Pharmacy Benefits Glossary

A guide to general pharmacy benefits terminology.

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What Is a MAC Drug List?

A MAC drug list refers to the maximum allowable cost for generic and non-generic multi-source drugs. It is a payment model used in the healthcare marketplace to represent the highest amount a healthcare provider will reimburse a pharmacy for a list of specific medications.

What Is the Purpose of a MAC Drug List?

The purpose of a MAC drug list is to bring transparency and standardization to the healthcare market by ensuring no one overpays for generic drugs. The same generic drug is often produced by multiple manufacturers, each with its own price. Therefore, the MAC price helps prevent this price from rising above the market value, encouraging competitive pricing from wholesalers and manufacturers.

Aligning reimbursements with acquisition costs helps with Medicaid’s budget management and sustainability. MAC lists are essential for that alignment.

Creation and Pricing

Pharmacy Benefit Managers (PBM) set and update MAC pricing based on the average cost of acquisition by reputable pharmacies, encouraging the dispensing of cost-saving generics. As market changes occur, PBMs adjust purchase prices. Multiple market factors can impact the MAC drug list pricing, including the length of time a generic version has been available, the number of manufacturers producing a generic version, and the drug’s availability. MAC drug lists are based on real market data, and PBMs consistently analyze them so they can set an accurate price that stays current. Price benchmarks used when determining the MAC price include:
  • The Average Wholesale Price (AWP): This refers to the average price pharmacies and physicians pay when buying a drug directly from a wholesaler. The AWP has historically been used as a benchmark to determine a drug’s market value, but the AWP is known to be inflated by as much as 20 percent.
  • The Wholesale Acquisition Cost (WAC): This is the drug manufacturer’s list price when selling to a wholesaler. Pharmacies often use this as a benchmark when buying drugs from wholesalers. The WAC is regularly monitored and compared to the MAC to ensure prices remain competitive and predictable for health insurance plans.
By factoring in the prices manufacturers set, the prices pharmacies are paying, and other market data, PBMs can determine the highest price a generic or multi-source drug should be sold for.

What Impact Do MAC Lists Have on Healthcare?

MAC lists help bring stable prices to the marketplace with three distinct benefits:
  • Ensuring fair pricing: By continuously analyzing cost structures and market changes, PBMs help ensure prices are based on actual production and wholesale pricing without exceeding a capped amount. As a result, pharmacies are reimbursed at reasonable rates.
  • Encouraging competition: The MAC price brings market transparency so purchasers can shop for the lowest price.
  • Controls Medicaid costs: Reimbursements cannot exceed the drug cap, helping government programs set reliable, consistent costs that allow them to allocate resources properly.

Legislation and Challenges

Multiple states have legislation that aims to bring transparency to the way drug prices are determined. In some cases, states require MAC lists to be shared publicly or directly with pharmacies, while others require PBMs to share data about how the MAC is determined.

However, nationwide legislative efforts that focus on ensuring the MAC doesn’t inflate drug prices could adversely lead to higher prices if PBMs were to use the AWP instead of the MAC to determine the cost basis.

While transparency is an essential element in fair market pricing, it can also hamper how prices are negotiated and limit whether competition can positively impact prices.

Disclaimer: The list of terms noted is not all inclusive, but a selection of commonly used terms and acronyms.

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