Drug Formulary Vocabulary

Researching your drug formulary can be overwhelming. To make things easier, we’ve put together a drug formulary vocabulary list. Use the information below to help learn about your formulary.

Drug Formulary
A drug formulary is a list of medications covered by your health insurance plan separated into several tiers or categories based on the price of the drug.

Preferred Drug List
A Preferred Drug List is another name for a drug formulary. The two are interchangeable or sometimes just known as a drug list.

Tiers are the categories or levels that covered drugs are sorted into, usually presented in order from lower cost to higher cost.

Generic Drugs
Generic drugs are required to be identical to brand-name drugs in dosage, safety, strengths, quality, performance, and intended use. They can be manufactured by several different drug companies once the original patent has expired. They are usually sold at significant discounts from the branded-drug price.

Brand-Name Drugs
A brand-name drug is a medicine that has been discovered, developed and marketed by a pharmaceutical company. Once a new drug has been discovered a patent is filed on it that prevents a rival company from creating a generic version for up to 20 years. Brand-name drugs tend to be more expensive than their generic counterparts.

Preferred Brand-Name Drugs
These are drugs for which generic equivalents are not available and have proven clinical and cost effectiveness. They cost more than generics, but less than non-preferred brand-name drugs.

Non-preferred Brand-Name Drugs
A non-preferred drug is a medication that has been determined to have a clinically equivalent drug, already on the list of preferred prescriptions. Non-preferred brand-name drugs have a higher co-payment than preferred brand name drugs, and may be new to the market. In most cases, you may pay the difference in cost in addition to a copayment.

Prior Authorization
A restriction placed on certain drugs that require your doctor get authorization from your benefit plan your plan will cover the medication.

Step Therapy
A restriction placed on certain drugs that require you first try an alternative medication that is cheaper and also has been determined to be safe and effective.

Quantity Limits
A coverage limit to how many doses you can get of a particular drug, determined by your plan.

More Expert Articles From PAF