As policymakers explore ways to reduce prescription drug costs, the independent drugstore lobby wants legislation (HR 4437) that would force seniors to pay drugstores more for generic drugs.

Their goal is to gut one of Medicare Part D’s key cost-control tools: Maximum Allowable Cost (MAC) lists, which reflect market rates paid to drugstores.  These lists are widely used by health plans to reduce costs for private-sector clients, union health and welfare funds, Medicaid and Medicare Part D.  Forty-five state Medicaid programs now use MAC lists, up from 26 states in 1999. A recent analysis from the Health and Human Services Office of Inspector General (OIG) demonstrated “the significant value MAC programs have in containing Medicaid drug costs.” The OIG recommended that states strengthen MAC programs, not weaken them.


A MAC is simply the maximum amount a health plan will reimburse a pharmacy for a particular generic drug, based on prevailing market conditions.  In contract negotiations, drugstores that participate in a plan’s pharmacy network agree to accept the plan’s MACs (along with dispensing fees) as reimbursement for generic prescriptions.  Without MACs, drugstores could overcharge for generics, earning excess profits at the expense of seniors and the Part D program.

The solution to lowering drug costs shouldn’t be legislative hand-outs to the drugstore lobby.  This bill would only force seniors and taxpayers to pay more for prescription drugs.

Instead, policymakers should examine how the Food and Drug Administration (FDA)can use its existing authority to lower drug costs for consumers, employers and public programs. A new white paper highlights policies to improve competition among prescription drugs, including: 

·       Expediting Approval of Competing Brand Drugs. Currently, the FDA focuses on expediting approvals for only certain types of new drugs, bypassing other products that would offer benefits comparable to existing medicines and thus bolster competition among branded drugs. 

·       Eliminating Delays in Generic Drug Approvals. The median Abbreviated New Drug Application (ANDA) approval time is currently 36 months, meaning that it takes the FDA, on average, more than three times longer to approve an ANDA than to approve a standard New Drug Application (NDA) or Biologic License Application (BLA) and six times longer than it takes to approve a priority NDA/BLA. 

·       Finalizing the Creation of a Biosimilar Pathway. The FDA's delay in issuing final guidance for biosimilar manufacturers has thwarted the development of a U.S. biosimilar industry, preventing the savings that competition would generate. In addition, the possibility that the agency will require unique naming for biosimilars could impede prescribing and utilization of potential biosimilar products. 

·       Adequate Funding for the FDA. The President's fiscal year 2015 budget request to Congress for drug-related services is an increase of just under 3 percent from fiscal year 2014. Higher funding levels for the FDA, appropriated through Congress, would allow the agency to enact policies that increase competition.

Merritt is president and CEo of the Pharmaceutical Care Management Association (PCMA).