The cost of covering a non-formulary drug will depend on your plan.  Your Medicare Part D plan has some flexibility with regard to what you will pay for the coverage of a non-formulary drug when your formulary exception request is granted and may even provide a lower cost-sharing structure for non-formulary generic drugs as compared to brand drugs.  Even so, many Medicare Part D plans cover non-formulary drugs (generic or brand) as Tier 3 or Tier 4 Non-Preferred drugs with 25% to 50% cost-sharing.

As noted in the Medicare manual:

"Unlike under the tiering exceptions process, the regulations do not specify what level of cost sharing applies when an exception is approved under the formulary exceptions process. Instead, a plan sponsor has the flexibility to determine what level of cost sharing will apply for non-formulary drugs approved under the exceptions process. However, a plan sponsor is limited to choosing a single cost-sharing level that applies to one of its existing formulary tiers. Plans may also elect to apply a second less expensive level of cost sharing for approved formulary exceptions for generic drugs, so long as the second level of cost sharing is associated with an existing formulary tier and is uniformly applied to all approved formulary exceptions for generic drugs" [emphasis added]

Accordingly, the government's Model Evidence of Coverage document provides Medicare drug plans with a very broad template when explaining cost-sharing for the coverage of non-formulary drugs.

"Section 6.2    What is an exception?
. . .
1.    Covering a Part D drug for you that is not on our List of Covered Drugs (Formulary). (We call it the “Drug List” for short.)
. . .
If we agree to make an exception and cover a drug that is not on the Drug List, you will need to pay the cost-sharing amount that applies to [insert as appropriate: all of our drugs OR drugs in [insert exceptions tier] OR drugs in [insert exceptions tier] for brand name drugs or [insert exceptions tier] for generic drugs]. You cannot ask for an exception to the copayment or coinsurance amount we require you to pay for the drug." [emphasis added]

However, as noted above, although provided with broad and flexible guidance, you may find that many Medicare Part D drug plans follow the same convention and cover a non-formulary drug (using the Formulary Exception request process) as a Non-Preferred drug at a higher-costing formulary tier (just below the Specialty Drug Tier) and you probably will pay 25% to 50% of the drug's retail cost.

For more information, you can review your Medicare plan’s “Evidence of Coverage” (EOC) document and you will probably find an explanation in the section under "Formulary Exceptions" that states something such as:

“If we agree to make an exception and cover a drug that is not on the Drug List, you will need to pay the cost-sharing amount that applies to drugs in Tier 4 [assuming a 5-tier formulary]. You cannot ask for an exception to the copayment or coinsurance amount we require you to pay for the [coverage of a non-formulary] drug.” [emphasis added]

or you may read something such as:

"If we agree to make an exception and cover a drug that is not in the Drug Guide, you will need to pay the cost-sharing amount that applies to drugs in Cost-Sharing Tier 4 - Non-Preferred Drug. You cannot ask for an exception to the copayment or coinsurance amount we require you to pay for the drug."

. . . or a slight variation . . .

"If we agree to make an exception and cover a drug that is not on the Drug List, you will need to pay the cost-sharing amount that applies to drugs in Cost-Sharing Tier 3: Non-Preferred Drug. You cannot ask for an exception to the copayment or coinsurance amount we require you to pay for the drug."

You can then look on your plan's formulary and see the cost-sharing for Tier 3 or 4 Non-Preferred drugs (for example, 25% or 33% or $50).  We also have all formulary cost-sharing information online in our Medicare Part D plan finder (PDP-Finder.com) and our in our Medicare Advantage plan finder (MA-Finder.com)

Question: So, will I always pay more for coverage of a non-formulary drug as compared to similar formulary drugs?

Not necessarily.  When a non-formulary drug is covered by your drug plan (even as a Tier 4 drug), you will not necessarily pay more for the drug than similar drugs on the plan’s formulary.  The cost difference will depend on the non-formulary drug's retail price, the placement of the similar drugs on the plan's formulary, and your Medicare Part D plan's cost-sharing structure (for example, Tier 1 drugs cost $1 and Tier 2 drugs cost $10).

As a general example, if the plan covers “Drug ABC” as a Tier 3 drug with a $40 co-pay and you use a similar non-formulary drug “Drug XYZ” that has a retail cost of $100 and the plan agrees to cover this non-formulary drug on Tier 4, you may pay 33% co-insurance for the drug or $33 (depending on your plan) -- and this is less than the $40 you would have paid for the similar Tier 3 drug.

Question: Who can provide more information about the specific coverage costs of a non-formulary drug?

You can learn more about how your non-formulary drugs might be covered if you are granted a Formulary Exception in your plan’s documentation about Formulary Exceptions or telephone your Medicare plan’s Member Services department using the toll-free found on your Member ID card.

Sources include:

Parts C & D Enrollee Grievances, Organization/Coverage Determinations, and Appeals Guidance
Effective January 1, 2020