A non-formulary drug refers to any medication not included on a health insurance plan’s official list of covered prescriptions. Patients typically encounter this situation when a doctor prescribes a medication, and they find it is not covered, or covered at a much higher cost.
Understanding Drug Formularies
A drug formulary, or prescription drug list, is a comprehensive list of medications covered by a health insurance plan. These lists include generic and brand-name drugs, and their primary purpose is to manage prescription costs while ensuring access to effective treatments. A committee of medical professionals, including doctors and pharmacists, creates and updates the formulary, evaluating drugs based on safety, effectiveness, and cost-efficiency.
Formularies are structured into tiers, which affect a patient’s out-of-pocket costs. Lower tiers typically include preferred generics with minimal co-pays. Higher tiers involve non-preferred generics, preferred brands, non-preferred brands, or specialty drugs, each carrying progressively higher co-payments or co-insurance. This system encourages the use of more affordable, effective medications.
Reasons a Drug Might Be Non-Formulary
Several factors can lead to a drug being designated as non-formulary. A common reason is the availability of a cost-effective alternative, such as a generic or biosimilar version, that treats the same condition. Insurers may exclude a brand-name drug to encourage the use of these more affordable options.
Another factor is the high cost of a medication. Very expensive drugs, especially new ones without full long-term efficacy or cost-effectiveness evaluations, may be excluded to control plan expenses. Additionally, a drug might be non-formulary if the pharmaceutical company and insurer haven’t agreed on pricing, or due to safety concerns or limited evidence of its effectiveness compared to existing alternatives.
Immediate Impact of a Non-Formulary Drug
When a prescribed medication is non-formulary, the impact on the patient can be significant. The drug may not be covered, meaning the patient is responsible for the full retail price. Even with some coverage, the out-of-pocket cost will be substantially higher than for a formulary drug, often involving a larger co-pay or co-insurance.
This situation creates a financial burden, potentially leading to treatment delays or patients skipping doses if they cannot afford the medication. Patients often face the choice of paying the entire cost or discussing alternative, formulary-covered medications with their doctor. Forced medication changes can lead to patients discontinuing treatment or experiencing adverse events.
Seeking Coverage for Non-Formulary Drugs
Patients facing a non-formulary drug have several avenues to explore for coverage. The first step involves discussing the issue with their prescribing doctor. The doctor can assess if a suitable, equally effective alternative exists on the formulary.
If no suitable formulary alternative exists, the doctor can initiate a “formulary exception” or “prior authorization” request with the insurance company. This process requires the doctor to provide medical justification, often through a letter of medical necessity, explaining why the non-formulary drug is medically necessary. Justification might detail that formulary alternatives were ineffective, caused severe side effects, or are otherwise contraindicated.
If the initial request for coverage is denied, patients have the right to appeal the decision. The appeal process involves submitting additional documentation and a formal request for reconsideration to the insurance company. If the internal appeal is unsuccessful, an external review by an independent organization may be an option, depending on the insurance plan and state regulations. Additionally, some pharmaceutical companies offer patient assistance programs (PAPs) that provide financial aid or free medication to eligible individuals, especially those who are uninsured or underinsured.