Tier 1 drugs are the lowest-cost prescription medications on your health insurance plan’s formulary, with an average copay of around $11 per prescription. They are almost always generic drugs, meaning they contain the same active ingredients as their brand-name counterparts but cost significantly less for both you and your insurer.
How Drug Tiers Work
Health insurance plans organize the medications they cover into a ranked list called a formulary. Each drug on the list is assigned to a tier, and the tier determines how much you pay out of pocket. Tier 1 sits at the bottom of that structure, carrying the lowest copay or coinsurance. Each tier above it costs progressively more, up to Tier 4 or Tier 5, which typically covers specialty medications that can cost hundreds or thousands of dollars per fill.
Most plans use either a three-tier, four-tier, or five-tier system. The exact structure varies by insurer, but Tier 1 consistently means “cheapest for the patient.” In a three-tier plan, Tier 1 covers generic drugs broadly. In a four-tier plan, Tier 1 may include both low-cost generics and certain inexpensive brand-name drugs. A five-tier plan narrows Tier 1 to only preferred, low-cost generics, while bumping other generics to Tier 2.
What Tier 1 Drugs Typically Cost
Federal survey data from the Agency for Healthcare Research and Quality puts the average copay for a Tier 1 generic prescription at $11 for employer-sponsored plans. Some plans charge as little as $0 to $5 for certain generics, while others set flat copays in the $10 to $15 range. By comparison, preferred brand-name drugs on Tier 2 or Tier 3 often carry copays of $30 to $50 or more, and specialty drugs on the highest tiers can require coinsurance of 25% to 33% of the drug’s full cost.
Because Tier 1 drugs use flat copays rather than percentage-based coinsurance, your cost stays predictable. You pay the same amount whether the pharmacy’s wholesale price for the drug is $4 or $40.
Common Tier 1 Medications
Tier 1 formularies are stocked with the generic versions of widely prescribed medications. Some of the most common examples include:
- Metformin (generic for Glucophage), used to manage type 2 diabetes
- Lisinopril (generic for Prinivil or Zestril), used to treat high blood pressure
- Amlodipine (generic for Norvasc), another blood pressure medication
- Simvastatin (generic for Zocor), a cholesterol-lowering statin
- Levothyroxine (generic for Synthroid), used for underactive thyroid
- Azithromycin (generic for Zithromax or Z-PAK), a common antibiotic
These are among the most frequently prescribed drugs in the United States, which is exactly why they land on Tier 1. They’ve been off-patent for years, multiple manufacturers produce them, and the resulting competition keeps prices low.
Why Drugs Get Placed on Tier 1
Insurance companies and the pharmacy benefit managers (PBMs) that negotiate drug prices on their behalf assign tiers based on a combination of cost and clinical value. A drug lands on Tier 1 when it meets two basic criteria: it’s inexpensive to acquire, and it’s a well-established treatment option for a common condition. Generic status is the single biggest factor, because generics can cost 80% to 85% less than the original brand-name product.
Insurers have a financial incentive to steer you toward Tier 1 drugs. When you fill a cheap generic instead of an expensive brand-name alternative, the plan saves money. Setting the copay low encourages you to choose the generic, which is why Tier 1 copays are deliberately designed to feel like a minor expense.
Tier 1 drugs also tend to come with fewer access restrictions. Higher-tier medications often require prior authorization, where your doctor must justify the prescription to your insurer before they’ll cover it, or step therapy, where you have to try a cheaper drug first and show it didn’t work. Tier 1 generics rarely involve these hurdles. In most cases, your pharmacist can fill them immediately.
Tier 1 Under Medicare Part D
Medicare Part D prescription drug plans follow the same general tiering concept, but with some federal guardrails. CMS, the agency that oversees Medicare, requires that Tier 1 be the lowest cost-sharing tier available to beneficiaries, with each subsequent tier costing more in ascending order. Most Medicare Part D plans place preferred generics on Tier 1 with copays that often fall between $0 and $15.
Medicare plans can vary widely in which specific drugs they place on each tier. Two Part D plans might both cover metformin, but one could list it as Tier 1 while the other places it on Tier 2 with a slightly higher copay. This is why comparing formularies matters during Medicare’s annual open enrollment period. The plan with the lowest monthly premium isn’t always the cheapest option if the drugs you take sit on higher tiers.
When Tiers Change
Your drug’s tier assignment isn’t permanent. Insurance plans regularly update their formularies, typically through a committee that reviews new medications, pricing shifts, and clinical evidence on an ongoing basis. A drug that sat on Tier 1 this year could move to Tier 2 next year if the plan renegotiates its contracts or if a newer, cheaper alternative becomes available.
If your plan moves a drug you’re taking to a higher tier, you’ll generally receive notice before the change takes effect. At that point, you have a few options: switch to whichever alternative now sits on Tier 1, ask your doctor to request a tier exception from your insurer, or simply absorb the higher copay. Tier exceptions aren’t guaranteed, but insurers are required to have a process for reviewing them, especially under Medicare Part D.
How to Check Your Plan’s Tier 1 List
Every insurance plan publishes its formulary, and it’s usually available on the insurer’s website or by calling the member services number on your insurance card. You can search for a specific medication to see which tier it falls on and what your copay will be. Many pharmacy websites and apps will also show your expected cost at checkout if your insurance is linked.
If you’re prescribed a medication that falls on Tier 2 or higher, it’s worth asking your doctor whether a Tier 1 alternative exists for the same condition. In many therapeutic categories, multiple generics treat the same problem, and one may sit on a lower tier than another simply because of pricing agreements between the manufacturer and your plan’s PBM. A quick conversation can sometimes save you $20 or more per month.