Understanding Medicare Part D – Prescriptions Drug Plans
Laying a Solid Foundation | Lesson 3

Formularies & Covered Drugs

Each Part D plan creates what is known as a formulary for their plan.

A formulary is a list of prescription drugs the Part D plan will cover.

In general, Medicare Part D plans cover prescription drugs, biologics, insulin, medical supplies associated with the injection of insulin, and certain vaccines.

However, many Part D plans do not cover all of these drugs, because in some cases, several similar drugs are available to treat the same medical condition.

Medicare Part D plans are required to cover at least two drugs in a therapeutic category.

They must also include coverage for both generic and brand-name drugs.

Inside the Part D Plan formulary, prescription drugs are organized into different cost levels called “tiers.”

Each tier has a different cost, and a drug on a lower tier will generally cost less than a drug on a higher tier.

Some drugs aren’t permitted to be included under Part D covered benefits.

For example, weight-loss drugs, vitamins, non-prescription drugs, and drugs that are covered under Part A and B.

Medicare Part D plans use several drug benefit management tools, such as Prior Authorization, Step Therapy, and Substitution.

These are important to be aware of because they could affect your clients’ access to their prescriptions.

I’ll define what these terms mean here, but for the full information on how these tools work, visit the link to Medicare’s drug coverage rules in the resources for this module.

We’ll start off with Prior Authorization.

Your client or their prescriber must contact the Medicare Part D plan before filling certain prescriptions.

Step Therapy is a type of prior authorization.

A beneficiary must try a certain, less expensive drug on the plan’s formulary that has been proven effective for others with the same condition before they can step up to a more expensive drug.

Substitution is when a Medicare Part D plan covers a drug only for the certain medical conditions it is approved for and not off-label use.

The plan will likely have a list of alternative drugs that can be substituted for the medication that is not on the formulary for that particular condition.

Formularies vary from one PDP to another, and from what’s covered to how it’s covered.

We’ll have the link to that resource we mentioned in the notes at the end of this module for more information.

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