacturer" by wholesalers for drugs distributed to retail community pharmacies, and by retail community pharmacies that buy direct (42 U.S.C. 1396r-8(k)(1)). It's confidential. The federal upper limit is 175% of the weighted average of the most recently reported monthly AMPs for multiple source drugs with at least three FDA-rated equivalents, and CMS updates it monthly (42 CFR 447.514, Medicaid.gov).

NADAC, National Average Drug Acquisition Cost, averages survey invoice prices from retail community pharmacies. Myers & Stauffer runs the survey for CMS (Medicaid.gov). CMS updates the file weekly (Medicaid.gov pharmacy pricing). Response is voluntary. Closed-door pharmacies, specialty pharmacies, and pharmacies that are mainly mail order are excluded. Since December 2024, generic rates use a three-month moving average (NADAC methodology). A plan to make survey response mandatory was dropped from the Consolidated Appropriations Act, 2026 (MACPAC).

The 2016 Covered Outpatient Drugs rule is why states use it: payment must reflect actual acquisition cost, and in aggregate must not exceed that cost plus a professional dispensing fee, or usual and customary charges (Federal Register, 42 CFR 447.512).

Maximum allowable cost lists

A maximum allowable cost list (not a Medicare Administrative Contractor) is a state payment cap on multiple source drugs and some other drugs. MACPAC says 45 states and the District of Columbia had a list as of March 2018, though federal rules do not require one, and managed care plans "may implement their own MAC lists" (MACPAC, 2018). Unlike the federal upper limit, the state picks the drugs and the rate (OIG, 2013).

PBMs keep maximum allowable cost lists too. MACPAC counted PBM-related list requirements in 25 states in its May 2026 brief (MACPAC). A Part D sponsor that uses one, or any other pricing standard, must update it on January 1 and at least every 7 days after that, and must name the source (42 CFR 423.505).

Drug pricing benchmarks compared

RegAffairs AI's answer on these benchmarks links the CMS sources behind the WAC price comparison. Weekly NADAC reference data is on data.medicaid.gov.