Under this formula, if a PBM does not include a generic drug on its MAC list, the first of the three alternatives will not exist, and the PBM’s invoiced price to its client will be the lowest of the retail pharmacy’s U&C or AWP minus 18 percent. Retail generic drugs: The lowest of (i) PBM’s MAC or (ii) the retail pharmacy’s U&C or (iii) AWP minus 18 percent. Having inserted a MAC contract definition that awards them complete discretion, PBMs next ensure that their contract pricing formulas enable them to manipulate the MAC concept in whatever way they decide.įor example, here is a common contract formula establishing the pricing that PBMs will use to invoice clients for retail generic drugs: In short, PBMs’ control of MAC definitions allows them to manipulate the MAC concept in whatever ways they choose. If a PBM does not include a drug on its MAC list, the drug’s price will default to whatever other pricing exists in the contract. For example, for a generic drug that actually costs $4, a PBM can create a MAC price of $40, or a MAC price of $100 (or any other price it wants).Ī PBM can change its MAC prices for any drug on its MAC lists whenever it wants to do so. For example, a PBM is free to include 500 drugs - or 2,000 drugs-and equally free to leave thousands of drugs off its MAC lists.Ī PBM can change the drugs it includes - or excludes - whenever it wants to do so.Ī PBM can select any prices it wants as the MAC prices for the drugs on its MAC Lists. While seemingly benign, these definitions actually allow PBMs to accomplish many things.Ī PBM can create different MAC lists for different clients.Ī PBM can include on - or exclude from - its MAC lists any drugs the PBM wants to include or exclude. The MAC list and payment schedules are frequently updated. The payment schedules specify the maximum unit ingredient cost payable by client for drugs on the MAC list.

MAC, the maximum allowable cost, consists of a list of off-patent drugs subject to maximum-allowable-cost payment schedules developed or selected by PBM.

MAC or “maximum allowable cost” means the unit price established by the PBM for a multisource drug included on PBM’s MAC drug lists developed for PBM’s clients, which may be amended from time to time by PBM, in its sole discretion. While the definitions may at first appear to be entirely benign, they are anything but.įor example, here are two typical MAC definitions found in hundreds of PBM/client contracts: 7 Our most popular topics on MAC definitionsĮvery PBM/client contract begins with many definitions, including a definition for the term MAC.

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