MACs: Increasing Transparency into Generic Drug Price, Payments

Background

Independent community pharmacies suffer from a lack of transparency on how they are reimbursed by large corporate PBMs for dispensing generic medications. This has an effect on patients as well as generics account for about 80 percent of drugs dispensed by independent community pharmacies, and are promoted to help save beneficiaries, Medicare and other public and commercial health plans money.

Many generic medications are subject to an arbitrary maximum allowable cost (MAC) list. This artificial cap limits what PBM corporations will pay a pharmacy for dispensing these medications.

PBMs may be paying pharmacies low and charging much higher rates to health plans, including taxpayer funded plans such as Medicare Part D, TRICARE and the Federal Employee Health Benefit Program (FEHBP), and keeping the difference to add to their profits. This practice of "spread pricing" was examined in a detailed Fortune magazine article entitled "Painful Prescription."

Solutions

At the federal level, Congress should enact bipartisan legislation to do three things:

  1. Increase transparency to allow a pharmacy to know how its individual maximum allowable cost (MAC) reimbursement rates for multisource generic drugs would be determined (but not those of other pharmacies in that particular health plan's pharmacy network).

  2. Ensure pharmacy reimbursement from PBMs is updated to keep pace with actual market costs and preserve patient access.

  3. Create a defined appeals process for pharmacies to challenge the PBM reimbursement when it would result in a financial loss.