TMAC Savings of 90% for Heartburn Drugs in the United States

TMAC Savings of 90% for Heartburn Drugs in the United States Therapeutic maximum allowable cost (MAC) is a managed care intervention that establishes a defined benefit dollar amount per therapeutic procedure or indication. TMAC can be established for any medical procedure (e.g., joint replacement) or any pharmacological indication (e.g., cholesterol reduction). Heartburn is ideal for TMAC, particularly since there is ample evidence that the PPIs are therapeutically indistinguishable. The potential cost savings that can be realized from a TMAC intervention for PPIs can be estimated from the data in Table 2, for community and mail-service pharmacy claims for the 90-day period ended April 30, 2006. The average price per standardized 30-day supply, excluding manufacturer rebates, varied by about 7-fold, from $26 for omeprazole OTC to $179 for brand-name omeprazole. These are the actual prices for average daily dosing; i.e., the average drug cost per day and cost per 30-day supply combine all dosages and strengths of the drugs as actually used and paid by plan sponsors and as copayments by drug plan beneficiaries. A small self-insured employer in the United States implemented a TMAC program for heartburn drugs on January 1, 2006. 9 This employer had approximately 300 employees and 650 total beneficiaries in its drug benefit plan in the month of implementation of the TMAC program. The defined benefit amount was $0.67 per day ($20 per month) of heartburn drug therapy. There were no prior authorizations or other exceptions permitted for this defined benefit amount. Actual drug utilization and prices for this employer group for the first 4.5 months of 2005 through May 15 are shown in Figure 1; the member costshare amounts are shown to model the expected outcomes when members used each of the drugs after the TMAC implementation. Motivation for this employer to implement the TMAC program arose from the large proportion (15.7%) of total drug benefit spending attributable to the heartburn drugs, nearly twice the average.10 Operationally, the Medi-Span Generic Product Indicator (GPI) was used to measure preperiod and postperiod costs and administer the TMAC intervention, using the programming logic, GPI begins with 492. This GPI captures all of the PPIs and all of the histamine-2 blockers (cimetidine, famotidine, ranitidine, and nizatadine). As illustrated in Figure 1, the member cost-share is $0 for any heartburn drug that has an allowed charge of $20 or less per 30-day supply (e.g., cimetidine or ranitidine).