Formulary sounds like something out of the 1800s, and that’s because it is. Back then a drug formulary was created to list medicines in a hospital. Today, it still is a list of medicines yet is more commonly used by health insurance and pharmacy companies to describe what prescription drugs are covered by a health plan.
Unfortunately, the drug formulary isn’t often part of the health insurance discussion with plan members, and it should be — especially if it’s enrollment time and you’re shopping for a new plan. The cost of prescription medicines (your drug coverage) is a big part of patients’ out-of-pocket costs. And understanding these costs early on can guide you to the best plan for you, your family, and small business employees.
Here are a few other important facts to know about drug formularies.
What Exactly is a Formulary/Prescription Drug List?
The word formulary sounds more complicated than it is. A formulary is simply a list (often quite extensive) of prescription drugs covered by your health plan. Sometimes they are also known as a preferred drug list or a PDL. Formularies are reviewed and updated regularly based on guidance from a panel of providers, pharmacists, and other healthcare professionals. These lists of drugs are meant to guide persons to the most affordable medicines that work.
Most health plans use tiers (or levels) that are based on the price of the drug as well as its effectiveness. Less expensive or generic drugs are typically Tier 1. Specialty drugs, medicines that are more complicated to administer, or newer prescription drugs are typically assigned a higher tier.
There are generally two types of formularies described in health plans and which make up your prescription drug plan. (Yes, each health plan has a separate plan that describes your prescription drug coverage.)
An open formulary provides coverage for all the prescription drugs listed regardless of tier. It offers the broadest prescription drug benefit though generally costs more in higher premiums.
A closed formulary provides coverage for lower-cost generic drugs and brand-name drugs. Closed formularies may not cover expensive non-preferred brand name drugs, or they may require you to try lower-cost alternatives before trying a more expensive one. (Typically, you can appeal for coverage of an excluded medication if there is a clear medical need.)
How Should You Use the Formulary?
Your health care providers don’t usually have insight into your health plan’s drug formulary or the costs to you for each medication. Consider sharing your formulary information with your physician, even printing it out for your next visit, so that you and your health care provider can make decisions about your prescriptions together.
What if a Prescription Drug isn’t on Your List?
If you and your doctor decide that you need a medication not included in your plan’s formulary, you can request a formulary coverage exception from your health plan. You and your doctor will want to explain why you need the medication and why the covered alternatives on your formulary will not work for you. Your health plan will then review your request and decide. If you’re denied, don’t despair — you and your provider can appeal. Some health plans may also require what’s known as prior authorization for prescribed covered drugs for the medical condition that your medicine has been prescribed for. This is typically a form provided by your insurance plan.
How Else Can You Save Money on Your Prescription Drugs?
You can price shop for medicines just like you do for other things — like toys or shoes. Pharmacies often add a markup on prescription medicines (yup, another price hike on something that often is already expensive) and these can often vary widely.
Decent’s mission is to make healthcare affordable, starting with small businesses. That’s why we partnered up with one of the lowest-cost, transparent leaders in the marketplace for prescription drugs — Costco Health Solutions.
3 Tips to Get the Best Deal on your Medicines
- Save $$$ by shopping. Your health plan may have a prescription drug pricing tool available to you that can help you find lower-cost medications. Contact your health plan for more information. By shopping around, patients can save hundreds and sometimes thousands of dollars.
- Make sure you stay within your health plan’s pharmacy network. Your health plan should have a searchable list of in-network pharmacies, which tend to have the best deals on prescription drugs.
- Ask about a generic option. Switching over to a generic version could result in big cost savings. (Make sure to consult with your doctor first.)
Why Should You Care About Your Health Plan’s Formulary?
Understanding your health plan’s formulary is an important part of understanding your potential out-of-pocket costs. The best way to avoid drug cost surprises is to make sure you are familiar with your prescription drug benefits (is your medicine covered by a copay? coinsurance? and/or annual deductible?), which pharmacies are in your network, and where you can find your plan’s drug formulary.
Have questions about Decent PEO’s group plans for small businesses? Contact us at support@decent.com.
.png)
