RD198 - Annual Report on Maximum Allowable Cost Program Reimbursement Methodology for Generic Drugs


Executive Summary:
The 2004 General Assembly adopted language in the 2004 – 2006 Appropriation Act directing the Virginia Department of Medical Assistance Services (DMAS) to modify the methodology used to reimburse pharmacies for providing generic drugs to Medicaid recipients. The mandate (Appendix A) requires DMAS to amend the State Plan to replace an existing pricing methodology, known as the Virginia Maximum Allowable Cost (VMAC) program, with a new pricing methodology referred to simply as Maximum Allowable Cost (MAC). The Appropriation Act also requires DMAS to report to the General Assembly by January 1 of each year on the savings achieved through the new MAC program.

This is the program’s first annual program status and cost savings report. It provides a brief overview of state pharmaceutical reimbursement policies and discusses both the previous and new reimbursement methodologies, and reviews the potential impact the revised methodology may have on the State’s pharmacy community. Because the new MAC program began in December 2004, the actual cost savings achieved through the program will not be measurable until the next cost savings report, which will be presented in January 2006.