MAC Pricing Keeps Generics Affordable

The market for purchasing drugs can be complex. Multiple drug makers may make clinically identical products available directly from the manufacturer or through various wholesalers, suppliers and distributors. When a medication is manufactured by multiple drug makers, the prices can differ vastly from manufacturer to manufacturer and from wholesaler to wholesaler – even though the products are clinically identical.

Plan sponsors – employers, health plans and government agencies – want to keep medications affordable and accessible for patients, so nearly all sponsors use maximum allowable cost or “MAC” reimbursement to ensure that they do not over-pay for drugs that are clinically the same. MAC works by setting one price for a set of clinically identical products. Capping the amount that plan sponsors will reimburse the pharmacy for a multi-source medication, MAC pricing incentivizes the pharmacies to buy medications from competitively priced manufacturers and wholesalers.

Maintaining a MAC List

A MAC list is the list of multiple source medications – and their associated MAC pricing – maintained by a sponsor or by a PBM that manages the pharmacy claims for a sponsor. MAC lists are a common cost management tool that are developed from a review of information available from wholesalers, manufacturers and nationally recognized drug pricing sources. Express Scripts updates its MAC list frequently to ensure it remains reflective of the current market dynamics.

The Value of MAC Pricing

Thanks to MAC pricing, multi-sourced generic medications are kept as affordable as possible in the U.S.

MAC pricing is used by 79% of private employer prescription drug plans for retail generic prescriptions. States adopted MAC lists after government audits showed that Medicaid reimbursements for generic drugs far exceeded a pharmacy’s acquisition costs, and now 45 state Medicaid programs are using MAC lists to better control costs.

Proposed Legislation That Would Increase Cost of Generics

Some states – and even the federal government – are considering legislation that would restrict the use of MAC pricing. Some proposals would allow pharmacies to dispense generic drugs while being paid brand drug rates. Other proposals guarantee pharmacies a profit on every drug they dispense, even if the pharmacy isn’t a good purchaser of medications. These types of requirements counteract, if not eliminate, the incentive for pharmacies to look for and purchase competitively priced drugs. All of these proposals unfairly shift costs to plan sponsors and patients who need these medications.

Retail pharmacies are able to buy medications at competitive prices. Apart from the large national drugstore chains, independent pharmacies join buying groups and/or Pharmacy Services Administration Organizations (PSAOs) to earn discounts and rebates from preferred suppliers. The typical PSAO represents thousands of pharmacies, giving these groups access to pooled purchasing power, negotiating advantages and contracting strategies.

While legislation restricting MAC pricing may financially reward some pharmacies, it’s unfair to shift these costs to plan sponsors, patients and taxpayers.