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How drugs are organized on a plan formulary -- the meaning of the drug tiers

Category: Your Formulary (Drug List)
Published: Nov, 10 2011 01:11:44
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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 25% 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 many of the Medicare Part D prescription drug plans (about 43%), the formulary drug tier definitions are as follows:

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

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 on the plan’s formulary.

--  Tier 1 is generally the least expensive tier and contains generics or preferred generics.
--  55% of stand-alone prescription drug plans use Tier 2 for Non-Preferred Generic Drugs, with 39% having Tier 2 covering Preferred Brand Drugs.
--  54% of the plans use Tier 3 for Preferred Brand Drugs and 40% use Tier 3 for Non-Preferred Brand Drugs.
--  58% of plan use Tier 4 for Non-Preferred Brand Drugs and 34% use Tier 4 for Specialty Tier Drugs.
--  Tier 5 is used for Specialty Tier Drugs 87% of the time when a plan has 5 or more drug tiers on their formulary.

The chart below shows the number of tiers on the formulary and the tier definitions for each tier followed by the number of Medicare Part D plans using this combination of tiers and definitions.  Please Note:  Yes, some plans simply call their "tiers" by their not-very-helpful "tier numbers":

Nbr of Tiers

 

 Tier 1

 

 Tier 2

 

 Tier 3

 

 Tier 4

 

 Tier 5

 

 Tier 6

 

 Nbr of Plans

 
2 Tier 1 Tier 2         35
3 Generic Drugs Brand Drugs Specialty Tier Drugs       1
3 Generic Drugs Preferred Brand Drugs Specialty Tier Drugs       1
3 Tier 1 Tier 2 Tier 3       25
4 Generic Drugs Preferred Brand Drugs Non-Preferred Brand Drugs Specialty Tier Drugs     4
4 Tier 1 Tier 2 Tier 3 Tier 4     3
4 Preferred Generic Drugs Non-Preferred Generic Drugs Preferred Brand Drugs Non-Preferred Brand Drugs     38
4 Preferred Generic Drugs Preferred Brand Drugs Non-Preferred Brand Drugs Specialty Tier Drugs     165
4 Generic Drugs Preferred Brand Drugs Non-Preferred Brand Drugs Specialty Tier Drugs     176
5 Generic Drugs Preferred Generic Drugs Non-Preferred Brand Drugs Injectable Drug Specialty Tier Drugs   1
5 Preferred Generic Drugs Preferred Brand Drugs Non-Preferred Brand Drugs Injectable Drugs Specialty Tier Drugs   70
5 Preferred Generic Drugs Non-Preferred Generic Drugs Preferred Brand Drugs Non-Preferred Brand Drugs Specialty Tier Drugs   461
6 Preferred Generic Drugs Non-Preferred Generic Drugs Preferred Brand Drugs Non-Preferred Brand Drugs Specialty Tier Drugs Injectable Drugs 4
6 Preferred Generic Drugs Non-Preferred Generic Drugs Preferred Brand Drugs Non-Preferred Brand Drugs Injectable Drug Specialty Tier Drugs 79


Please also keep in mind that cost-sharing for the same tier can vary depending on whether youpurchase your medication from a preferred Network pharmacies as compared to Network pharmacies or whether you use the plan's 90-day mail order option (if available).


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