EP429: Following the Dollar Through Pharmacy Acronyms Like WAC, AWP, and NADAC, With Luke Slindee, PharmD

Most pharmacy pricing acronyms — AWP, WAC, and the rest — refer to a number with a dollar sign in front of it, and it's nearly impossible for a patient or plan sponsor to know how much that number actually reflects reality. Luke Slindee, PharmD, senior pharmacy consultant at Myers and Stauffer (the accounting firm that calculates the NADAC benchmark on behalf of CMS), joins Stacey Richter to follow a drug's dollar from the manufacturer's list price all the way through wholesalers, pharmacies, and PBMs to what a patient or plan sponsor actually pays — and to explain why the one benchmark in this whole chain that isn't a black box is the one CMS itself administers. WHAT YOU'LL LEARN ✅ What AWP (Average Wholesale Price) and WAC (Wholesale Acquisition Cost) actually mean, how manufacturers arrive at these list prices, and why the difference between them matters ✅ How the drug dollar moves from manufacturer to wholesaler to pharmacy, and why pharmacies so often end up buying a drug at one price from the wholesaler while getting reimbursed an entirely different price to dispense it ✅ How PBMs ended up doing three jobs at once — adjudicating patient claims, negotiating manufacturer rebates, and setting pharmacy reimbursement — and why that concentration of roles is what makes spread pricing possible ✅ Why spread pricing (charging the plan sponsor more than the PBM pays the pharmacy, then calling the difference a trade secret) can exist and persist when so much of the transaction happens under cover of darkness ✅ What NADAC (National Average Drug Acquisition Cost) is, how it's calculated from a retail price survey, and why it's one of the only benchmarks in the entire pharmacy pricing stack that reflects an actual, transparent average of what pharmacies pay WHY THIS MATTERS The opacity baked into pharmacy pricing isn't incidental — it's the mechanism that makes spread pricing and inflated PBM margins possible in the first place. When plan sponsors can't see what a PBM actually paid a pharmacy for a given drug, they have no way to know whether they're being charged a fair and reasonable price or quietly funding someone else's markup. Understanding acronyms like AWP, WAC, and NADAC isn't academic trivia; it's the literacy plan sponsors need to ask the right questions of their PBMs before they end up in a lawsuit like the ones discussed on this show recently. MENTIONED IN THIS EPISODE EP423 with Joey Dizenhouse: Apple Podcasts | Spotify | Other Apps EP344 with Steven Quimby, MD: Apple Podcasts | Spotify | Other Apps === LINKS === 🔗 Show Notes with all mentioned links: Episode Page ✉️ Enjoy this podcast? Subscribe to the free weekly newsletter 🫙 Support the podcast with a small donation to the Tip Jar 🎤 Listen on Apple Podcasts 🎤 Listen on Spotify 📺 Subscribe to our YouTube channel === CONNECT WITH THE RHV TEAM === ✭ LinkedIn ✭ Threads ✭ Bluesky ✭ X 00:00 Introduction. 09:52 Why is it important for plan sponsors to understand the going rate for every point in the supply chain? 10:21 How do manufacturers come up with a list price? 10:40 What does AWP stand for? 10:59 What does WAC stand for? 11:06 How are AWP and WAC numbers chosen by the manufacturer? 13:22 What is the difference between AWP and WAC? 14:54 How much are wholesalers paying to manufacturers? 16:43 How much is the pharmacy paying for branded drugs from a wholesaler? 17:34 Why might pharmacies be buying drugs for less than what wholesalers are paying? 19:22 EP423 with Joey Dizenhouse. 20:33 Why do things get weird when a PBM gets involved? 21:58 How does all of this work for generic manufacturers? 25:20 EP344 with Steven Quimby, MD. 26:15 How did Civica Rx come about? 32:21 What's the difference between the NADAC and the AWP value? 36:04 Luke discusses the downstream effects to pharmacies.