What is a Medicare formulary?

For many, prescription drugs are a necessity that contributes to much of their healthcare spending. Medicare prescription drug coverage through Part D provides millions of Americans help to cover some of these costs. 

With any prescription drug plan, it’s important to understand what medications are covered to ensure you have the best plan for your prescription drug needs. Here is an overview of Medicare Part D drug formularies, including the drugs covered, common plan rules and restrictions, and how to find the best plan for your list of medications.

What is a Medicare drug formulary?

A drug formulary is a health plan’s list of covered drugs. Most plans with drug coverage, including Medicare and non-Medicare plans, have their own drug formulary. These formularies are created by Pharmacy and Therapeutics (P&T) committees for each individual health insurance company.

The Centers for Medicare and Medicaid Services (CMS) then reviews the formularies to ensure that plans offer comprehensive drug benefits that provide beneficiaries with cost-effective access to necessary medications. 

“Medicare formularies include generic and brand-name prescription drugs,” says Ashley Woodcox, BSHCA, executive director of Brookdale Senior Living. “Many plans divide the covered drugs into tiers, or levels, based on cost. Drugs in a lower tier will generally have a lower copayment than non-preferred drugs in a higher tier.”

While each plan can divide its tiers how they choose, an example of a drug plan’s tiers may include: 

• Tier 1: Mostly generic prescription drugs
• Tier 2: Preferred, brand-name prescription drugs
• Tier 3: Non-preferred, brand-name prescription drugs
• Tier 4: Specialty, brand-name prescription drugs

What drugs are covered by Medicare Part D?

Medicare Part D covers prescription drugs that are regularly taken at home. All Medicare drug plans are required to cover at least two drugs in most prescription drug categories. However, it’s up to the individual drug plans to make coverage determinations that include which specific drugs they cover within those categories.

Medicare prescription drug plans are also required to cover nearly all drugs in Medicare’s Six Protected Classes, which include: 

1. Antipsychotics: Drugs used to help treat forms of psychosis.
2. Antidepressants: Drugs used to help treat depression and anxiety disorders.
3. Anticonvulsants: Drugs used to treat seizure disorders.
4. Antineoplastics: Drugs used to treat cancer, also known as anticancer drugs.
5. Antiretrovirals: Drugs commonly used to treat HIV/AIDs.
6. Immunosuppressants: Commonly used to reduce the strength of the body’s immune system to prevent organ rejection after a transplant.

What drugs aren’t covered by Medicare Part D?

Although Medicare Part D plans cover a wide variety of drugs, there are certain prescription drugs that aren’t covered.

Examples of drugs excluded from Part D coverage include: 

• Brand-name drugs when a generic version containing the same active ingredients is available
• Drugs used to treat eating disorders
• Medications for weight loss or gain
• Over-the-counter medications
• Cosmetic drugs, such as those for hair growth
• Prescription vitamins and mineral products, except prenatal vitamins 
• Drugs used to treat sexual or erectile dysfunction

“It’s important to understand that each drug formulary is different, and your plan may not include the specific medication your doctor has prescribed,” says Woodcox. “In this case, a similar drug should be available.” However, when this is not the case, you or your prescriber can request a formulary exception or look into changing plans during the next enrollment period. 

You can enroll in Part D coverage through a stand-alone Part D plan or a Medicare Advantage plan that includes Part D benefits.

Network pharmacies

Medicare Part D plans often have agreements with pharmacies within their network to provide services and supplies to consumers for a discounted price. Plans may not cover prescription drugs from a pharmacy outside of its network.

In addition to network pharmacies, plans may offer other options for getting prescription medications, including preferred pharmacies, mail-order programs, and two- or three-month retail pharmacy programs. Regardless of the pharmacy, it’s important to have your Medicare ID card on hand when filling your prescription.

Preferred pharmacies

Some Part D plans may have preferred pharmacies to help consumers save on out-of-pocket prescription drug costs. A preferred pharmacy has an agreement with the drug plan to charge less for prescription drugs purchased through them. As a result, consumers will have a lower copay for covered drugs than if they purchased them through a non-preferred pharmacy. 

Mail-order programs

Some drug plans offer a mail-order option for home delivery of prescriptions. Not only do these programs offer the convenience of skipping a visit to the pharmacy every time a refill is needed, but they may also offer additional savings when purchasing a 90-day supply.

Two- or three-month retail pharmacy programs

Some retail pharmacies offer the option to purchase a two- or three-month supply of the covered prescription drugs rather than a 30-day supply. This may be a cost-effective option for those wanting to save time with fewer visits to the pharmacy.

