Prescription Drug Wholesale Acquisition Cost (WAC) Increases

The Office of Statewide Health Planning and Development (OSHPD) has released to the public the mandatory reporting of information related to increases to the wholesale acquisition cost (WAC) of prescription drugs by drug product as identified by the drug product’s National Drug Code (NDC). Health and Safety Code §127679 requires prescription drug manufacturers to report quarterly specified WAC increases of more than 16%, beginning January 1, 2019. The current public release includes all the data in completed reports submitted as of August 17, 2020 by prescription drug manufacturers for specified WAC increases with effective dates in the first 2 quarters of 2020. For a full list of the information of WAC increases collected by OSHPD, see the data format and file specifications.

A summary review of the submitted data is provided below and includes descriptive analyses and visualizations. The summary can be downloaded as a PDF file by clicking on it.

Image of full report

Wholesale Acquisition Cost#

Wholesale Acquisition Cost (WAC) is defined in the U.S. Code as “…the manufacturer’s list price for [a] drug or biological to wholesalers or direct purchasers in the United States, not including prompt pay or other discounts, rebates or reductions in price…”

National Drug Code (NDC)#

The pharmaceuticals industry assigns a unique three-segment number, called the NDC, to each drug product manufactured and sold.  NDCs must be provided to the federal Food and Drug Administration (FDA), and are used for ordering, billing, inventory management, and recalls.

OSHPD requires that relevant reporting uses the 11-digit format of the NDC.  The three-segments of the format can be broken into the following:

National Drug Code Template

The labeler code, also known as the manufacturer code, identifies who manufactures, repacks, or distributes a given drug product.

The product code identifies the drug, its strength, dosage form, and formulation specific to the firm that manufactures the given drug product.

The packaging code typically identifies the number of product units in the given product (package size), but also may indicate the type of packaging used.

Specified WAC Increases#

As specified by California Statute are those “…with a wholesale acquisition cost of more than forty dollars ($40) for a course of therapy … if the increase in the wholesale acquisition cost of a prescription drug is more than 16 percent, including the proposed increase and the cumulative increases that occurred within the previous two calendar years prior to the current year. For purposes of this section, a “course of therapy” is defined as either of the following:

(1) The recommended daily dosage units of a prescription drug pursuant to its prescribing label as approved by the federal Food and Drug Administration for 30 days.

(2) The recommended daily dosage units of a prescription drug pursuant to its prescribing label as approved by the federal Food and Drug Administration for a normal course of treatment that is less than 30 days.

3-Year Percent Increase in WAC#

The percent increase in WAC for a given report (NDC) that includes the WAC increases in the current quarter and the previous two calendar years prior to the current year.

Drug Source#

Defined in the U.S. Code as either:

(1) A single source drug which means a drug “…which is produced or distributed under a new drug application approved by the Food and Drug Administration, including a drug product marketed by any cross-licensed producers or distributors operating under the new drug application… and also includes a …drug that is a biological product licensed, produced, or distributed under a biologics license application approved by the Food and Drug Administration…” Prescription drugs of this source type are often referred to as brand drugs.

(2) A multiple source drug which means a drug “…for which there is at least 1 other drug product which— (I) is rated as therapeutically equivalent (under the Food and Drug Administration’s most recent publication of “Approved Drug Products with Therapeutic Equivalence Evaluations”), (II) except as provided in subparagraph (B), is pharmaceutically equivalent and bioequivalent, as defined in subparagraph (C) and as determined by the Food and Drug Administration, and (III) is sold or marketed in the United States during the period.”

(3) An innovator multiple source drug which “…means a multiple source drug that is marketed under a new drug application approved by the Food and Drug Administration…” Prescription drugs of this source type can be primarily referred to as generic drugs, although a manufacturer of this type of generic would have been granted special authorization to produce the generic while the relevant brand drug was still under protection. In addition, this source type includes the brand drug after protection has expired.

(4) A noninnovator multiple source drug which “…means a multiple source drug that is not an innovator multiple source drug.” Prescription drugs of this source type are often referred to as generics.

Data Updates#

Annual datasets of reports from the preceding year are reviewed in the second half of the current year to identify if any revisions or additions have been made since the original release of the datasets. If revisions or additions have been found, an update of the datasets will be released. Datasets will be clearly marked with ‘Updated’ in their titles for convenient identification. Not all datasets may require an updated release. The review of previously released datasets will only be conducted once to determine if an updated release is necessary. Datasets with revisions or additions that may been made after the one-time review can be requested. These requests should be made via email at ctrx@oshpd.ca.gov.

Data and Resources##

Additional Information##

Topic: Healthcare
Temporal Coverage: January to June 2020
Spatial/Geographic Coverage: Statewide
Frequency: Quarterly
Citation: Office of Statewide Health Planning and Development (OSHPD), Prescription Drug Cost Transparency