What is Formulary?
Definition
A formulary is the tiered list of prescription drugs an insurer covers, with each tier setting a different copay or coinsurance. Non-formulary drugs are either uncovered or require a formal exception request supported by physician documentation of medical necessity.
Real-World Example
A diabetes patient's generic metformin sits on Tier 1 with a $10 copay, while a new GLP-1 injectable is on Tier 4 at 40% coinsurance until the patient's doctor files a Tier Exception.
Why It Matters
The formulary can change every January. A drug that is affordable in December may cost hundreds more starting January 1 — a fact that catches thousands of Medicare Part D members off guard each year.
Frequently Asked Questions
Are formularies the same across insurers?
No. Each insurer designs its own formulary, which is why the same drug can be Tier 1 with one plan and non-covered with another.