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How drugs are organized on a plan formulary -- the meaning of the 2016 drug tiers

Category: Your Formulary (Drug List)
Published: Feb, 07 2016 03:02:35
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Medicare prescription drug plans organize covered medications into different logical categories or tiers -- each with a different 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, nor is there are standard for which drugs appear on which tier.

For the majority of Medicare Part D prescription drug plans -- 91% of PDP (up from 89% in 2015 and 76% in 2014) and 73% of MAPD plans (up from 71% in 2015 and 68% in 2014), the formulary drug tier definitions are as follows:

Tier 1: Preferred Generic
Tier 2: 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 - PBM) and how many tiers are on the plan’s formulary.

  • Tier 1 is generally the least expensive tier and contains generics or preferred generics.
  • 96% of stand-alone prescription drug plans use Tier 2 for Non-Preferred Generic Drugs, with 4% have Tier 2 covering Preferred Brand Drugs.
  • 96% of the plans use Tier 3 for Preferred Brand Drugs and 4% use Tier 3 for Non-Preferred Brand Drugs.
  • 96% of plan use Tier 4 for Non-Preferred Brand Drugs and 4% use Tier 4 for Specialty Tier Drugs.
  • Tier 5 is used for Specialty Tier Drugs 99.8% 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:


2016 Stand-alone Medicare Prescription Drug Plans
Nbr of Tiers Tier 1 Tier 2 Tier 3 Tier 4 Tier 5 Tier 6 Nbr of Plans
4 Generic Preferred Brand Non-Preferred Brand Specialty Tier     38
5 Preferred Generic  Generic Preferred Brand Non-Preferred Brand Specialty Tier    820
6 Preferred Generic Generic Preferred Brand Non-Preferred Brand Injectable Drugs Specialty Tier 2
6 Preferred Generic  Generic Preferred Brand Non-Preferred Brand Specialty Tier Select Care Drugs 37


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 2016 PDP-Finder or 2016 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.


2016 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           1
2 Generic Drugs Brand Drugs         10
3 Generic Brand Specialty Tier       3
3 Generic Drugs Brand Drugs Non-Medicare Rx/OTC Drugs       39
3 Generic Drugs Preferred Brand Drugs Non-Preferred Brand       2
4 Generic Preferred Brand Non-Preferred Brand Specialty Tier     85
4 Generic Drugs Brand Drugs Non-Medicare Rx Drugs Non-Medicare OTC Drugs     19
4 Preferred Generic Generic Preferred Brand Non-Preferred Brand     4
5 Generic Preferred Brand Non-Preferred Brand Specialty Tier Select Care Drugs   8
5 Preferred Generic Generic Preferred Brand Injectable Drugs Specialty Tier   2
5 Preferred Generic Generic Preferred Brand Non-Preferred Brand Specialty Tier   1526
6 Preferred Generic Generic Preferred Brand Non-Preferred Brand Injectable Drugs Specialty Tier 21
6 Preferred Generic Generic Preferred Brand Non-Preferred Brand Specialty Tier Injectable Drugs 9
6 Preferred Generic Generic Preferred Brand Non-Preferred Brand Specialty Tier Select Care Drugs 269
6 Preferred Generic Generic Preferred Brand Non-Preferred Brand Specialty Tier Select Diabetic Drugs 18
6 Preferred Generic Generic Preferred Brand Non-Preferred Brand Specialty Tier Supplemental Brand and Generic Drugs 4
6 Preferred Generic Generic Preferred Brand Non-Preferred Brand Specialty Tier Vaccines 77
6 Preferred Generic Drugs Generic Drugs Preferred Brand Drugs Non-Preferred Brand Drugs Non-Medicare Rx Drugs Non-Medicare OTC Drugs 1


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 2016 PDP-Finder or 2016 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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