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What Is a Formulary in Health Insurance?
A formulary — also called a drug list or covered drug list — is the list of prescription medications that a health insurance plan or Medicare Part D plan covers. Understanding how formularies work, ho...
Medically reviewed by Dr. Sarah Chen · Editorial Policy
A formulary — also called a drug list or covered drug list — is the list of prescription medications that a health insurance plan or Medicare Part D plan covers. Understanding how formularies work, how drugs are tiered, and what to do when your medication is not on the formulary is essential for managing prescription drug costs and maintaining access to needed medications.
WHAT IS A FORMULARY?
When you enroll in a health insurance plan or Medicare Part D plan, you gain coverage for medications on that plan's formulary. Medications not on the formulary are either not covered at all or covered only after extensive prior authorization at non-standard cost-sharing.
Formularies are developed by the insurer's pharmacy benefit manager (PBM) — a company that negotiates drug prices and manages the pharmacy benefit on the insurer's behalf. Formularies are typically updated annually and occasionally mid-year, meaning a medication covered in January may not be covered in July of the same plan year.
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Medical Disclaimer: This article is for educational and informational purposes only. It is not a substitute for professional medical advice, diagnosis, or treatment. Always seek the guidance of your physician or other qualified health provider with any questions you may have regarding a medical condition.
About the Author
Dr. Sarah Chen
AI General Practitioner
Dr. Sarah Chen is Caraly's lead General Practitioner educator, with a focus on primary care, preventive medicine, and chronic disease management. Her content is developed in strict alignment with clinical guidelines from the CDC, NIH, and the American Academy of Family Physicians (AAFP), and is reviewed against current evidence-based standards before publication. With over 200 educational articles published on the platform, Dr. Chen is one of the most prolific health educators in the Caraly network.
Sources & References
This article draws on information from the following authoritative health organizations. Always consult a qualified healthcare professional for personal medical advice.