Monday, March 18, 2013

Predictive Acquisition Cost and MAC Optimization

Here's an update on Predictive Acquisition Cost (PAC), the drug pricing measure developed by Glass Box Analytics and distributed by Elsevier/Gold Standard. Elsevier/Gold Standard is a Drug Channels sponsor.

Elsevier/Gold Standard has just released a new PAC Proof of Concept Analysis for Payers and PBMs. It shows how PAC can be used to adjust the maximum allowable cost (MAC) paid to pharmacies. Elsevier is offering payers the opportunity to have their MAC list evaluated against PAC. See below for more details.

For background PAC vs. other drug pricing metrics, download Elsevier's white paper: Drug Price Types and Options For A Future Standard. (Free with registration.)


PAC Helps Payers, PBM’s and Pharmacies through MAC Optimization

When looking to control drug spend or seeking cost savings opportunities, health insurance payers, or their PBMs can evaluate their Maximum Allowable Cost (MAC) drug price list against the Predictive Acquisition Cost (PAC) to determine when MAC prices are too high. PAC is an estimation of acquisition cost that more closely predicts acquisition costs when compared to Average Wholesale Price (AWP), or any other existing or proposed price type.

Click here for a proof of concept analysis that identifies a sample of drug groups for which the current MAC is outside the range of true acquisition cost, thus causing reimbursement to be higher than necessary in some cases.

Payers and PBMs can also see when reimbursement is too low and pharmacy network relations could potentially be negatively affected. PAC allows payers and PBMs to see where the MAC needs balancing. Click here to see examples.

One particular feature of interest with PAC is that it accounts for a degree of uncertainty by providing a standard PAC, along with a range: PAClow and PAChigh, creating a high degree of confidence that the true acquisition cost lies within the range. For any given pharmacy per-script profit target, this PAC range can translate into a range within which the MAC should lie.

In order to identify opportunities to create more balanced MAC pricing, we can identify drug groups for which the current MAC is outside the range, for example MAClow and MAChigh. Download the PAC Proof of Concept for Payers and PBM’s here.

A deeper awareness of the MAC list and optimizing it to reflect the best potential allowable cost, can result in significant savings for payers and great value add for PBMs by quickly identifying situations where reimbursement is high. Perhaps less obviously, PAC can also benefit pharmacies and improve network relations by rapidly identifying situations where reimbursement is low, which ultimately is not good for payers either. Overall, PAC provides confidence and justification in ascertaining fair pricing based on informed knowledge of true acquisition cost.

Get the PAC Proof of Concept Analysis for Payers and PBMs

Interested in having your MAC list evaluated against PAC now? Email Elsevier’s Gold Standard or call 800.375.0943. All you need to provide is your drug identifier, MAC price, quantity per claim (average), number of claims over a period of time (e.g. week, month), and any per-script profit target assumptions or other business rules.

1 comment:

  1. PAC looks like the only solution to the AWP problem that understands the complexities and deals with them appropriately in a rather simple way. As the inventor of AWP (in 1969) I have observed its deterioration and the many failures to come up with a solution that understands the whole problem, the players and that might work for more than a few weeks. I think we have one here.


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