Goold Health Systems

State Maximum Allowable Cost (SMAC)

State Medicaid Agencies have implemented multiple modalities to rein in the rising costs of prescription drugs. As generic medications account for an ever larger proportion of the total prescription count for Medicaid Programs, it becomes increasingly important to control the costs of these medications. Having an active State Maximum Allowable Cost (SMAC) program enables a State to pay fairly for multi-source generic drugs while also allowing pharmacies a reasonable reimbursement. A SMAC program is a pricing strategy that is applied to multiple source drugs, which are drugs that are made by several companies and are available generically. SMAC rates are set based on the tenet that chemically equivalent drug products in the same strength, dosage, and package size available from multiple sources should be reimbursed similarly. SMACs are designed to maximize the cost-effectiveness of pharmacy services and to save Medicaid money while ensuring proper access to health care.

GHS develops detailed criteria for selecting products to include in the SMAC program, the reimbursement rates for these products, as well as an update process. We create a unique SMAC program for each client state, one designed for maximal efficiency and state savings balanced against the reimbursement needs of the state’s pharmacy providers. We carefully monitor the net pricing of brand multi-source drugs to ensure that the State does not automatically, and therefore sometimes prematurely, shift utilization into the generic until the time when it has been documented to be cost-effective. We develop at least three SMAC reimbursement models and present each model to our State clients with multiple rate scenarios for the State’s review and consideration. SMAC and PDL processes are integrated in order to balance optimizing savings for our State clients while minimizing inventory control problems for the stores.

GHS currently manages the SMAC programs of Maine, West Virginia and Wyoming Medicaid. These are rural states with distinct populations and geographic challenges. Maine and West Virginia receive some of the lowest overall generic drug pricing in the nation thanks to strict state standards and GHS’ team of knowledgeable doctors and pharmacists.

Maine’s average cost per generic prescription over 10 years is represented below.