Drug Formularies

A drug formulary is a list of prescription drugs that your insurance wants you to use. These may be dispensed through certain pharmacies.This list is reviewed and changed by health insurance regularly. Drug formularies are often used by health insurance to help manage drug costs and improve quality of care. Below is a list of the different types of formularies.

1. Open or "voluntary formularies." These are simple lists of drugs that the insurance company would like providers to prescribe. Your doctor can prescribe anything and insurance will cover it. An open formulary pays for both formulary and non-formulary drugs.

2. Closed formularies. In a closed formulary, the insurance company chooses a limited number of drugs that it will cover and lists them as formulary drugs. Drugs not included on this list are considered non-formulary drugs and are not covered. If you need a non-formulary drug, you will have to work with your doctor to get an approval from your insurance company. This is called an exception process. These formularies are not common, but they do exist.

3. Tiered, or "pre-ferred" formularies. All drugs are covered, but thereare three or more different levels (tiers) of co-pays. For example, ageneric drug might have a $5 co-pay,while a "preferred" brand drug would have a $20 co-pay, and a"non-preferred" brand drug would have a $35 co-pay. (See Table 2.)