What Is a Drug Formulary? Covered, Preferred, and Non-Formulary Medications Explained

What Information Is Included in a Formulary?

A formulary may show:

• Covered brand-name and generic medications
• The medication's coverage tier
• Prior-authorization requirements
• Step-therapy requirements
• Quantity limits
• Age or other coverage restrictions
• Specialty-pharmacy requirements
• Whether a particular dosage form is covered

Two strengths or formulations of the same medication may have different coverage rules. For example, a tablet may be covered while a liquid requires additional review. Coverage details should therefore be checked using the exact medication, strength, dosage form, and quantity.

What Are Formulary Tiers?

Many plans organize medications into tiers. Although structures vary, a formulary may include:

• Tier 1: Preferred generic medications
• Tier 2: Preferred brand-name medications
• Tier 3: Non-preferred medications
• Specialty tier: High-cost or complex medications

A lower tier often means a lower copayment or coinsurance, but patients should verify their actual cost with the plan.

Being listed on the formulary does not always mean a medication will process without restrictions. A covered drug may still require prior authorization, step therapy, or compliance with a quantity limit.

What Is a Preferred Medication?

A preferred medication is one the health plan generally favors within a therapeutic category. The decision may consider:

• Clinical evidence
• Safety
• Treatment guidelines
• Availability of generic products
• Comparative effectiveness
• Negotiated cost
• Overall value

A preferred drug is not automatically the best choice for every individual patient. It is the plan's favored covered option for many members.

What Is a Non-Formulary Medication?

A non-formulary medication is not routinely included on the plan's covered-drug list. The patient may have several options:

• Use a covered alternative
• Ask the prescriber to request a formulary exception
• Submit an appeal
• Use a manufacturer or pharmacy discount when appropriate
• Pay the cash price

Before paying cash, ask whether doing so will count toward the plan's deductible or out-of-pocket expenses. It may not.

Patients whose insurers will not pay for a prescription may have the right to appeal and, depending on the plan, seek review by an independent third party. See our full guide on appealing a prescription drug denial →

Can Formularies Change?

Yes. Plans may add or remove medications, change preferred products, add utilization-management requirements, or move medications between tiers.

Review the plan's notices and covered-drug list during open enrollment, especially when you take ongoing medications.

When comparing health plans, do not look only at the monthly premium. Check whether your medications are covered, what tier they occupy, which restrictions apply, and whether your pharmacy participates in the network.

Are Generic Drugs Usually Preferred?

Generic medications are often placed on lower formulary tiers because they typically cost less than brand-name products.

FDA-approved generic medications must meet rigorous standards. An approved generic generally has the same active ingredient, strength, dosage form, route of administration, and expected clinical performance as its brand-name counterpart.² Some inactive ingredients, such as colors or flavorings, may differ.

Patients with questions about a change in manufacturer, appearance, or inactive ingredients should speak with their pharmacist.

How Can You Check Your Formulary?

You can:

1. Sign in to your health plan's website or app
2. Search the online covered-drug list
3. Review your plan documents
4. Call the member-services number on your insurance card
5. Ask your pharmacist to submit the prescription
6. Ask the prescriber to verify coverage before starting an expensive medication

Confirm the exact name, strength, dosage form, and quantity.

Questions to Ask Your Insurance Plan

• Is this medication covered?
• What tier is it on?
• Does it require prior authorization?
• Is step therapy required?
• Is there a quantity limit?
• Must it be filled by a specialty or mail-order pharmacy?
• What covered alternatives are available?
• Can my prescriber request a formulary exception?
• What will my estimated out-of-pocket cost be?

Frequently Asked Questions