What is a Formulary?

The list of covered drugs in a Medicare Prescription Drug Plan (PDP) is called a Formulary. This article provides an outline of a formulary's tiered structure and describes how it impacts your out-of-pocket costs.

What is a Formulary?

What is a Formulary?

The list of covered drugs in a Medicare Prescription Drug Plan (PDP plan or the PD part of a MA-PD plan) is called a formulary. The formulary makes it easy for beneficiaries to figure out which drugs are covered and their share of the costs.

The formulary is in a ‘tiered’ format which categorizes drugs in different cost brackets. A drug in a higher tier will normally cost more than a drug placed in a lower tier. The lower the tiers into which your drugs fall, the less you will pay for those prescription drugs.

A formulary typically has up to 6 tiers. Many plans simplify this into a 4-5 tier structure. A 6-tier formulary looks like:

  • Tier 1 - Preferred Generic medications
  • Tier 2 - Generic medications,
  • Tier 3 - Preferred Brand medications,
  • Tier 4 - Brand medications,
  • Tier 5 - Specialty medications, and
  • Tier 6 - Select medications.

The list of covered drugs may be updated every year (or more frequently) by a plan as new drugs enter the market or old drugs get removed from the market.

Your PDP Plan will notify you of any changes to the formulary in writing at least 60 days before the date the change takes place. These change notices should be read carefully to make sure you understand their impact on you, if any. This activity becomes especially important during the annual enrollment period when you can enroll into a more suitable prescription drug plan.


Click here to learn more about Medicare, its various Parts, different enrollment periods and your costs. 

We have also created videos to help you better understand various topics related to Medicare. Select and watch a video explaining the topic of your interest in a simple and intuitive manner.

Remember that you cannot choose just any combination of Parts and Plans. Let Lighted Road Insurance guide you step-by-step through the Medicare ecosystem and help you in selecting the right plan(s) for your needs.