Formulary Programs

Written by Norene Anderson
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Formulary programs are designed to manage the cost of supplying drug benefits to plan participants. This is a preferred drug list recommended by the provider of the pharmacy benefit plans. The formulary includes both generic and brand name drugs. Providers contract with manufacturers for a volume discount to reduce the cost of medications. This discount is passed on to the provider and plan recipient.

Formulary programs change frequently as the demand for certain drugs increases or new drugs are introduced into the market. Individual insurance plans must be carefully read to determine the specific benefits for formulary and non-formulary drugs. Just because a drug is not listed in the formulary does not mean that the insurance will not pay. It will most likely pay at a different rate or percentage from a formulary medication.

The Use of Formulary Programs

Formulary programs contain drugs with a proven record of effective results. They are also a more cost-efficient drug than similar drugs. Some of the drugs listed are more therapeutically advanced than similar drugs that are non-formulary. The formulary provides information to the physicians regarding the use of the drugs listed and how the effectiveness of alternative therapies is considered.

Physicians should prescribe medication with both the cost to the patient and the effectiveness of the drug in mind. Most prescription plans only include generic drugs in the co-pay amount. It is often more expensive to receive the brand name medication. Some plans waive the co-pay for a percentage of the actual cost if the drug prescribed is not generic or if it is not listed in the formulary for the plan's pharmacy coverage.

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