WAC (Wholesale Acquisition Cost)

WAC stands for Wholesale Acquisition Cost — the manufacturer's published list price for a drug sold to wholesalers, before any rebates, discounts, or chargebacks. It's the drug industry's version of MSRP: a real published number that almost nobody actually pays. Every drug has a WAC, updated by the manufacturer and reported through pricing compendia like Medi-Span and First Databank.

WAC matters because it's the anchor point for a lot of downstream pricing. Many plan contracts reimburse pharmacies at "WAC minus a percentage" (say WAC minus 3 percent for brands, WAC minus 30 percent for generics) plus a dispensing fee. PBM rebate negotiations with manufacturers are often expressed as a percentage off WAC. Cash prices at retail pharmacies frequently sit at WAC plus a markup, which is why uninsured cash prices can be startlingly high on brand drugs. WAC does not include the rebates that flow back to PBMs and plans after the fact — the net price the manufacturer actually receives can be 30 to 60 percent lower than WAC on heavily rebated categories like insulin, biologics, and diabetes drugs.

The takeaway: when comparing drug prices or auditing a pharmacy contract, always ask what the WAC is and what the reimbursement formula is relative to WAC. The formula, not the sticker, is where the real cost lives.