Which term represents the highest price a health plan will pay retail pharmacies for a medication?

The term that represents the highest price a health plan will pay retail pharmacies for a medication is referred to as the maximum allowable cost, commonly known as MAC. This pricing mechanism ensures that health plans maintain control over pharmacy expenditures by setting a specific reimbursement rate for certain generic and brand-name medications.

The significance of MAC lies in its role in controlling costs within pharmacy benefit programs. It establishes a cap on what insurers will reimburse pharmacies, potentially affecting how pharmacies price their medications and how patients may perceive costs associated with their prescriptions.

Understanding the context of other terms can clarify why MAC is the correct answer. AWP, or Average Wholesale Price, is often used as a reference point but does not specifically dictate the maximum a health plan will pay. WAC, or Wholesale Acquisition Cost, reflects the price at which wholesalers acquire drugs from manufacturers, not the maximum reimbursement rate. AMP, or Average Manufacturer Price, is used for Medicaid pricing and reflects the average price paid to manufacturers, which does not equate to what a health plan would reimburse a pharmacy. Thus, MAC is specifically tailored to denote the maximum reimbursement threshold set by health plans for medications, making it the most accurate choice in this scenario.