A Medicare formulary is the list of prescription drugs that a Medicare drug plan (Part D) has agreed to cover. Every Part D plan and Medicare Advantage plan with drug coverage maintains its own formulary, and the drugs on that list, along with how they’re organized, directly determine what you pay at the pharmacy. If your medication is on the formulary, you’ll pay a predictable share of the cost. If it’s not, you could be responsible for the full price unless you successfully request an exception.
How Drug Tiers Work
Formularies aren’t just a yes-or-no list. They organize drugs into tiers, and each tier comes with a different cost. Most plans use a structure similar to this:
- Tier 1 (lowest cost): Most generic prescription drugs
- Tier 2 (medium cost): Preferred brand-name drugs
- Tier 3 (higher cost): Non-preferred brand-name drugs
- Specialty tier (highest cost): Very high-cost prescription drugs
The lower the tier, the less you pay. Tier 1 and Tier 2 drugs typically have a flat copay, meaning you pay a set dollar amount each time you fill your prescription. Higher tiers are more likely to charge coinsurance instead, where you pay a percentage of the drug’s total cost. The specialty tier, reserved for the most expensive medications, has cost-sharing capped at 25% of the drug’s price after you meet your deductible (or up to 33% for plans with a reduced or no deductible). Specialty tiers are also the one tier that plans can exempt from cost-sharing exception requests, so you generally can’t appeal to get a lower rate on those drugs.
Your plan’s Summary of Benefits spells out the exact dollar amount or percentage for each tier, so it’s worth checking before you fill a prescription.
Why Every Plan’s Formulary Is Different
Medicare doesn’t dictate one universal drug list. Each plan negotiates its own prices with drug manufacturers and pharmacies, which means plans have financial reasons to prefer certain drugs over others. Two plans might both cover a cholesterol medication, but one could place it on Tier 2 while the other puts it on Tier 3, resulting in a meaningful difference in what you pay each month.
This is why comparing formularies matters during open enrollment. A plan with a lower monthly premium might save you money overall, or it might place your specific medications on higher tiers that cost more at the pharmacy counter. The cheapest plan on paper isn’t always the cheapest plan for your prescriptions.
Six Drug Classes Plans Must Cover
Plans have significant freedom to decide which drugs make their formulary, but there are limits. Federal rules require every Part D plan to cover substantially all drugs in six protected categories: antidepressants, antipsychotics, anticonvulsants (used for seizures), immunosuppressants for transplant rejection, antiretrovirals (used for HIV), and cancer medications. These protections exist because gaps in coverage for these conditions can be medically dangerous, and switching between drugs in these classes isn’t always safe or effective.
Outside these six categories, plans have more discretion. They must cover at least two drugs in every therapeutic category, but they can choose which ones. That flexibility is what creates the variation between plans.
Utilization Management Tools
Even when a drug is on the formulary, your plan may put conditions on filling it. These restrictions are called utilization management, and they come in three common forms.
Prior authorization means the plan requires approval before it will cover a drug. Your doctor’s office typically handles this by submitting clinical information to the plan explaining why you need the medication. Step therapy requires you to try a less expensive drug first and show that it didn’t work before the plan will cover the one your doctor originally prescribed. Step therapy only applies to new prescriptions. If you’re already taking a medication when a plan introduces a step therapy requirement, your current treatment can’t be disrupted. Quantity limits cap how much of a drug the plan will cover in a given time period, such as 30 pills per month.
If any of these restrictions create a problem for you, you can request an exception.
How to Request a Formulary Exception
You have the right to ask your plan to cover a drug that isn’t on the formulary, move a drug to a lower cost-sharing tier, or waive a utilization management requirement like prior authorization or step therapy. You, your doctor, or someone acting on your behalf can submit the request.
The key requirement is a supporting statement from your prescriber explaining why the request is medically necessary. For a drug that’s not on the formulary, your doctor needs to explain that every alternative drug the plan does cover would either be less effective for your condition or cause adverse effects. For step therapy waivers, the statement must explain why the required first-step drug has been or is likely to be ineffective or harmful. Your doctor can submit this statement verbally, in writing, by letter, or on a standard coverage determination request form.
Once the plan receives the prescriber’s statement, it must respond within 72 hours for standard requests or 24 hours for expedited requests (cases where waiting could seriously harm your health). The initial response can come by phone, but the plan must follow up with a written notice within three calendar days. If the plan denies your request, the denial letter will include instructions for filing an appeal.
Mid-Year Formulary Changes
Formularies are generally set at the start of each plan year, but they can change. Plans may remove drugs, add new restrictions, or shift medications between tiers during the year. When these changes affect a drug you’re currently taking, the plan must give you at least 30 days’ written notice before the change takes effect, giving you time to talk to your doctor about alternatives or file an exception request.
One area where plans now have more flexibility involves biosimilars, which are near-identical versions of expensive biologic drugs. Plans can substitute a biosimilar for the original biologic on their formulary as a routine maintenance change, applying the switch to all enrollees, including those already taking the original drug, after providing that 30-day notice. For newer interchangeable biologics that weren’t available when the plan’s formulary was first approved, plans can make the substitution immediately and notify affected enrollees afterward.
How to Check Your Plan’s Formulary
Every Medicare drug plan is required to publish its formulary, and most make it searchable online. You can look up any plan’s drug list on Medicare.gov by entering your medications into the plan finder tool, which will show you exactly which tier each drug falls on and whether any utilization management restrictions apply. You can also call your plan directly or request a printed copy of the formulary.
Checking the formulary before you enroll, and again whenever your doctor prescribes a new medication, is the most reliable way to avoid surprise costs. A drug your doctor considers routine might sit on a high tier or require prior authorization under your specific plan, and knowing that upfront gives you and your doctor time to explore lower-cost alternatives or start an exception request before you’re standing at the pharmacy counter.