A drug formulary refers to the list of drugs that a particular health insurance plan will cover. Has your healthcare provider prescribed a drug that’s not on your health plan’s drug formulary? Many people are shocked to learn their health plan has a list of drugs it will pay for (or count towards your deductible, if you have to meet it first); if your drug isn’t on that list, your health insurance won’t pay for it.
This article will help you understand why a particular drug might not be on your health plan’s formulary, and what you can do if your doctor prescribes a drug that your health plan doesn’t cover.
If you’ve tried to fill a prescription only to have the pharmacy tell you that your health insurance won’t pay for it, you’re probably frustrated. It’s tempting to think, “My doctor prescribed this drug because I need it. Why does my health insurance company think it can tell my doctor what drugs I can and can’t have?”
First, understand that your health plan isn’t saying you can’t have the drug your healthcare provider prescribed. Instead, excluding a drug from its formulary is more like saying that it won’t pay for that particular drug. You may still have it if you or someone else pays for it.
Or you may find that your doctor can prescribe a substitute that will work just as well, after they find out that your health plan won’t cover the drug they initially prescribed.
It may also be possible to convince your health plan to pay for a drug that isn’t on its formulary. There’s an appeals process and you and your practitioner can use if your healthcare provider believes that none of the drug options that are on your plan’s formulary will work for you.
Understanding why your health plan has chosen to keep the drug you’ve been prescribed off of its drug formulary will help you decide how to proceed.
Why Your Drug Isn’t on Your Health Plan Drug Formulary
Your health insurance plan’s Pharmacy & Therapeutics Committee might exclude a drug from its drug formulary a few common reasons:
- The health plan wants you to use a different drug in that same therapeutic class.
- The drug is available over-the-counter.
- The drug hasn’t been approved by the U.S. FDA or is experimental.
- The health plan has concerns about the safety or effectiveness of the drug.
- The drug is considered a “lifestyle” drug and therefore not medically necessary. Drugs used for weight loss, erectile dysfunction, or cosmetic purposes can fall into this category.
(Note that there is a growing discussion around the topic of weight loss drugs and whether they should still be considered “lifestyle” drugs or covered like other medically necessary medications. States can require that health plans cover these drugs on state-regulated health plans, and this might be something that states start to consider in the coming years. For the individual and small group health insurance markets, states could choose to update their benchmark plans to include weight loss medications—see more below about how the benchmark plan affects coverage in a state. For the time being, the vast majority of state benchmark plans do not include coverage for weight loss medications.)
A therapeutic class is a group of drugs that work in a similar way or treat a certain condition. Examples of therapeutic classes include antibiotics and antihistamines.
A health plan may want you to use a different drug in the same therapeutic class for several reasons. One drug may have a better safety track record, fewer side effects, or be more effective than its competitor. However, the cost is the most common reason your health plan wants you to use a particular drug and leaves competing drugs off of its drug formulary.
Health plans try to save money by steering you to less expensive prescription drug options within the same therapeutic class. They may do this by demanding a higher copayment for the more expensive drug. Or they may leave the more expensive drug off of the drug formulary entirely.
In some cases, a health plan may cut a deal with the maker of an expensive drug to get the drug at a discounted rate by excluding a competing drug from its drug formulary. The health plan saves money by getting the expensive drug at a discount.
The drug maker is happy because it will get a larger share of the market for its drug if its competitor isn’t on a big health plan’s drug formulary. The only parties unhappy with this type of deal are the maker of the drug that was excluded, and you if the excluded drug happens to be the one you want.
Guidelines Imposed Under the Affordable Care Act
Drug formularies continue to be an important way for insurers to manage costs and ensure that their members are utilizing effective treatment. But since prescription drugs are one of the Affordable Care Act’s essential health benefits, there are some regulations that have been put in place to make sure that insurers are providing adequate prescription coverage.
Essential health benefits requirements only apply to individual/family (self-purchased) and small group plans (that aren’t grandfathered or grandmothered). For these plans, insurers have to make sure that their drug formularies:
And the development and maintenance of a health plan’s formulary must be guided by the recommendations of a pharmacy and therapeutics committee that complies with committee requirements.
Although large group health plans are not required to cover essential health benefits and are thus not subject to these same requirements, most large group plans tend to have fairly robust coverage and drug formularies.
What if You Need a Drug That Isn’t on Your Plan’s Formulary?
If you and your healthcare provider believe that you need a medication that isn’t on your health plan’s formulary, you can submit a formulary exception request, asking your insurer to cover the drug and documenting the reasons that other covered options won’t work.
Your doctor will help to facilitate this process if they believe that a substitute medication won’t be suitable for you.
If your health plan isn’t grandfathered, it’s subject to the ACA’s internal and external appeals requirements (this applies to large group plans too, as long as they’re not grandfathered), which guarantees your access to a fair appeal if your insurer rejects your prior authorization request or denies a claim for your medication. That doesn’t always mean your appeal will be successful, but the process will be fair and includes the option for an external, third-party review.
Here’s more information from the federal government about appealing health plans decisions, and an overview of the process for appealing a drug formulary decision if you have Medicare Part D (including a Medicare Advantage plan with integrated Part D coverage).
Although health plans cover a wide range of medications, they generally do not cover all FDA-approved drugs. Instead, each health plan covers certain drugs within each category and class. The list of drugs that the plan will cover is called a formulary. If a doctor prescribes a drug that isn’t on the patient’s health plan formulary, it could be possible that a substitute drug—that is on the formulary—will work just as well.
If not, it’s possible for the doctor and patient to appeal to the health plan, explaining why only the prescribed drug will treat the patient’s condition. An appeal is not guaranteed to be successful, but it can sometimes result in a formulary exception, with the health plan covering the medication even though it’s not on the formulary.
A Word From Verywell
Don’t give up if your health plan says the medication your doctor has prescribed isn’t on its formulary. Your doctor might be able to prescribe another on-formulary drug that will work just as well, or you might be able to successfully appeal and get your health plan to cover the medication.
But if not, and if the off-formulary drug continues to be necessary, you may want to consider other health coverage options at your next opportunity. If your employer offers more than one plan, you can switch during your employer’s open enrollment window. And if you buy your own coverage, you can select from all of the available options during the open enrollment period for individual market coverage (November 1 to January 15 in most states).
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