Maximum allowable cost (MAC)
What is the maximum allowable cost (MAC?)
MAC is the maximum reimbursement that can be paid to a pharmacy for a particular generic drug that is available from multiple manufacturers for different prices. It is one of the most common ways to pay pharmacies for dispensing generic drugs.
The MAC payment model is agreed upon by all participants and is updated frequently to keep up with any market changes in the prices of generic drugs.
MAC pricing is implemented to encourage pharmacies to purchase less costly generics—purchasing generics with a higher manufacturer list price can lead to limited profits or, in some cases, losses.
Some of the factors that contribute to MAC pricing include:
- How long a drug has been generic
- How widely available the generic drug is for purchasing
- The number of manufacturers making generic versions
- If there have been any problems in manufacturing
Drugs that have been generic for longer are likely to have more competition, which often leads to lower pharmacy-purchasing prices.
How does MAC improve healthcare access?
MAC ensures that consumers do not overpay for generic drugs. As such, MAC makes pharmaceuticals more accessible, increasing the number of individuals who can access them and see improved health outcomes.
MAC is often considered a managed care tool because of its encouragement of cost-saving generic drugs.