How Drugs are Organized on the 2014 Plan Formularies - Drug Tier Meanings

Medicare prescription drug plans organize covered medications into different logical categories or tiers -- each with a different co-payment or cost-sharing amount (for instance, you may have a $5 co-pay for generic drugs, a $30 co-pay for your brand name drugs, and 33% co-insurance for your Tier 5 specialty drugs).

However, as you start comparing different Medicare Part D plans, you may find that there are no standardized drug tier definitions.

For the majority of Medicare Part D prescription drug plans (76% of PDP and 68% of MAPD plans), the formulary drug tier definitions are as follows:

Tier 1: Preferred Generic
Tier 2: Non-Preferred Generic
Tier 3: Preferred Brand
Tier 4: Non-Preferred Brand
Tier 5: Specialty Tier

How different drugs are organized into the formulary drug tiers generally depends on the Medicare Part D plan (or the plan's Pharmaceutical Benefit Manager) and how many tiers are on the plan’s formulary.

Tier 1 is generally the least expensive tier and contains generics or preferred generics.
86% of stand-alone prescription drug plans use Tier 2 for Non-Preferred Generic Drugs, with 10% have Tier 2 covering Preferred Brand Drugs.
86% of the plans use Tier 3 for Preferred Brand Drugs and 10% use Tier 3 for Non-Preferred Brand Drugs.
86% of plan use Tier 4 for Non-Preferred Brand Drugs and 7% use Tier 4 for Specialty Tier Drugs.
Tier 5 is used for Specialty Tier Drugs 86% 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. There are two (2) charts, the first 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: Some plans simply call their "tiers" by their not-very-helpful "tier numbers," so it is difficult to determine which types of drugs on each tier. Also, many plans loosely adhear to the tier definition. 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:

2014 Stand-alone Medicare Prescription Drug Plans
Nbr of Tiers	Tier 1	Tier 2	Tier 3	Tier 4	Tier 5	Tier 6	Nbr of Plans
1	On Forumlary	34
3	Preferred Generic	Preferred Brand	Non-Preferred Brand	34
4	Generics	Preferred Brands	Non-Preferred Brand Drugs	Specialty Tier	2
4	Preferred Generic	Non-preferred Generic	Preferred Brand	Non-preferred Brand	7
4	Preferred Generic	Non-Preferred Generic	Preferred Brand	Specialty Tier	5
4	Tier 1	Tier 2	Tier 3	Tier 4	2
5	Generic	Preferred Brand	Non-Preferred Brand	Specialty Tier	Select Care Drugs	67
5	Preferred Generic	Non-Preferred Generic	Preferred Brand	Non-Preferred Brand	Specialty Tier	770
6	Preferred Generic	Non-Preferred Generic	Preferred Brand	Non-Preferred Brand	Injectable Drugs	Specialty Tier	59
6	Preferred Generic	Non-Preferred Generic	Preferred Brand	Non-Preferred Brand	Specialty Tier	Select Care Drugs	35

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 2014 PDP-Finder or 2014 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.

2014 Medicare Advantage Plans with Prescription Drug Coverage
Nbr of Tiers	Tier 1	Tier 2	Tier 3	Tier 4	Tier 5	Tier 6	Nbr of Plans
2	Generic	Brand	6
3	Generic	Brand	Specialty Tier	6
3	Preferred Generic	Preferred Brand	Non-Preferred Brand	8
3	Preferred Generic	Preferred Brand	Specialty Tier	10
4	Generic	Preferred Brand	Non-Preferred Brand	Injectable Drugs	7
4	Generic	Preferred Brand	Non-Preferred Brand	Specialty Tier	142
4	Preferred Generic	Non-Preferred Generic	Preferred Brand	Non-Preferred Brand	11
4	Preferred Generic	Non-Preferred Generic	Preferred Brand	Specialty Tier	19
4	Preferred Generic	Preferred Brand	Non-Preferred Brand	Specialty Tier	69
5	Generic	Preferred Brand	Non-Preferred Brand	Injectable Drugs	Specialty Tier	3
5	Generic	Preferred Brand	Non-Preferred Brand	Specialty Tier	Select Care Drugs	86
5	Preferred Generic	Non-Preferred Generic	Preferred Brand	Injectable Drugs	Specialty Tier	2
5	Preferred Generic	Non-Preferred Generic	Preferred Brand	Non-Preferred Brand	Specialty Tier	1307
5	Preferred Generic	Non-Preferred Generic	Preferred Brand	Specialty Tier	Select Diabetic Drugs	1
5	Preferred Generic	Preferred Brand	Non-Preferred Brand	Injectable Drugs	Specialty Tier	9
5	Preferred Generic	Preferred Brand	Non-Preferred Brand	Specialty Tier	Select Care Drugs	6
6	Preferred Generic	Non-Preferred Generic	Preferred Brand	Non-Preferred Brand	Injectable Drugs	Select Care Drugs	3
6	Preferred Generic	Non-Preferred Generic	Preferred Brand	Non-Preferred Brand	Injectable Drugs	Select Diabetic Drugs	1
6	Preferred Generic	Non-Preferred Generic	Preferred Brand	Non-Preferred Brand	Injectable Drugs	Specialty Tier	55
6	Preferred Generic	Non-Preferred Generic	Preferred Brand	Non-Preferred Brand	Specialty Tier	Injectable Drugs	3
6	Preferred Generic	Non-Preferred Generic	Preferred Brand	Non-Preferred Brand	Specialty Tier	Select Care Drugs	126
6	Preferred Generic	Non-Preferred Generic	Preferred Brand	Non-Preferred Brand	Specialty Tier	Select Diabetic Drugs	4
6	Preferred Generic	Non-Preferred Generic	Preferred Brand	Non-Preferred Brand	Specialty Tier	Supplemental Brand and Generic Drugs	5
6	Preferred Generic	Non-Preferred Generic	Preferred Brand	Non-Preferred Brand	Specialty Tier	Vaccines	41