Every time you write a prescription, you’re not just choosing a drug-you’re choosing a cost. And if that cost isn’t covered, your patient might skip the medication, split pills, or just go without. That’s not hypothetical. In 2024, nearly 1 in 5 Medicare beneficiaries skipped a prescribed drug because of cost. The key to avoiding this? Checking the formulary before you hit send.
What Exactly Is a Formulary?
A formulary, also called a Preferred Drug List (PDL), is the official list of medications your patient’s insurance plan covers. It’s not random. Every drug on it has been reviewed by a committee of doctors and pharmacists who weigh clinical evidence, safety, and price. The goal? To make sure patients get effective treatment without unnecessary spending. These lists aren’t static. They change. Medicare Part D plans update theirs quarterly-January, April, July, October-and can make mid-year changes with 60 days’ notice. A drug that was Tier 1 last month could be Tier 4 next month. If you’re prescribing Januvia, for example, one plan might list it as preferred (Tier 3), another as non-preferred (Tier 4), and a third might require step therapy first. You can’t assume. You have to check.How Formularies Are Structured (The Tier System)
Most formularies use a tier system. The lower the tier, the less the patient pays. Here’s how it typically breaks down in Medicare Part D plans:- Tier 1: Preferred generics-usually $1 to $5 per prescription. Think metformin, lisinopril, atorvastatin.
- Tier 2: Other generics-slightly higher cost, maybe $10-$15.
- Tier 3: Preferred brand-name drugs-often $30-$50. These are drugs with proven effectiveness and good value.
- Tier 4: Non-preferred brands-$50 to $100+. These are often newer or more expensive drugs with little cost advantage.
- Tier 5: Specialty drugs-anything over $950/month. These require coinsurance (e.g., 33% of cost) and often prior authorization.
What Those Letters Mean: PA, ST, QL
Don’t just look at the tier. Look at the symbols next to the drug:- PA (Prior Authorization): You need to call or submit paperwork before the plan will cover it. This can take 24 to 72 hours. For cancer drugs, delays of over 48 hours happen in 32% of cases.
- ST (Step Therapy): The patient must try and fail on a cheaper drug first. For example, you want to start a patient on Ozempic, but the plan requires them to try metformin and then sitagliptin first.
- QL (Quantity Limit): You can only prescribe a certain amount per month. A 90-day supply might be blocked unless you justify it.
Where to Check Formularies (And How to Do It Fast)
You have three main ways to check:- Insurer’s website: Most major insurers-Aetna, UnitedHealthcare, Humana-have a drug search tool. You enter the drug name, the patient’s plan name, and sometimes their zip code. Aetna’s tool was rated “very helpful” by 74% of providers in a 2024 survey.
- EHR-integrated tools: If your clinic uses Epic, Cerner, or another major system, check if they’ve enabled the Formulary Check module. Northwestern Medicine cut prescription abandonment by 42% after implementing this in 2023.
- CMS Plan Finder: For Medicare patients, this free tool covers 99.8% of Part D plans. You can search by drug, compare plans, and see tier status and restrictions.
Differences Between Medicare, Medicaid, and Commercial Plans
Not all formularies are created equal:- Medicare Part D: Always uses a five-tier system. Must cover at least two drugs per therapeutic category. Must offer exceptions and appeals.
- Medicaid: Varies by state. 42 states use closed formularies-meaning if a drug isn’t on the list, you need prior authorization just to request it. Minnesota, for example, has a single PDL for all Medicaid members.
- Commercial plans: Often use four tiers. Some don’t require prior authorization for brand drugs. Others have stricter quantity limits. UnitedHealthcare’s 2024 commercial formulary, for instance, doesn’t have a separate specialty tier like Medicare does.
What’s Changing in 2025 and Beyond
The Inflation Reduction Act’s $2,000 annual cap on out-of-pocket drug costs for Medicare starts in 2025. That’s already reshaping formularies. In 2025, 73% of Medicare Part D plans are moving more drugs to lower tiers to keep patients under the cap. Also, by January 1, 2026, all Medicare Part D plans must use Real-Time Benefit Tools (RTBT). That means when you type a drug into your EHR, the system will instantly show you the patient’s cost, tier, and any restrictions-no more logging into separate portals. Some health systems are even testing AI tools. Epic’s FormularyAI, launched in August 2024, predicts whether a prior authorization will be approved based on 10 million historical decisions-with 87% accuracy. It’s not perfect, but it cuts guesswork.Why This Isn’t Optional
A 2023 Sermo survey found that 68% of physicians spend 10 to 20 minutes per patient just verifying coverage. Primary care doctors spend nearly 19 minutes. That’s not administrative busywork-it’s part of prescribing. And the stakes are high. In 2024, 34% of physicians reported that prior authorization delays led to serious adverse events. A patient with diabetes who can’t get their insulin on time? A heart patient whose beta-blocker is denied? These aren’t abstract risks. They’re preventable. You don’t need to be a pharmacy expert. But you do need to treat formulary checks like you treat allergies or drug interactions. It’s part of the prescription.What You Can Do Today
Here’s your action plan:- Identify your top 10 most-prescribed drugs. Check their tier and restrictions on the top three insurers in your area.
- Bookmark the formulary pages. Save direct links to Aetna, UnitedHealthcare, and Medicare Plan Finder.
- Set quarterly reminders. Formularies change. Mark your calendar for January 1, April 1, July 1, and October 1.
- Ask your EHR vendor. Do you have a formulary checker? If not, push for it.
- Train your staff. Have a medical assistant run a quick formulary check before the patient sees you.
What’s the difference between a formulary and a preferred drug list?
They’re the same thing. "Formulary" is the industry term used by insurers and pharmacy benefit managers. "Preferred Drug List" (PDL) is often used by Medicaid programs and government agencies. Both refer to the list of drugs covered by a health plan, organized by cost tiers and usage rules.
Can I prescribe a drug that’s not on the formulary?
Yes, but the patient will likely pay full price unless you request an exception. For Medicare Part D, you can submit a prior authorization request with clinical justification. The insurer must respond within 72 hours (or 24 hours for urgent cases). For Medicaid, it’s harder-many states have closed formularies, meaning non-listed drugs are rarely covered without a complex appeal.
How often do formularies change?
Medicare Part D plans update their formularies quarterly-in January, April, July, and October. They can also make mid-year changes, but they must notify patients and providers 60 days in advance. Commercial insurers vary, but most update at least once a year. Always check before prescribing, even if you prescribed the same drug last month.
Why do two plans cover the same drug at different tiers?
Each insurer negotiates separately with drug manufacturers. One plan might get a better rebate on a brand-name drug, so they put it in Tier 3. Another plan might not have that deal, so they put it in Tier 4. It’s not about clinical value-it’s about price negotiations. That’s why checking the specific plan matters.
Is there a free tool to check Medicare formularies?
Yes. The Medicare Plan Finder on Medicare.gov is free, official, and covers nearly all Part D plans. You can search by drug name, compare multiple plans side-by-side, and see exact costs, tiers, and restrictions. It’s the most reliable source for Medicare patients.
What should I do if a patient can’t afford their prescribed drug?
First, check if there’s a lower-tier alternative on the formulary. If not, submit a prior authorization request with clinical justification. Many insurers have patient assistance programs-ask the pharmacy or call the insurer’s provider line. For Medicare patients, the $2,000 out-of-pocket cap in 2025 will help, but until then, don’t assume cost isn’t a barrier. Always ask: "Can you afford this?"