Coverage rules and restrictions

To ensure that certain drugs are used correctly and only when necessary, plans may enforce coverage rules and restrictions, according to Medicare. This includes prior authorization, step therapy, quantity limits, and opioid pain medication safety checks. 

Prior authorization

Some plans may require prior authorization for certain drugs. This means that before a plan will cover the cost of a drug, the plan must give pre-approval based on prior authorization criteria set by the plan. To do so, your doctor must submit the proper documentation to show that a drug is medically necessary. 

In some cases, a plan may use the prior authorization process when it only covers a drug when used to treat certain medical conditions but will not cover the drug when used to treat other medical conditions.

Step therapy

Step therapy requires that you try an alternative drug on a lower tier before the plan covers the higher cost of a drug on a higher tier. 

If your doctor believes there will be negative side effects caused by the less expensive drug, it won’t be as effective, or that the more expensive drug is medically necessary, they may request an exception. If approved, the plan will cover the cost of the more expensive drug without requiring that you try other medications first.

Quantity limits 

A quantity limit is a restriction on the amount of a certain drug ‌the plan will cover during a specific period‌. These limits are based on several factors, such as pharmaceutical guidelines, Food and Drug Administration (FDA) labeling, and dosing recommendations. 

This helps reduce costs and ensure ‌the drugs are being used as prescribed. For example, for a once-daily medication, they may only cover 30 pills every 30 days.

Opioid pain medication safety checks

Opioid medications can pose serious addiction and health risks if not used properly. For this reason, drug plans and pharmacies conduct safety reviews to ensure that commonly abused prescription drugs are being used safely and that the prescription is appropriate for your needs.

A plan may also limit the initial covered supply of opioids ‌to decrease the risk of addiction or serious health issues from long-term use. 

Opioid safety reviews rarely apply to consumers with cancer or sickle cell disease, palliative or end-of-life care, hospice, or those living in a long-term care facility. 

How often do Medicare formularies change?

Formulary changes may occur throughout the year for several reasons, such as the release of new drugs or new generics, new medical information, or changes to drug therapies. In most cases, plans must inform you of changes through written notice—at least 30 days prior to the date the change becomes effective or at the time of refill. 

If the FDA removes the medication from the market or finds it unsafe, your plan may remove the drug from their formulary immediately. Plans can also replace brand-name drugs with generic drugs under certain requirements. In these cases, they should inform you of the changes made after they go into effect. 

This may cause changes to your medication coverage throughout the year. In these cases, the plan should provide the consumer with an annual notice of change. If a medication you’re taking is removed from the formulary, you’ll have to pay full price or ask for an exception. During the next enrollment period, it’s important to review your formulary for the coming year and make changes accordingly.

How to find your Medicare formulary

It’s important for you to review and understand your Medicare plan’s drug formulary. Contact your plan or visit their website for more information.

You can also find out which plans cover your medications by comparing Part D drug plans at medicare.gov. You should also receive an “Evidence of Coverage” (EOC) from Medicare each year, which will explain what the plan covers and how much you’ll need to pay. 

How to find the best Medicare formulary

All Medicare Part D plans are different, so it’s important to research and find the best plan to meet your specific needs. Start by compiling a list of your current prescription drugs and their dosages. Use this information to compare plans on medicare.gov with the Plan Finder tool or by calling member services at 1-800-Medicare.

While Medicare drug plans can help lower the cost of prescription drugs, there are other ways to save:

1. Find a plan with your current prescriptions set to a low tier on the formulary: This will help ensure you are paying a lower cost for your medications. 
2. Apply for Extra Help: This assistance program helps those with limited income and resources afford the costs of Medicare drug plans, including yearly deductibles, monthly premiums, and coinsurance.
3. Compare Medicare copays to SingleCare prices: Get a free discount card and save up to 80% on medications not included in your Medicare formulary at over 35,000 nationwide pharmacies. Get your free prescription discount card here. A pharmacist can help you compare your discount with Medicare versus SingleCare.
4. Shop around: Drug prices vary by pharmacy. If your plan has a preferred pharmacy, make sure you fill your prescriptions there to save the most money.

RELATED: Does SingleCare work with Medicare?

If your Part D plan isn’t meeting your drug coverage needs, you can switch your drug plan during the Initial Enrollment Period. The Initial Enrollment Period happens when you first become eligible for Medicare or during the annual Open Enrollment Period. Open enrollment runs from Oct. 15 to Dec. 7 each year. Any changes made during this time will take effect on Jan. 1.

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