In these stressful times due to the economic recession, we are all searching for a way to save. Prescription drugs can be expensive, but by taking the time to understand your healthcare formulary, you can save both money and stress when at the pharmacy counter. A formulary is a healthcare insurance’s list of medications whose price is covered in part or total. For any drug not listed, you would have to pay a larger co-pay or the total cost out of pocket. If sticking to this list would cause you harm or leave you inadequately treated, then you have the opportunity to request an exception. There is no guarantee though, so finding out what drugs are covered and discussing with your doctor the importance of trying to keep to this list when possible, will certainly save you money in the future.

Deciphering your plan’s formulary is simple. It will be organized into four different tiers based on price; the lower the tier the cheaper co-pay you will be. Most generic and cheaper brand name drugs would be in the first tier, the second tier will be mainly moderate brand name medications and expensive generics, the third tier is usually pricey brand name drugs, and finally the fourth tier will be the most expensive and will often consist of newly approved or specialty drugs. Health plans will not cover anything that has not been approved by the FDA. In return for offering certain medications at a lower tier and thereby ensuring more patients and doctors choose it over competitors, many health plans have negotiated with pharmaceutical companies for a lower price, which is great news for you.

In addition to cost, there may be other restrictions associated with the formulary, usually to keep costs down and patient’s safe. Three such common restrictions are: prior authorization, which requires your doctor to contact your provider for coverage on specific medications such as those with a cheaper alternative or safety concerns; quality care dosing, that largely ensures that prescriptions are consistent with FDA suggestions; and step therapy, where your health care provider has you try a different and usually more inexpensive drug before moving onto what was originally recommended by your doctor.

The formulary is created by a pharmacy and a therapeutics committee made up of pharmacists and doctors from different specialties. They pick the most cost-effective medications in each therapeutic class, while taking into consideration effectiveness and risk to patient. Knowing and understanding the healthcare formulary of a plan will let you know what prescription drugs will be covered and to what degree. This is important when using your current healthcare insurance or when signing up for a new one.