Generic drug cost containment in Medicaid: lessons from five State MAC programs

Health Care Financing Review, Spring, 2004 by Richard G. Abramson, Catherine A. Harrington, Raad Missmar, Susan P. Li, Daniel N. Mendelson

Table 1

FUL and MAC List Per Unit Prices for 20 Representative Generic Drugs,
by Study State: 2001

                                       Total
                                     National        MAC Programs
                                    Sales, 2001
Drug Entity, Strength, and Form     (Millions) (1)   FUL List   Georgia

Acyclovir 200 mg Capsules             $224.1          $0.3525   $0.3530
Albuterol 0.083 Percent Nebulizer      368.9           0.1450    0.1572
  Solution, 3 mL
Albuterol 90 mg Inhaler Refills        702.7             --        --
Alprazolam 0.25 mg Tablets             598.9           0.0480    0.0560
Amitriptyline HCI 10 mg Tablets        173.1           0.0466    0.0315
Amoxicillin 250 mg Capsules            366.8           0.0636    0.0636
Atenolol 25 mg Tablets                 551.8           0.0461    0.0460
Cephalexin 250 mg Capsules             442.4           0.1500    0.1700
Clonazepam 0.5 mg Tablets              367.2           0.2455    0.2760
Enalapril maleate 2.5 mg Tablets       432.5             --      0.6347
Fluoxetine 10 mg Capsules              730.6             --        --
Glyburide 1.25 mg Tablets              333.7             --      0.1466
Hydrochlorothiazide 25 mg /            324.0           0.3177    0.3014
  Triamterene 37.5 mg Capsules
Ibuprofen 400 mg Tablets               257.0           0.0493    0.0640
Isosorbide Mononitrate 10 mg           331.6           0.6110    0.6110
  Tablets
Lorazepam 0.5 mg Tablets               536.5           0.4350    0.4350
Naproxen 250 mg Tablets                323.0           0.1325    0.1035
Ranitidine HCI 150 mg Tablets          707.8           0.3411    0.2294
Verapamil HCI 120 mg ER Capsules       335.3           0.8250    0.8250
Warfarin 1 mg Tablets                  240.2             --      0.4361

                                             MAC Programs

Drug Entity, Strength, and Form     Arkansas   Washington    Texas

Acyclovir 200 mg Capsules            $0.3525    $0.3382     $0.2424
Albuterol 0.083 Percent Nebulizer     0.1093     0.1990      0.0925
  Solution, 3 mL
Albuterol 90 mg Inhaler Refills        --        0.4394      0.2932
Alprazolam 0.25 mg Tablets            0.0480     0.0383      0.0312
Amitriptyline HCI 10 mg Tablets       0.0466     0.0466      0.0242
Amoxicillin 250 mg Capsules           0.0636     0.0735      0.0494
Atenolol 25 mg Tablets                0.0614     0.0825      0.0386
Cephalexin 250 mg Capsules            0.2513     0.1103      0.0795
Clonazepam 0.5 mg Tablets             0.2455     0.1800      0.2013
Enalapril maleate 2.5 mg Tablets      0.0625       --        0.0699
Fluoxetine 10 mg Capsules             0.1556     0.0953      0.4426
Glyburide 1.25 mg Tablets             0.0671     0.1312        --
Hydrochlorothiazide 25 mg /           0.3177     0.3075      0.2284
  Triamterene 37.5 mg Capsules
Ibuprofen 400 mg Tablets              0.0493     0.0338      0.0287
Isosorbide Mononitrate 10 mg          0.6111     0.6110      0.4562
  Tablets
Lorazepam 0.5 mg Tablets              0.4350     0.0982      0.1081
Naproxen 250 mg Tablets               0.1044     0.1075      0.0780
Ranitidine HCI 150 mg Tablets         0.3411     0.0800      0.0417
Verapamil HCI 120 mg ER Capsules      0.8250     0.8250      0.6440
Warfarin 1 mg Tablets                 0.4362       --        0.4959

These data represent total nationwide sales (not just Medicaid) for
all available forms and strengths of the listed drug entity. For
comparison, total nationwide generic sales in 2001 were approximately
$27 billion.

NOTES: FUL is Federal upper limit. MAC is maximum allowable cost.

SOURCE: (Scott-Levin, 2002.)

Table 2

Possible Ways for States to Optimize Resources in MAC List Development
and Maintenance

* Focus on generic drugs with high sales volumes

* Ensure that MAC lists contain prices for all strengths and forms
(i.e., generic code numbers) of a given drug entity

* Collaborate with other States and/or CMS

NOTE: MAC is maximum allowable cost.

SOURCES: Abramson, R.G. Missmar, R., Li, S.P., Mendelson, D.N. The
Health Strategies Consultancy LLC, and Harrington, C.A., Nova
Southeastern University College of Pharmacy, 2004.

Table 3

Strategies for Obtaining Drug Pricing Information

* Make reimbursement concessions to pharmacies in exchange for pricing
information

* Seek price information from alternative sources, e.g., State-run
hospitals or clinics

* Implement formal policies requiring wholesale price disclosure

* Explore pharmacy reimbursement schemes that reduce pharmacy
dependence on profits from generic drug sales

SOURCES: Abramson, R.G., Missmar, R., Li, S.P., Mendelson, D.N., The
Health Strategies Consultancy LLC, and Harrington, C.A. Nova
Southeastern University College of Pharmacy, 2004,