Council on Aging Answers 2016 - 36

HEALTHCARE

COUNCIL ON AGING - ORANGE COUNTY

The Economics
of Pharmacies
and Prescriptions
n Bill Liu, PharmD., CGP

"How many times have you heard those dreaded
words at your pharmacy: "...Sorry, that drug is not covered by your insurance..."? The person at the pharmacy
counter may add some additional words, like: " ... the
drug is not on your insurance company's formulary..."
What Is A Formulary?
A formulary is much like a catalog. It contains the
names of all the medications covered by the insurance
company. Generally, a formulary will include one or
two drugs from each pharmacologic class of medicine.
A formulary will also place each covered medication
into one of several possible levels, called "Tiers". The
higher the Tier a drug is in, the more the insured's copay will be. For example, a drug in Tier One would most
likely be a generic version of a drug, where the insured's
36

Answers Guide 2016	

co-pay would be very low or even zero. A drug in Tier
Three would most likely be a drug that is only available
by brand name and hence the insured's co-pay would be
very high.
When a drug is not on the insurance company's formulary at any Tier, the insured will have several options.
Note however, that not all options will work. The first
option is to pay cash for the total price of the medication. This option always works, but is not the most palatable since the total price may be quite high. The second
option is to ask your pharmacy to call your prescriber
to see if another drug that is on the formulary, can be
substituted. A third option is to ask your pharmacy to
work with your prescriber to fill out and submit a "Prior
Authorization" form. This is a request to your insurance
company for "an exception" and to cover the medication involved. If approved, the insured may still have a
co-pay, the amount of which will depend on the insur-

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Table of Contents for the Digital Edition of Council on Aging Answers 2016

Contents
Council on Aging Answers 2016 - Intro
Council on Aging Answers 2016 - Cover1
Council on Aging Answers 2016 - Cover2
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