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How Drugs are Organized on the 2013 Plan Formularies - Drug Tier Meanings

Category: Your Formulary (Drug List)
Published: Jan, 22 2013 10:01:25
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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 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 (56% of PDP and 48% 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.  
  • 67% of stand-alone prescription drug plans use Tier 2 for Non-Preferred Generic Drugs, with 29% have Tier 2 covering Preferred Brand Drugs.  
  • 67% of the plans use Tier 3 for Preferred Brand Drugs and 29% use Tier 3 for Non-Preferred Brand Drugs.  
  • 67% of plan use Tier 4 for Non-Preferred Brand Drugs and 25% use Tier 4 for Specialty Tier Drugs.  
  • Tier 5 is used for Specialty Tier Drugs 89% 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:

2013 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 Forumlary Drugs           34
3 Preferred Generic Preferred Brand Specialty Tier       2
3 Preferred Generic Drugs Preferred Brand Drugs Non-Preferred Brand Drugs       34
4 Generics Preferred Brands Non-Preferred Brand Drugs Specialty     145
4 Preferred Generic Non-preferred Generic Preferred Brand Non-preferred Brand     38
4 Preferred Generic Non-Preferred Generic Preferred Brand Specialty Tier     1
4 Preferred Generic Preferred Brand Non-Preferred Brand Specialty Tier     94
4 Tier 1 Tier 2 Tier 3 Tier 4     1
5 Preferred Generic Non-Preferred Brand Preferred Brand Non-Preferred Brand Specialty Tier   2
5 Preferred Generic Non-Preferred Generic Preferred Brand Non-Preferred Brand Specialty Tier   530
5 Preferred Generic Preferred Brand Non-Preferred Brand Injectable Drugs Specialty Tier   2
5 Tier 1 Tier 2 Tier 3 Tier 4 Tier 5   2
6 Preferred Generic Non-Preferred Generic Preferred Brand Non-Preferred Brand Injectable Drugs Specialty Tier 62
6 Preferred Generic Non-Preferred Generic Preferred Brand Non-Preferred Brand Specialty Tier Injectable Drugs 4


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 2013 PDP-Finder or 2013 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.

2013 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
1 Tier 1           44
2 Generic Brand         12
2 Tier 1 Tier 2         25
3 Generic Brand Specialty Tier       4
3 Generic Preferred Brand Specialty Tier       2
3 Preferred Generic Preferred Brand Non-Preferred Brand       12
3 Preferred Generic Preferred Brand Specialty Tier       7
3 Tier 1 Tier 2 Tier 3       22
4 Generic Preferred Brand Non-Preferred Brand Injectable Drugs     5
4 Generic Preferred Brand Non-Preferred Brand Specialty Tier     297
4 Generic Preferred Brand Non-Preferred Brand: Greater of $35 or  Specialty Tier     1
4 Preferred Generic Non-Preferred Brand Preferred Brand Specialty Tier     1
4 Preferred Generic Non-Preferred Generic Preferred Brand Non-Preferred Brand     6
4 Preferred Generic Non-Preferred Generic Preferred Brand Specialty Tier     3
4 Preferred Generic Preferred Brand Non-Preferred Brand Specialty Tier     254
4 Tier 1 Tier 2 Tier 3 Tier 4     123
5 Generic Preferred Brand Non-Preferred Brand Injectable Drugs Specialty Tier   2
5 Generic Preferred Brand Non-Preferred Brand Specialty Tier Select Care Drugs   7
5 Preferred Generic Non-Preferred Brand Preferred Brand Injectable Drugs Specialty Tier   2
5 Preferred Generic Non-Preferred Generic Preferred Brand Non-Preferred Brand Specialty Tier   1141
5 Preferred Generic Non-Preferred Generic Preferred Brand Non-Preferred Brand Specialty Tier: Lesser of $350 or %   3
5 Preferred Generic Preferred Brand Non-Preferred Brand Injectable Drugs Specialty Tier   10
5 Preferred Generic Preferred Brand Non-Preferred Brand Specialty Tier Select Care Drugs   3
5 Preferred Generic Preferred Brand Non-Preferred Brand Specialty Tier Specialty Tier   4
5 Tier 1 Tier 2 Tier 3 Tier 4 Specialty Tier   1
5 Tier 1 Tier 2 Tier 3 Tier 4 Tier 5   119
6 Preferred Generic Non-Preferred Generic Preferred Brand Non-Preferred Brand Injectable Drugs Specialty Tier 72
6 Preferred Generic Non-Preferred Generic Preferred Brand Non-Preferred Brand Specialty Tier Injectable Drugs 16
6 Preferred Generic Non-Preferred Generic Preferred Brand Non-Preferred Brand Specialty Tier Select Care Drugs 85
6 Preferred Generic Non-Preferred Generic Preferred Brand Non-Preferred Brand Specialty Tier Select Diabetic Drugs 12
6 Preferred Generic Non-Preferred Generic Preferred Brand Non-Preferred Brand Specialty Tier Supplemental Brand and Generic Drugs 6
6 Preferred Generic Non-Preferred Generic Preferred Brand Non-Preferred Brand Specialty Tier Vaccines 47
6 Tier 1 Tier 2 Tier 3 Tier 4 Tier 5 Tier 6 9

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 2013 PDP-Finder or 2013 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.



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