A formulary determines which medicines a plan pays for and on what terms. Most US formularies are organized into tiers, such as generics, preferred brands, non-preferred brands and specialty drugs, with patients paying more out of pocket for higher tiers. Some drugs are excluded altogether.
Many covered drugs come with utilization management: prior authorization, step therapy, quantity limits, or restrictions to certain prescribers. These conditions can matter as much as the tier itself in deciding how many patients actually get a medicine.
Formularies are set by pharmacy and therapeutics committees of clinicians and pharmacists, and in practice are heavily influenced by the rebates manufacturers offer to pharmacy benefit managers and health plans. Medicare Part D formularies follow federal rules, including requirements to cover substantially all drugs in certain protected classes.
For a brand, formulary position is one of the strongest drivers of performance, and it changes regularly. Access teams track their own product’s position and their competitors’ across the plans that matter, and watch for changes at each formulary update.