Blog Archives

State MAC Laws – Unintended Consequences

Earlier this decade, retail pharmacies were adversely impacted by increasing generic prices on a number of multisource products.  This occurred when some Pharmacy Benefit Managers (PBM’s) did not increase their MAC (Maximum Allowable Cost) prices in a timely fashion to prevent the pharmacy from losing money for generics where the pharmacy cost had increased.  At that time, MAC prices were typically updated by the PBM on a monthly or quarterly basis.  Pharmacy owners complained to their state legislators, and there are now over 30 states with MAC laws that define timeliness for MAC price updates and mandatory access to published MAC prices.  In response, most MAC prices are now updated on a weekly basis.

At first glance, more frequent MAC updates should address the retail pharmacy issue of losing money on generic products where there had been a sizable price increase.  However, there is an unintended consequence that impacts retail pharmacies.   As PBMs are updating their MAC prices more frequently, they are also examining drugs where the cost to the pharmacy continues to decline.  On these products, PBMs are lowering their MAC prices.  These dynamics were discussed in the PHSI webinar “Drugs, Dollars and Dynamics: The Ups and Downs of Generic Pharmaceutical Pricing Webinar”.

The overall impact on pharmacy profitability is negative. PHSI research indicates that the overall Generic Effective Discounts (GER) for multisource drugs continues to decline.  There are many more multisource products declining in price than those increasing.  The unintended consequence is the MAC increases have been more than offset by the reduction in MAC prices.

PHSI has extensive experience in pharmacy purchasing, PBM contracting and reimbursement, including MAC prices and GER calculations.   If you have an interest in learning more about these topics, please feel free to contact Don Dietz by filling out our contact form.

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Retail Pharmacy Clinical Services – Decision Criteria

Retail pharmacy is innovating by expanding clinical services. To obtain the best results, the clinical service implementation should be thoroughly evaluated. Listed below are suggested questions to use when evaluating the introduction of new retail pharmacy clinical services.

 

Questions

 

  1. Is there evidence based studies that estimate the ROI for the provision of the clinical service? If yes, what is the expected ROI and payback time for the service? If not, what are your expectations for an ROI and the rationale?

 

  1. What is the timeframe for the expected benefit to be realized? If the benefit realization is delayed, when will it be realized?

 

  1. Does the potential service fit into the retail pharmacies relationships with their payers? If yes, how can the services be leveraged by working with the payer?

 

  1. Do we have the capabilities today to perform the services? If not, how do we assess current staff competency and training needs? What resource(s) should provide the clinical service? Can technicians be used to reduce the cost of providing the service?

 

  1. What other professions/organizations are providing a similar service today?

 

  1. How will the results be measured? Do we have the systems in place to track outcomes? Is the data readily available today or will programming be required? Who will be responsible for pulling and analyzing the data?

 

  1. What patient population will be targeted? Is the population growing, staying the same or decreasing? How can we identify/segment the patient population? Can we further risk stratify this patient population to prioritize service delivery?

 

  1. Does the clinical service focus on patient engagement, is evidence based, and cost effective execution/implementation? If yes, describe in detail. If not, why should this service be implemented over other potential clinical services that could be offered?

 

  1. Does the clinical service fit into the one of the new reimbursement models of healthcare? Accountable care organizations, patient centered medical home model, etc.? If yes, do we have relationships with these entities? If not, can we use this clinical service to open discussions?

 

Have you implemented a clinical service without answering these questions? How would the results have changed if you had considered these questions? What changes would you make to these questions and decision criteria?

 

Please send your feedback to PHSI through our contact page.

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