What is a Prescription Drug Formulary?

A drug formulary is a list of the prescription drugs that your health insurance company has agreed to cover so that when you fill your prescription, you don’t pay the full price of the medication. In most cases, formularies are comprised of drugs that are the safest, most effective, and most affordable.

How Are Drug Formularies Determined?

The medications on your health insurance company’s formulary were chosen by a third-party panel of experts known as a pharmacy and therapeutics committee. Pharmacy and therapeutic committees are made up of doctors, nurses, and pharmacists. The committee meets regularly to discuss new drugs, safety data, the results of clinical trials, and doctors’ recommendations for new drugs that may be added to the formulary. For this reason, the formulary may evolve over time as better drugs hit the market or new safety data comes out.

The health insurance company determines what these drugs will cost its customers. In most cases, the health insurance company covers a greater portion of the cost of more affordable drugs, such as generics and inexpensive brand name drugs, giving customers an incentive to opt for these over more expensive options.

How Drug Formularies Work

Drug formularies are comprised of drug tiers. Some health insurance companies only divide their formularies into four tiers while others may have as many as five or six. The tier that your medication is in determines your portion of the drug cost.

In most cases, each tier is associated with a specific co-pay, and the lower the tier, the smaller your co-pay. For example, your health insurance company may cover almost all the cost of a generic medication that is on the first tier, but you may pay a significant portion of the cost of a third- or fourth-tier drug. Sometimes Tier 6 medication costs $0. You’ll have to verify by reviewing your health plan or speaking with your broker.

Using Your Health Insurance Company’s Drug Formulary to Save Money

How much you pay at the pharmacy counter depends on your insurance plan and whether your medication is on your health insurance company’s formulary. In some cases, your primary care physician may have knowledge of your formulary or can look it up to determine what would be the most inexpensive medications they could prescribe for you. Other times, your best bet is to bring a copy of your formulary with you to doctor’s office visits.

Occasionally, health insurance companies remove a drug from the formulary. If this happens, then your insurer should provide you with written notice. This gives you an opportunity to speak with your doctor about switching to a more cost-effective medication.

Finding a Health Insurance Company that Fits Your Needs

Every health insurance company has its own unique drug formulary. If you are receiving treatment for a condition and you purchase individual health insurance, then finding a health insurance company that covers your prescription can help you save a lot of money. At Nevada Insurance Enrollment, our health insurance agents can help you review your needs and find the health insurance plan that will provide the best coverage.