Understanding your prescription drug program’s formulary is an important part of understanding your medical benefits.
Most health plans that cover prescription drugs, including the Medical Plan offered through the Board of Pensions, have a formulary to encourage the use of safe and effective medications for the most affordable cost. A formulary, sometimes called a preferred drug list, is a list of generic and brand-name drugs covered by your plan. You may have used medications on your plan's formulary and know that they can save you money, but do you know how a formulary is developed?
Health insurers and prescription benefit managers have pharmacy and therapeutics (P&T) committees made up of doctors, pharmacists, and other healthcare professionals that evaluate and select existing and new medications for the formulary. The selections are made according to each drug's therapeutic class, which is a group of medications used to treat a specific condition. For example, statins are a class of drugs that are used to prevent and treat heart disease by lowering the level of cholesterol in the blood.
When two or more medications in the same therapeutic class are similarly effective and safe, factors like cost, ease of delivery, or other unique properties of the drugs are considered when determining which medication to include on the formulary.
Medications are assigned to a formulary tier, which represents how much the plan will pay for the medication and your share of the cost. The most cost-effective drugs (often generics) typically are assigned to the most preferred tier and have the lowest out-of-pocket costs for plan members.
Plans may also choose to exclude a particular drug from coverage. For example, this may be the case if the drug
The prescription marketplace is continually changing: New drugs are introduced, generic versions of brand names become available, and new guidelines are released. To keep formularies current, P&T committees meet regularly to discuss clinical trial results, new drugs, provider recommendations, and more. As a result, a health plan's formulary is updated at least once a year and may change throughout the year as well.
The formulary used by the PPO, EPO, and HDHP medical options* is typically updated every July 1 and January 1. If you are affected by a formulary change — for example, a drug you are taking changes to a more expensive tier or will no longer be covered — you will be sent a letter listing alternative formulary medications for you to discuss with your doctor.
As a qualified Medicare Part D plan, the Medicare Supplement prescription drug program also uses a formulary. Formularies developed for the Medicare Part D prescription drug benefit must follow certain rules established by the Centers for Medicare & Medicaid Services (CMS). For example, CMS regulations and guidance include specific instructions on the number of medications that must be included in each therapeutic class and how soon new medications must be reviewed. The formulary for Medicare Supplement is subject to annual approval by the CMS, and may change from year to year.
If you have medical coverage through the Board*, the best way to check whether a medication is on the formulary and estimate your cost is to log on to express-scripts.com (or use the single sign-on feature through Benefits Connect) and click Price a Medication in the menu under Prescriptions to calculate the estimated cost of a prescription drug. Note: The Price a Medication calculator does not imply a guarantee of coverage as covered products or categories are subject to individual plan restrictions and/or limitations.
*Those enrolled in Triple-S or GeoBlue should consult their plan for information about prescription drug benefits.
Source: Academy of Managed Care Pharmacy, Formulary Management