Maximum allowable cost (MAC)
Maximum allowable cost (MAC) is the upper reimbursement limit a payer or pharmacy benefit manager sets for a generic drug, regardless of acquisition price. MAC lists cap what pharmacies are paid and are a recurring point of payer-pharmacy dispute.
What is maximum allowable cost (MAC)?
Maximum allowable cost (MAC) is the ceiling that a payer or pharmacy benefit manager sets on reimbursement for a generic drug, regardless of what the pharmacy actually paid to acquire it. In effect, MAC defines the most a plan will pay for a given multi-source medication.
Payers and pharmacy benefit managers maintain MAC lists that specify these limits across many generic products. The lists are updated over time and are intended to encourage cost-effective dispensing of generics.
Why does maximum allowable cost (MAC) matter in billing?
MAC pricing is a frequent source of friction between pharmacies and payers, because a pharmacy's acquisition cost can exceed the capped reimbursement, leaving it underwater on certain fills. This dynamic has prompted appeals processes and regulation around how MAC lists are set and disclosed.
Understanding MAC limits is important for accurate reimbursement expectations and for identifying when a payment falls short of cost. Transparency around how these caps are determined remains an ongoing point of dispute in pharmacy reimbursement.
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