Formulary (Drug Formulary)

What Is a Formulary?

A formulary, or drug formulary, is a list of prescription medications approved for coverage under a health insurance policy or other means of coverage.  A formulary is used by practitioners to identify drugs that offer the greatest overall value.

Who Decides What Drugs Are in the Formulary?

In most cases, there is a committee that decides this. The committee typically includes both physicians and pharmacists, and sometimes specialists and nurse practitioners. They meet periodically to update the drug list in order to keep it current and relevant.

These healthcare professionals usually make decisions based on a few different factors such as clinical evidence and opinions and findings from experts among others.  These decisions may vary from state to state, because some companies determine what drugs are approved at the state level.

Drug Formulary Tiers

Most drug formularies have at least three or four tiers of drugs. The tier determines what portion of the cost must be covered by the consumer.  Typical tiers include: 

• Generic
• Preferred brand name drugs 
• Non-preferred brand name drugs
• Specialty drugs

Formulary Drug vs. Non-Formulary Drug

As you can probably guess, formulary drugs which have been pre-approved will be covered by your health insurance plan. Non-formulary drugs, or drugs that were not pre-approved may require you to pay out-of-pocket.  For the purpose of saving money, it is going to be in your best interest to stick to formulary drugs when possible. 

How to Find Out If a Drug Is Formulary

You can get a copy of the approved drug list from your insurance company. Start by searching for it online. For example, here is one for Aetna. If you cannot find a formulary, call your provider to ask for one. If you are part of an HMO, you may be able to get the list from your provider.

Prior Authorization

Prior authorization is a statement of approval for a non-listed drug that indicates your insurance will pay for the medication. This approval must be received prior to filling the prescription. 

In order to ensure that your non-listed medication is covered, you should seek prior authorization. This means making sure it will be covered before getting the prescription filled. 

Steps for Prior Authorization

This should be handled by your provider. You need to prove that a non-listed drug is medically necessary. You should have an appropriate diagnosis, and you will need to have failed to achieve the desired results from listed drugs or have had an allergic to them.