Drug Formulary: Understanding Your Prescription Coverage

What is a Drug Formulary and How Does it Impact Your Prescription Coverage?

A drug formulary is a list of prescription medications that are covered by a health insurance plan. The formulary lists the medications in different “tiers,” with tier 1 typically being the lowest cost medications, and tier 4 the most expensive. Health insurance plans use formularies to manage the cost of prescription drugs and to encourage the use of lower cost, more effective medications. When a patient needs a medication, their doctor will usually check the formulary to see if it is covered and what the cost will be for the patient. If a medication is not covered, the patient’s doctor may suggest a different medication that is covered by the formulary.

This is not common practice yet in International Private Medical Insurance but is so in certain domestic markets such as the US and also in public funded social security states such as Sweden. Not all medication is or can be covered as some are very expensive.