Medicare prescription drug plans (
PDPs and MAPDs) organize covered medications into different "logical" categories or tiers -- each with a different cost-sharing amount. For example, you may have a $3.00 co-pay for Tier 1 generic drugs, a $47.00 co-pay for your Tier 3 brand name drugs, and 33% of retail co-insurance for your Tier 5 specialty drugs.
When comparing different Medicare Part D plans, you may notice no standardized drug tier definitions, and there are no standards for how drugs are organized onto a particular tier. For example, your drug plan may organize a particular generic drug on Tier 1 and another Medicare Part D drug plan may have the same generic drug listed as a Tier 2 (with a higher co-pay).
Are we moving toward a more standardized Medicare formulary structure?
Yes. Although there is no universal formulary structure, the good news is that the many Medicare Part D prescription drug plans use the same five (5) drug tier structure:
Tier 1: Preferred Generic
Tier 2: Generic
Tier 3: Preferred Brand
Tier 4: Non-Preferred Drug
Tier 5: Specialty Tier
As an example,
94.6% of 2017 stand-alone Medicare prescription drug plans (PDPs) used the same five (5) drug tier structure shown above (and the number of stand-alone Part D plans using this 5-tier structure is up from 91% of the plans in 2016, 89% of the plans in 2015, 76% of the plans in 2014, and
56% of the plans in 2013).
Please notice that one significant change in 2017 was that most of these stand-alone Medicare Part D plans have changed the name of Tier 4 to "Non-Preferred
Drug" rather than using the 2016 tier-name of "Non-Preferred
Brand".
In comparison to PDPs,
75.5% of all 2017 Medicare Advantage plans with prescription drug coverage (MAPDs) used the five (5) drug tier structure shown above (and this percentage is up from 73% of the plans in 2016, 71% of the plans in 2015 and 68% of the plans in 2014).
Please note that 14% of the 2017 Medicare Advantage plans continued to use the 2016 Tier 4 descriptor of "Non-Preferred Brand" and 61% moved to the newer title of "Non-Preferred Drug".
Are Medicare drug plans standardizing how drugs are organized on formulary tiers?
Not really. Please keep in mind that almost any drug can be on any formulary tier, even if the drug does not "match" the tier description.
As an example, it is often the case that a newly introduced generic medication will appear on the same drug tier as it's brand-name equivalent - and this certainly can cause confusion to plan members who are assuming generic drugs are covered on generic tiers (Tier 1 or Tier 2) - and not organized onto brand-name drug tiers (Tier 3 or Tier 4).
Accordingly, we may be seeing the trend of changing the Tier 3 name change to "Non-Preferred Drug" rather than the older "Non-Preferred Brand" to help plan members better understand the plan's formulary.
For
example, back in 2017, the drug
Quetiapine Fumarate (the generic for Seroquel®)
is a Tier 2: "Generic" on eleven (11) Florida Medicare Part D plan (PDP) formularies, but the same drug is a Tier 3: "Preferred Brand Drug" on
six (6) Florida formularies, and a Tier 4: "Non-Preferred Brand Drug" on one (1) Florida Medicare Part
D formulary.
This means that the fixed co-pays for
this generic drug can range from $1 to $47. (However, the average 2017 retail drug price for this generic was around $10 - and since you
never pay more than retail, even with a $47 fixed co-pay, a Part D plan member would not pay over the $10 retail price.)
Bottom line: Be sure to look closely at your chosen Medicare plan's
formulary and confirm where your medications are organized - before enrolling into the plan. Do not assume that
your generic drugs are a low-costing Tier 1 or Tier 2 drug as they could
be a more-expensive Tier 3 drug.
In addition, remember that you are allowed to ask your Medicare Part D plan for a "tiering exception" whereby, if your request is granted, your plan would allow you to move a medication to a lower-costing formulary tier.
For more information, please see our FAQ, "Can I ask my Medicare Part D plan to move my expensive medication to a lower-costing formulary tier?" found at
https://Q1FAQ.com/673.html
How are drugs organized into the different drug tiers?
In general, formulary design and organization depends on the Medicare Part D plan's (or the plan's Pharmaceutical Benefit Manager's - PBM's) overall plan strategy and economics.
- Tier 1 is generally the least expensive formulary tier and contains generics or preferred generics. (However, please note that the Anthem Blue Cross MedicareRx Plus (PDP) has a Tier 6 with a $0 co-pay)
- 99.7% of PDPs use Tier 2 for Generic Drugs, with only 0.3% have Tier 2 covering Preferred Brand Drugs.
- 99.7% of PDPs use Tier 3 for Preferred Brand Drugs and 0.3% use Tier 3 for Non-Preferred Drugs.
- 93.5% of PDPs have adopted the new Tier 4 name Non-Preferred Drug, 6.2% use Non-Preferred Brand and 0.3% use Tier 4 for Specialty Tier Drugs.
