Wholesale Acquisition Cost (WAC)

Key facts

Set by

The drug manufacturer

Statutory definition

Social Security Act Section 1847A(c)(6)(B)

Excludes

Prompt pay and other discounts, rebates and reductions in price

Published through

Manufacturer price notices and drug pricing compendia

Price type

List price, not a net or transaction price

What is Wholesale Acquisition Cost?

WAC is the price a manufacturer publishes for a drug sold to wholesalers and other direct purchasers. The manufacturer sets it unilaterally, and each National Drug Code (NDC), meaning each package size, has its own WAC.

Federal law defines WAC in the Medicare Part B drug payment statute as the list price to wholesalers or direct purchasers, not including prompt pay or other discounts, rebates or reductions in price, as reported in wholesale price guides or other pricing publications. Few buyers pay exactly WAC: wholesalers usually receive prompt pay discounts, and payers negotiate rebates after the sale.

When news reports describe a drug price increase, they usually mean a WAC increase.

How WAC is used in pricing and payment

WAC is the starting point for many downstream prices and formulas:

• Medicare Part B can pay for some new drugs based on WAC during the period before Average Sales Price (ASP) data are available.
• Commercial pharmacy contracts and some state Medicaid formulas price drugs as a discount off WAC or a markup on it.
• Drug pricing compendia commonly derive Average Wholesale Price (AWP) by applying a markup to WAC.
• Rebates negotiated by pharmacy benefit managers are usually expressed as a percentage of WAC.
• Several states require manufacturers to report WAC increases above set thresholds, and some require advance notice.

Why WAC matters

WAC is the most visible and most frequently tracked manufacturer price, so it is the usual baseline for measuring list price changes, launch prices and price positioning within a therapeutic class. Many brand manufacturers announce list price increases in January.

Because WAC excludes rebates, it overstates what payers ultimately pay for heavily rebated brands. The gap between WAC-based gross sales and net revenue is called gross-to-net. For generics, comparing WAC with NADAC often shows pharmacies paying well below list price.