State Maximum Allowable Cost (State MAC)
State MAC - Facts
Pharmacy Rate Methodology Transition
Until recently, many states have utilized average wholesale price (AWP), a pricing statistic provided primarily by First Data Bank, as the primary component of their pharmaceutical reimbursement methodology. Following a lawsuit wherein the flaws of average wholesale price setting were exposed, First Data Bank has stated that it will cease to publish average wholesale pricing as of September 26, 2011. Colorado Medicaid has historically utilized this information in their pricing methodology, and the program is forced to implement new pricing methodologies to replace AWP for all covered drugs.
The Department has implemented a new pricing methodology that relies on a combination of average acquisition cost (AAC) and wholesale acquisition cost (WAC). This hybrid approach is a result of inconsistent reporting of WAC throughout the catalogue of covered product identifiers. For many products there is a linear relationship between current AWP price and WAC price. However, some products exist with no published WAC price, and many multisource products have pricing that does not follow the linear relationship between the two pricing measures. The hybrid methodology will enable Colorado Medicaid to establish prices for drug products that either do not have a published WAC price or that have WAC prices that would adversely affect reimbursement. The Department is currently in transition and using a temporary AAC list. This list is from a vendor using an average of wholesale pricing from a national source. The Department is currently seeking contract with a vendor to assist with establishing a Colorado specific acquisition cost price list and an increased dispensing fee. Implementation is expected to be complete by spring of 2012. This methodology was selected as a mechanism to ensure responsible purchase prices for Medicaid outpatient drugs while reimbursing Colorado pharmacies appropriately for their professional services.