Pharmacy maximum allowable cost (MAC) schedules and generic effective rate (GER) guarantees are two important concepts in the field of pharmacy benefit management (PBM). These mechanisms play a crucial role in controlling costs and ensuring the availability of affordable medications for patients.
A pharmacy MAC schedule is a list of maximum prices that a PBM is willing to reimburse pharmacies for generic drugs. Once a generic is available from multiple manufacturers setting their own price, there often will be a wide range of prices based on Average Wholesale Price (AWP). The MAC schedule helps PBMs manage costs by setting a limit on the amount they will pay for a particular generic medication. Unfortunately, there is currently no industry standard on which drugs are to be included, what methodology is used to determine the maximum price, nor guidelines on how the list is changed or updated.1 This encourages pharmacies to source generic drugs at lower prices, which in turn helps to reduce overall healthcare expenses.
On the other hand, a GER guarantee is a commitment made by a PBM to ensure that the average cost of generic drugs dispensed by pharmacies remains below a certain threshold. This guarantee is typically expressed as a percentage discount off the average wholesale price (AWP) of the medication. The GER guarantee provides pharmacies with assurance that they will be reimbursed at a rate that allows them to cover their costs and maintain profitability.
Similarities between MAC schedules and GER guarantees
Both MAC schedules and GER guarantees are designed to promote cost-effective prescribing practices and encourage the use of generic medications. Generic drugs are typically less expensive than their brand-name counterparts, and they offer the same therapeutic benefits. By incentivizing the use of generics, PBMs can help reduce healthcare costs for patients, employers, and insurers.
It is important to note that MAC schedules and GER guarantees are subject to regular review and adjustment. PBMs continuously monitor market conditions, drug pricing trends, and changes in the availability of generic alternatives. This allows them to update MAC schedules and GER guarantees to reflect current market dynamics and ensure appropriate reimbursement for pharmacies.
In conclusion, pharmacy MAC schedules and GER guarantees are essential tools in managing medication costs and promoting the use of cost-effective generic drugs. By striking a balance between cost containment and quality care, MAC schedules and GER guarantees contribute to the overall sustainability of the health care system.
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Sources:
- “The Need for Legislation Regarding “Maximum Allowable Cost” (MAC) Reimbursement,” National Community Pharmacists Association, accessed August 6, 2024, https://www.ncpa.co/pdf/leg/mac-one-pager.pdf.
