What is a prescription drug 'formulary' and why does it matter to patients?

A formulary is your health plan's approved list of prescription medications, organized into tiers that determine how much you pay. Tier 1 typically includes low-cost generics with the lowest co-pays, while Tier 3 or 4 drugs — often brand-name or specialty medications — may require significant co-insurance. If your doctor prescribes a drug not on the formulary, your plan may not cover it at all unless you obtain a medical exception. Reviewing a plan's formulary before enrolling is important if you take regular medications, since formularies vary significantly between plans.