Drug Formulary Tiers

Formulary tiers are levels within a health insurance plan's list of covered prescription drugs, known as the formulary.

These tiers are determined by:

• Cost of the drug
• Cost of the drug and how it compares to other drugs for the same treatment
• Drug availability
• Clinical effectiveness and connection to standard of care
• Other cost factors, including delivery and storage

Here’s a common tier structure:

1. Tier 1: Generic Drugs

   • These are medications that are equivalent to brand-name drugs in dosage, strength, and administration but are sold at a lower cost. They are often the least expensive option in terms of copayments or coinsurance.

2. Tier 2: Preferred Brand-Name Drugs

   • These are brand-name drugs that are preferred by the insurance plan for their cost-effectiveness. They are more expensive than generic drugs but are cheaper than non-preferred brand-name drugs.

3. Tier 3: Non-Preferred Brand-Name Drugs

   • These are brand-name drugs that are not preferred by the insurance plan. They typically have higher copayments or coinsurance compared to Tier 1 and Tier 2 drugs.

4. Tier 4: Specialty Drugs

   • Specialty drugs are high-cost medications used to treat complex or rare conditions. They often require special handling, administration, or monitoring. These drugs usually have the highest copayments or coinsurance and may be subject to additional requirements or restrictions.