q1medicare.com
Powered by Q1Group LLC
A non-government resource for the Medicare community
Powered by Q1Group LLC
A non-government Medicare community resource
  • Menu ☰
  • Home
  • Contact
  • MAPD
  • PDP
  • 2024
  • 2025
  • FAQs
  • Articles
  • Search ⌕
  • Contact
  • 2024
  • 2025
  • FAQs
  • Articles
  • Latest Medicare News
  • Search ⌕

How drugs are organized on a Medicare drug plan formulary and moving toward uniform drug tier definitions

Category: Your Formulary (Drug List)
Published: Feb, 25 2017 04:02:42
< Previous
Next >
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

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 PDP-Finder or 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.



News Home
< Previous   Next >




Medicare Supplements
fill the gaps in your
Original Medicare
1. Enter Your ZIP Code:
» Medicare Supplement FAQs


News Categories
Selecting your Medicare plan
Star Ratings & plan quality
Annual Medicare plan changes
Enrollment topics
Late Enrollment Penalty (LEP)
Your Formulary (Drug List)
Monthly Formulary changes
Your Medicare plan coverage
Pharmacies & Providers
Changing Medicare plans
Special Enrollment Periods (SEPs)
The Donut Hole or Coverage Gap
Donut Hole Discounts
Straddle Claims and high costs
Out-of-Pocket: TrOOP, RxMOOP, and MOOP
Medicaid, LIS, & Extra Help
IRMAA - for higher incomes
Medicare Advantage plans (MAPD)
Medicare Supplements - Medigap
Medicare plan providers
General Medicare Part D (PDP)
General Medicare
Diabetes and diabetic coverage
Your Health & Wellness
About Q1Medicare.com


Ask a Pharmacist*
Have questions about your medication?

» Answers to Your Medication Questions, Free!
Available Monday - Friday
8am to 5pm MST
*A free service included with your no cost drug discount card.


© Q1Group LLC 2005 - 2024  



Tips & Disclaimers
  • Q1Medicare®, Q1Rx®, and Q1Group® are registered Service Marks of Q1Group LLC and may not be used in any advertising, publicity, or for commercial purposes without the express authorization of Q1Group.
  • The Medicare Advantage and Medicare Part D prescription drug plan data on our site comes directly from Medicare and is subject to change.
  • Medicare has neither reviewed nor endorsed the information on our site.
  • We provide our Q1Medicare.com site for educational purposes and strive to present unbiased and accurate information. However, Q1Medicare is not intended as a substitute for your lawyer, doctor, healthcare provider, financial advisor, or pharmacist. For more information on your Medicare coverage, please be sure to seek legal, medical, pharmaceutical, or financial advice from a licensed professional or telephone Medicare at 1-800-633-4227.
  • We are an independent education, research, and technology company. We are not affiliated with any Medicare plan, plan carrier, healthcare provider, or insurance company. We are not compensated for Medicare plan enrollments. We do not sell leads or share your personal information.
  • Benefits, formulary, pharmacy network, provider network, premium and/or co-payments/co-insurance may change on January 1 of each year. Our PDPCompare.com and MACompare.com provide highlights of annual plan benefit changes.
  • The benefit information provided is a brief summary, not a complete description of benefits. For more information contact the plan.
  • Limitations, copayments, and restrictions may apply.
  • We make every effort to show all available Medicare Part D or Medicare Advantage plans in your service area. However, since our data is provided by Medicare, it is possible that this may not be a complete listing of plans available in your service area. For a complete listing please contact 1-800-MEDICARE (TTY users should call 1-877-486-2048), 24 hours a day/7 days a week or consult www.medicare.gov.
    Statement required by Medicare:
    "We do not offer every plan available in your area. Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov or 1-800-MEDICARE to get information on all of your options."
  • When enrolling in a Medicare Advantage plan, you must continue to pay your Medicare Part B premium.
  • Medicare beneficiaries with higher incomes may be required to pay both a Medicare Part B and Medicare Part D Income Related Monthly Adjustment Amount (IRMAA). Read more on IRMAA.
  • Medicare Advantage plans that include prescription drug coverage (MAPDs) are considered Medicare Part D plans and members with higher incomes may be subject to the Medicare Part D Income Related Monthly Adjustment Amount (IRMAA), just as members in stand-alone Part D plans. In certain situations, you can appeal IRMAA.
  • You must be enrolled in both Medicare Part A and Part B to enroll in a Medicare Advantage plan. Members may enroll in a Medicare Advantage plan only during specific times of the year. Contact the Medicare plan for more information.
  • If you are enrolled in a Medicare plan with Part D prescription drug coverage, you may be eligible for financial Extra Help to assist with the payment of your prescription drug premiums and drug purchases. To see if you qualify for Extra Help, call: 1-800-MEDICARE (1-800-633-4227). TTY users should call 1-877-486-2048, 24 hours a day/ 7 days a week or consult www.medicare.gov; the Social Security Office at 1-800-772-1213 between 7 a.m. and 7 p.m., Monday through Friday. TTY users should call, 1-800-325-0778; or your state Medicaid Office.
  • Medicare evaluates plans based on a 5-Star rating system. Star Ratings are calculated each year and may change from one year to the next.
  • A Medicare Advantage Private Fee-for-Service plan (PFFS) is not a Medicare supplement plan. Providers who do not contract with the plan are not required to see you except in an emergency.
  • Disclaimer for Institutional Special Needs Plan (SNP): This plan is available to anyone with Medicare who meets the Skilled Nursing Facility (SNF) level of care and resides in a nursing home.
  • Disclaimer for Dual Eligible (Medicare/Medicaid) Special Needs Plan (SNP): This plan is available to anyone who has both Medical Assistance from the State and Medicare. Premiums, co-pays, co-insurance, and deductibles may vary based on the level of Extra Help you receive. Please contact the plan for further details.
  • Disclaimer for Chronic Condition Special Needs Plan (SNP): This plan is available to anyone with Medicare who has been diagnosed with the plan specific Chronic Condition.
  • Medicare MSA Plans combine a high deductible Medicare Advantage Plan and a trust or custodial savings account (as defined and/or approved by the IRS). The plan deposits money from Medicare into the account. You can use this money to pay for your health care costs, but only Medicare-covered expenses count toward your deductible. The amount deposited is usually less than your deductible amount, so you generally have to pay out-of-pocket before your coverage begins.
  • Medicare MSA Plans do not cover prescription drugs. If you join a Medicare MSA Plan, you can also join any separate (stand-alone) Medicare Part D prescription drug plan
  • There are additional restrictions to join an MSA plan, and enrollment is generally for a full calendar year unless you meet certain exceptions. Those who disenroll during the calendar year will owe a portion of the account deposit back to the plan. Contact the plan provider for additional information.
  • Medicare beneficiaries may enroll through the CMS Medicare Online Enrollment Center located at www.medicare.gov.
  • Medicare beneficiaries can file a complaint with the Centers for Medicare & Medicaid Services by calling 1-800-MEDICARE 24 hours a day/7 days or using the medicare.gov site. Beneficiaries can appoint a representative by submitting CMS Form-1696.
.