- Tier 5 is used for expensive Specialty Tier Drugs 99.7% of the time when a plan has 5 or more drug tiers on their formulary.
The charts below show the number of tiers on formularies and the tier definitions for each tier followed by the number of Medicare Part D plans using this combination of tiers and definitions. The first chart is for stand-alone Medicare Prescription Drug plans (PDPs) and the second chart is for Medicare Advantage plans with prescription drug coverage (MAPDs)
Please Note: Many plans loosely adhere to the tier definition. As mentioned above, you can find some generic drugs on a brand-name drug tier, especially if the generic drug is a newly released brand-name drug equivalent:
Example of 2017 Stand-alone Medicare Prescription Drug Plans (PDPs)
|
Nbr of Tiers |
Tier 1 |
Tier 2 |
Tier 3 |
Tier 4 |
Tier 5 |
Tier 6 |
Nbr of Plans |
4 |
Preferred Generic |
Preferred Brand |
Non-Preferred Brand |
Specialty Tier |
|
|
2 |
5 |
Preferred Generic |
Generic |
Preferred Brand |
Non-Preferred Brand |
Specialty Tier |
|
45 |
5 |
Preferred Generic |
Generic |
Preferred Brand |
Non-Preferred Drug |
Specialty Tier |
|
671 |
6 |
Preferred Generic |
Generic |
Preferred Brand |
Non-Preferred Brand |
Injectable Drugs |
Specialty Tier |
2 |
6 |
Preferred Generic |
Generic |
Preferred Brand |
Non-Preferred Drug |
Specialty Tier |
Select Care Drugs |
37 |
Reminder: If you are looking to see how a specific Medicare Part D plan (PDP) or Medicare Advantage plan (MA) defines their drug tiers, you can use our
2017 PDP-Finder or
2017 MA-Finder for tier definitions and cost-sharing. Also, keep in mind that cost-sharing for the same tier can be different at preferred network pharmacies as compared to non-preferred network pharmacies.
Example of 2017 Medicare Advantage Plans with Prescription Drug Coverage (MAPDs)
|
Nbr of Tiers |
Tier 1 |
Tier 2 |
Tier 3 |
Tier 4 |
Tier 5 |
Tier 6 |
Nbr of Plans |
2 |
Generic Drugs |
Brand Drugs |
|
|
|
|
8 |
3 |
Generic |
Brand |
Specialty Tier |
|
|
|
4 |
3 |
Generic |
Preferred Brand |
Non-Preferred Brand |
|
|
|
2 |
3 |
Generic Drugs |
Brand Drugs |
Non-Medicare Rx/OTC Drugs |
|
|
|
41 |
4 |
Generic |
Preferred Brand |
Non-Preferred Brand |
Specialty Tier |
|
|
14 |
4 |
Generic Drugs |
Brand Drugs |
Non-Medicare Rx Drugs |
Non-Medicare OTC Drugs |
|
|
15 |
4 |
Preferred Generic |
Preferred Brand |
Non-Preferred Drug |
Specialty Tier |
|
|
25 |
5 |
Preferred Generic |
Generic |
Preferred Brand |
Non-Preferred Brand |
Specialty Tier |
|
303 |
5 |
Preferred Generic |
Generic |
Preferred Brand |
Non-Preferred Drug |
Specialty Tier |
|
1302 |
5 |
Preferred Generic |
Preferred Brand |
Non-Preferred Drug |
Specialty Tier |
Select Care Drugs |
|
10 |
5 |
Preferred Generic |
Preferred Brand |
Non-Preferred Drug |
Specialty Tier |
Select Diabetic Drugs |
|
5 |
6 |
Preferred Generic |
Generic |
Preferred Brand |
Non-Preferred Brand |
Injectable Drugs |
Specialty Tier |
20 |
6 |
Preferred Generic |
Generic |
Preferred Brand |
Non-Preferred Brand |
Specialty Tier |
Select Care Drugs |
90 |
6 |
Preferred Generic |
Generic |
Preferred Brand |
Non-Preferred Brand |
Specialty Tier |
Select Diabetic Drugs |
13 |
6 |
Preferred Generic |
Generic |
Preferred Brand |
Non-Preferred Brand |
Specialty Tier |
Vaccines |
45 |
6 |
Preferred Generic |
Generic |
Preferred Brand |
Non-Preferred Drug |
Specialty Tier |
Select Care Drugs |
209 |
6 |
Preferred Generic |
Generic |
Preferred Brand |
Non-Preferred Drug |
Specialty Tier |
Select Diabetic Drugs |
3 |
6 |
Preferred Generic |
Generic |
Preferred Brand |
Non-Preferred Drug |
Specialty Tier |
Supplemental Brand and Generic Drugs |
3 |
6 |
Preferred Generic |
Generic |
Preferred Brand |
Non-Preferred Drug |
Specialty Tier |
Vaccines |
13 |