Drug Formularies – What is a Drug Formulary

Have you ever encountered a disgruntled employee complaining that one of their regular medications is “not covered”, but you’re not sure how to help? In this article, PSyn Inc seeks to simplify drug formularies and provide you with knowledge that will help you to improve communication with your employees regarding their prescription drug plan.

Imagine that you are at a restaurant and the waitress is taking your drink order. You order a Pepsi, only to be informed that the restaurant only serves Coca-Cola products. The restaurant has likely negotiated a deal with Coca-Cola to only serve their products. After researching both products, they likely decided that Coca-Cola and Pepsi serve the same purpose for their consumers. Since both companies offer similar supply and restocking services, the decision to stock Coca-Cola may have been influenced by that company offering them a better deal. The soda products that are chosen to be kept “on hand” for customers are essentially the restaurant’s “formulary”.

Of course, it gets more complicated, and the stakes are higher when dealing with medications, but the same idea is present. Put simply, a drug formulary is a list of specific medications that is put together by a team of physicians and pharmacists. This team recommends a list of clinically safe and efficacious medication therapies for the health plan to cover on their formulary. This list will vary from plan to plan.

Formularies will include brand and generic drugs that treat a given disease state that are approved for use by the US Food and Drug Administration (FDA). If a particular drug is “non-formulary”, then the plan will likely pay less, or nothing at all, towards that medication. This is often because there have been other medications that are proven to work the exact same way, that are already on the formulary. Similarly, to the Coca-Cola and Pepsi analogy above, formularies aim to provide the most effective drugs to you without a sacrifice in quality.

As a health plan works to create the best formulary for their customers, they may change what is covered  as drugs get taken off the market, branded drugs go generic, and new drugs become available. The formulary may also change from year to year as clinical research is published regarding the efficacy and safety of a drug.

Understanding drug formularies is critical when seeking clarity regarding a given health plan. Medication prices and copays should never be a surprise. Knowing ahead of time what is on formulary can save everyone involved a lot of headache, and as a result, your employee satisfaction often improves. Continue to follow our blogs as we’ll be addressing some of the most common questions that your employees have surrounding their drug formularies.