MAC Pricing (Maximum Allowable Cost)
Maximum Allowable Cost (MAC) pricing is a reimbursement limit set by insurance companies and PBMs on the amount they will pay for generic and multi-source brand-name drugs, ensuring pharmacies dispense the most cost-effective version available.
Exam Tip
MAC = maximum reimbursement for generics set by PBMs. Applies to multi-source drugs only. DAW 1 (prescriber wants brand) bypasses MAC. Pharmacy reimbursement = MAC + dispensing fee or U&C, whichever is lower.
What Is MAC Pricing?
Maximum Allowable Cost (MAC) is a cost-containment strategy used by Pharmacy Benefit Managers (PBMs) and insurance companies to set an upper limit on reimbursement for generic and multi-source drugs (drugs available from multiple manufacturers). MAC lists are updated frequently and vary by PBM.
How MAC Pricing Works
| Step | Description |
|---|---|
| 1 | PBM creates a MAC list of eligible drugs (generics with multiple manufacturers) |
| 2 | PBM sets a maximum reimbursement price for each drug on the list |
| 3 | Pharmacy dispenses the drug and submits a claim |
| 4 | PBM reimburses at the MAC price + dispensing fee (or U&C price, whichever is lower) |
| 5 | If pharmacy's acquisition cost exceeds MAC, the pharmacy absorbs the loss |
MAC vs. AWP Reimbursement
| Feature | MAC Pricing | AWP Pricing |
|---|---|---|
| Applies to | Generic/multi-source drugs | Brand-name and some generics |
| Set by | Individual PBMs | Published in pricing databases |
| Price level | Generally lower | Generally higher |
| Update frequency | Weekly to monthly | Varies by publisher |
| Transparency | Often opaque; varies by PBM | Publicly available |
Key Points for Pharmacy Technicians
- MAC applies only to drugs available from multiple manufacturers (multi-source)
- If a generic is NOT on the MAC list, AWP-based reimbursement applies
- DAW 1 (prescriber requests brand) bypasses MAC pricing
- MAC appeals: pharmacies can challenge MAC prices they believe are set below acquisition cost
- MAC prices can change frequently, affecting pharmacy profitability
Exam Alert
MAC pricing falls under the Order Entry and Processing domain on the PTCE. Know that MAC applies to generics/multi-source drugs, is set by PBMs (not the government), and that DAW 1 overrides MAC pricing. Understand the difference between MAC and AWP reimbursement.
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AWP (Average Wholesale Price)
Average Wholesale Price (AWP) is a benchmark price for prescription drugs that represents the average price wholesalers charge pharmacies, commonly used by insurance companies and PBMs to calculate reimbursement rates for pharmacy claims.
Adjudication (Pharmacy)
Adjudication is the real-time electronic process by which a pharmacy submits a prescription claim to a patient's insurance plan and receives an immediate approval, rejection, or request for additional information.
Formulary
A formulary is a list of prescription drugs approved for coverage by a health insurance plan, pharmacy benefit manager (PBM), or healthcare institution, organized into tiers that determine patient cost-sharing.
DAW Codes (Dispense As Written)
DAW codes are standardized numeric codes (0-9) used on pharmacy claims to indicate whether a brand-name or generic drug should be dispensed and who is requesting the specific product.
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