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Generic drug cost containment in Medicaid: lessons from five state MAC programs
Richard G Abramson1, Catherine A Harrington, Raad Missmar
1Nova Southeastern University College of Pharmacy, USA. rick.abramson@uphs.upenn.edu
Health Care Financing Review
|July 3, 2004
Summary
State Medicaid programs can control generic drug costs using Maximum Allowable Cost (MAC) programs. Analyzing five states reveals significant variations, suggesting expansion could aid nationwide cost containment efforts.
Area of Science:
- Health Economics
- Pharmaceutical Policy
Background:
- Medicaid drug cost containment relies on Federal Upper Limit (FUL) and State Maximum Allowable Cost (MAC) programs.
- Significant variations exist in the implementation and pricing strategies of State MAC programs.
Purpose of the Study:
- To analyze the characteristics and pricing of MAC programs in five selected US states.
- To compare State MAC programs with the Federal Upper Limit (FUL) program.
- To identify strategies for optimizing State MAC programs for enhanced cost containment.
Main Methods:
- Comparative analysis of MAC program structures and pricing across five states.
- Evaluation of pricing aggressiveness and list comprehensiveness for generic drugs.
- Benchmarking against the Federal Upper Limit (FUL) program.
Main Results:
- Considerable variation observed in the size and pricing aggressiveness of State MAC programs compared to the FUL program.
- Differences in the scope of drug entities, forms, and dosages covered by State MAC lists.
- Identified potential for increased cost savings through optimized MAC program design.
Conclusions:
- Expansion of existing State MAC programs and the creation of new ones can significantly contribute to national Medicaid drug cost containment.
- States should focus on high-volume drugs, ensure comprehensive form/dosage inclusion, and explore inter-state or federal collaboration for MAC operations.