Understanding drug formularies
Prescription drugs are an important part of healthcare for many Americans. Health insurance companies like Humana develop formularies, or lists of approved drugs they cover. You can find out if your medicine is covered by searching the drug list. You can also find out if there is a generic equivalent to a brand-name medicine that may be covered. This may help you save money and budget your medical expenses.
Let’s go over what a drug list is, what they can tell you about your medicine, and how they are broken down into tiers. Let’s start with the tiers. Most health plans have tiers 1 through 4, but there are plans that may have 5 or 6 tiers. What do the tiers do? The tiers determine:¹
- How much you will pay for a medicine
- If prior approval is needed for your medicine
- If there is a limit to the amount of pills per month for the medicine
How do the tiers break down?
Let’s review a 5-tier Humana plan, for example. Each tier has its own status and gets progressively more expensive than the tier prior.²
Tier 1: Preferred generic medicines that will have the lowest copay.
Tier 2: Generic medicines that may have a higher copay than preferred generic.
Tier 3: Includes both generic and brand-name medicines. This tier will typically have higher copays than Tier 1 medicine.
Tier 4: Typically brand-name medicine that has a higher copay. You may be able to find the generic version of a Tier 4 medicine in Tier 1 or 2.
Tier 5: These medicines are usually for specialty or chronic conditions. They may be drugs used to treat rare conditions or need specific approval from your doctor. Medicine in this tier usually has an expensive copay associated with it.
Knowing which tier your medicine is in can help save you money, especially if you opt to take a generic. Learn more about the difference between generic and brand-name medicine.
How drug lists are determined
The approved list of drugs is determined by a panel of experts independent of your insurance company. This panel, called a pharmacy and therapeutics (P&T) committee, is made up of doctors, nurses, pharmacists and other experts.
The P&T committee meets every so often to review information such as new Food and Drug Administration (FDA) data, doctor’s recommendations and clinical trial results.
While the P&T committee makes decisions about the drugs included on the list, they leave the decisions about cost up to the insurance company. If there are 2 or more drugs that are similarly priced and equally effective to treat a condition, they may both be included in the drug list.³
Changes to the drug list
Drug lists are reviewed and updated often, and may change at any time during the year. Reasons for those changes may be a lower-cost drug that becomes available, or safety or effectiveness issues about a certain drug that need to be reviewed. Humana can immediately substitute a therapeutically equivalent generic that is new to the market and remove a brand drug, if needed. Your insurer will usually cover a drug throughout your plan year, and changes usually happen when a new plan year begins.
Find out if your medicine is covered in the drug list.
Do you have Humana insurance through your employer? You can search the Humana Drug List for employers.
If your medicine is not covered
If your medicine is removed from your insurer’s drug list, the first thing you should do is talk with your doctor. They can decide if an alternative on the list will work for you. If not, they can work with your insurance company to see if the removed medicine can be reviewed and covered.
- “What Is a Health Insurer’s Drug Formulary and Tier Pricing?” Verywell Health, last accessed January 9, 2020, https://www.verywellhealth.com/drug-formulary-tiers-pricing-health-insurance-plans-2615042.
- “Humana Preferred Rx Plan (PDP)”, Humana.com, last accessed October 3, 2019, https://www.humana.com/medicare/part-d-drug-plans.
- Lacie Glover, “Your Drug Formulary: How It Works and What to Know," NerdWallet, last accessed September 26, 2019, https://www.goodrx.com/insurance/health-insurance/medication-formulary.