Drugs and medications that by law require a prescription from a physician or other licensed health care professional.
Prescription Drug Words and Terms:
- Brand/Brand Name: A brand drug, protected by a patent, which has a trade name. It can only be produced by the company holding the patent.
- Coverage: Prescription drug coverage is health insurance that pays for prescriptions drugs and medications.
- Formulary/Formulary List: A drug formulary is a list of prescription drugs, both generic and brand name, which are covered under each health plan. Your doctor and other health care professionals will use your plan’s formulary to identify those drugs likely to be most effective in treating your health care conditions. Your plan’s Evidence of Coverage or Policy/Certificate of Insurance will specify your plan, which will help you find the related formulary. (A formulary is often referred to as a “drug list” for your plan.) Some health plans offer a formulary look-up feature on their websites.
- Generic: A generic drug is a medication created to be the same as an already-marketed brand-name drug in dosage, safety, strength, administration, quality, performance, and intended use. In most cases, a generic drug becomes available after the patent owned by the original developer expires.
- Mail Order: An online pharmacy, Internet pharmacy, or mail-order pharmacy is a pharmacy that operates online/over the Internet and sends the orders to customers through the mail or other provider, such as UPS, FedEx, or other delivery services.
- Non-Formulary: A prescription that is not on a health plan’s or insurance company’s list of preferred drugs. Non-formulary drugs are more costly for patients.
- Specialty Drugs: Specialty drugs are higher-cost medications used to treat complex, chronic conditions like cancer, rheumatoid arthritis, multiple sclerosis, and others. Specialty drugs often require special handling (such as refrigeration during shipment) and administration, such as injection or infusion.
- Retail Pharmacy: A pharmacy in which drugs are sold directly to patients, in contrast to a hospital pharmacy.
- Tier 1, 2, 3, 4 Drugs: Drugs on a formulary are typically grouped by tiers. The tier a medication is in determines the patient cost for the drug. A typical drug benefit includes three or four tiers.
- Tier 1: Usually includes generic medications.
- Tier 2: Usually includes preferred or brand-name medications.
- Tier 3: Usually includes non-preferred brand-name medications.
- Tier 4: Usually includes medications (3-Tier programs do not have a unique tier for specialty medications)
A medication may be placed in Tier 3 or 4 because it is new and not yet proven safe or effective, or when there is a similar drug on the lower tier of the insurer/health plan formulary that may provide the same benefits to a patient, but at a lower cost.
Notes: Federally qualified High Deductible Health Plans (HDHPs) do not have a tiered drug benefit; your pharmacy and medical expenses are subject to your HDHP deductible and coinsurance. Sometimes the active ingredients in a generic drug are chemically identical to brand-name counterparts. When the FDA-approved generic is available, a health plan may limit coverage to the generic, and a pharmacist will dispense the generic medication.