Calculation of the AWP

20.4 - Calculation of the AWP (Rev. 397, Issued: 12-16-04, Effective: 01-01-05, Implementation: 01-03-05) See Business Requirements and Excel Spreadsheets at: http://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/downloads/R54CP.pdf and http://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/downloads/R55CP.pdf A/B MACs (B) must ensure that if any NDCs are added or deleted, the formulae are applied appropriately. A separate AWP is calculated for each drug as defined by a HCPCS code. Within each HCPCS code there may be a single source or there may be many sources, or there may be no source. • For a single-source drug or biological, the AWP equals the AWP of the single product. • For a multi-source drug or biological, the AWP is equal to the lesser of; ° The median AWP of all generic forms of the drug or biological; or ° The lowest brand name product AWP. A “brand name” product is defined as a product that is marketed under a labeled name that is other than the generic chemical name for the drug or biological. NOTE: Repackagers make the status of the drug a multi-source. After determining the AWP, A/B MACs (B) multiply it by 0.85 or 0.95, or other percentage, as applicable, and round to the nearest penny. This is the drug payment allowance limit. A/B MACs (B) round it in accordance with standard rounding procedure. Part B coinsurance and deductible requirements apply. In applying this procedure, A/B MACs (B) use the package sizes that are most commonly used for the most frequently administered dosage of the drug. A/B MACs (A) get drug prices from the A/B MAC (B) for drugs not listed on the Single Drug Pricer.