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What is a drug formulary?

Wednesday, October 9, 2013
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Get More from Your Benefits, Understanding your drug coverage

What is a drug formulary?

The most basic way to define a drug formulary is "a list of prescription drugs that are paid for by a health plan." This could be the government's drug plan or a private plan that you—or your employer—has purchased through an insurance company.

So what drugs are in a formulary? That all depends on your health plan. For example, one formulary might only cover generic drugs, while another might cover a specific list of both generic and brand name drugs. The important thing to understand is each list can be different. Some drugs are covered by the plan, while others are not. And certain drugs may be listed as a limited benefit, which means you must meet certain criteria before they'll be covered.

It's no secret drug costs are rising. Formularies are one more way to help manage those costs. But formularies are not always about only covering the cheapest drugs. They are based on a comprehensive review of a drug's safety and effectiveness AND it's ability to provide cost effective treatment. Drugs are usually not fully covered if they are unsafe OR more expensive than other drugs that are just as effective for the same condition. In other words, they must offer value to the plan.

You see, there are lots of drugs available for a variety of health conditions. But there are also many drugs that work the same way for the same condition and the only difference may be the price. For example, Drug A may be just as effective as Drug B, but it's a lot cheaper.

Drug B may be more effective, or be easier to take, but we have to ask "is the benefit significant enough to justify the additional cost?" There are breakthrough drugs that offer better treatment and may be listed on a formulary despite their higher cost, but if drugs are excluded from a formulary it's because they cost more without offering any better clinical treatment or health outcome.

Drug plans can be complicated. But they don't have to be. More information is available on our website to help you. The more you know, the more you'll benefit from your health plan.

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