Health insurance and government health plans have to make decisions about what coverage to offer for prescription drugs. Some drugs are hugely expensive, especially when they’re new, or when they’re sold in brand-name form, and either private or public insurances typically go through the list of available drugs to determine which ones will be covered by the insurance plan. The list derived is called a drug formulary.
Essentially, medications listed in the drug formulary of either an insurance company or a government agency are those that the company or government will pay for, at least partly. Medications not listed on a drug formulary may not receive any coverage. Occasionally insurance companies will extend coverage to non-formulary medications, if other covered drugs have been tried and are ineffective. This may require written approval and a doctor’s explanation or request for a specific medication.
There are several special needs for each drug formulary. People selecting health insurance can search these to see the extent of a plan’s pharmacy coverage. If they know the names of the drugs they usually take, they may want to choose, given an option, health insurance plans that list the medications they already take. Very small formularies suggest that most people will end up paying full price for any prescription drugs they take currently or will later be prescribed.
Doctors need to keep drug formularies for each common insurance company on hand too. When treating a patient who will need prescription drugs, the doctor can scan the drug formulary to find appropriate medications that are covered or offer low copayment options for patients. Prescribing a drug that is financially out of reach of the patient makes no sense if it can be reasonably assumed the patient will not be able to purchase the medication. Sometimes doctors also have free samples of short-term use drugs that they can give to patients who can’t afford to purchase medications.
Some insurance companies offer online access to drug formulary lists, but most still send out a booklet, or several of them to doctor’s offices, so that both doctors and patients know what is covered. They usually send these lists to patients too, especially if there are any updates. Insurance companies may price drugs differently, depending upon total cost of a medication. They often offer “tiered” pricing. The least expensive drugs in the drug formulary, usually generic forms that have been on the market for a while, may cost a small copayment, while brand name drugs and those that are recent in development cost a larger copayment or result in a higher percentage of the cost being paid by the consumer.
There is interesting competition for those people who lack insurance or who have high copayments for certain drugs. Some pharmacies now offer very low prices on medications that are in generic form, as little $4 US Dollars (USD), for the average prescription. While this won’t cover all medications, those using a pharmacy with lower prices should check to make sure that their medication isn’t already covered under these low price deals, since even with insurance average copayments for generic meds are usually about $10 USD or more. Under certain circumstances, it may make sense to use a pharmacy with a lower price offer and not use insurance to pay for prescription medications because the price may actually be lower.