Opinion ID: 2532078
Heading Depth: 1
Heading Rank: 3

Heading: Mathematical Relationship Between the WAC and the AWP

Text: The main opinion recognizes that there is a mathematical relationship between the WAC and the AWP. 41 So.3d at 24. Conceptually, if the WAC is inflated, then the AWP is likewise inflated. This point was made by GSK's corporate representative: Q. And if that WAC price is false, then the multiplier would simply report a false AWP also, correct? A. You've got to make that leap again of an assumption of Q. I'm going to make that leap, and the jury is going to be asked to do it later. A. Okay. Q. So, if that original WAC price is false, the multiplier simply takes a false price and multiplies against it; am I correct? Q. Simply math. Exactly. This point was also made by the State's witness, Dr. Gerard Anderson: Q. If the WAC is false and not a true price, a calculated AWP will also be false and not a true price. A. Okay. There is a mathematical relationship between onethe WAC price and the AWP price. So and essentially if the WAC price is not a true price, then mathematically the AWP cannot be a true price either. Contrary to the implication in the main opinion, however, I believe that this mathematical relationship is a one-way relationship, not a two-way relationship; dependent, not interdependent. That is, the AWP is based upon the WAC: an increase to the WAC causes an equal increase to the AWP; but the WAC is not tied to the AWP in a fixed relationship: a deduction from the AWP does not cause an equal deduction from the WAC. The defendants refer to the AWP as a benchmark that is based upon the WAC plus 20% or 25%. The AMA discovered through the retail surveys it had performed by two Alabama pharmaceutical wholesalers that the AWP was not a true representation of the prices that Alabama pharmacies were paying for drugs. Thus, the deduction from the AWP in the formula: AWP  10%. But the fact that there has to be a deduction from the AWP to more closely approximate the true price paid by pharmacies does not mean that there has to be an equal deduction from the WAC. No party is advocating that here. For these reasons I believe that the fact that the benchmark AWP was not a true price did not put the AMA on notice that the WAC was therefore not a true price.