What Happens When a Medication Is Not on the Formulary?

Navigating your health insurance plan’s prescription drug coverage can be a challenge, especially when you have to deal with non-formulary drugs, which refer to medications that aren’t included on your plan’s list of covered prescription drugs. Understanding the role of formularies, non-formulary drugs, and what to do when a medication is not on the formulary plays an important role in helping you get necessary medications at an affordable price. In this post, we will walk you through what a non-formulary drug is, why some medications are excluded from prescription drug lists, and what you can do if you need a drug that is not covered by your plan’s formulary.   

What is a Formulary?

A formulary, also known as a prescription drug list, is essentially a list of prescription medications, organized into prescription drug tiers, that your health insurance plan covers. This list includes both brand name and generic drugs, and is designed to ensure that you have access to a wide range of medications while keeping your out-of-pocket costs low.

Health insurance companies use formularies to manage prescription drug costs with the goal of offering affordable, effective treatment options without compromising on care and quality. When medications are placed on the formulary, it means they have been reviewed and vetted by doctors, pharmacists, and medical professionals for their safety, effectiveness, and cost-efficiency.

Why Formularies are Important

Formularies serve as a critical tool for health insurers to manage prescription drug costs while making sure patients have access to a wide range of treatments. They serve as a classification system for PBMs (Pharmacy Benefits Managers) and insurance providers to categorize medications based on safety, efficacy, cost, and coverage. They can influence a number of outcomes including out-of-pocket costs, access, and even patient behavior.

It is important to know that not every drug is included in a formulary. There are instances where a medication might be excluded for a number of reasons. These are known as non-formulary drugs.

What is a Non-formulary Drug?

A non-formulary drug refers to any medication that isn’t included on your health insurance plan’s formulary. These drugs are oftentimes not covered meaning that you will likely have to pay the full price unless you take steps to request coverage. Non-formulary drugs often include high cost brand-name medications where alternatives are available, but can also include over-the-counter drugs, kits, non-FDA approved and experimental treatments, 

Here are a few common reasons why some drugs are left off the formulary:

• A Generic or Biosimilar Version Exists: If a generic or biosimilar version of the medication is available, its brand-name counterpart might be excluded to encourage the use of more affordable and equally effective alternatives.
• Effectiveness: If a drug has been shown to be less effective than similar medications on the formulary, it may be excluded.
• Experimental or New Drugs: Medications that are still undergoing clinical trials and have not yet been reviewed and approved may not be included yet.
• Cost: Drugs that are significantly more expensive than other equally effective options may be excluded.

While it can be frustrating to discover that you have been prescribed a non-formulary drug, it’s important to understand that there are steps you can take to get access to necessary medications d without paying high out-of-pocket costs and/or experiencing unnecessary delays.

What to Do if Your Medication is Not on a Formulary

If your doctor prescribes a medication that is not on your insurance plan’s formulary, don’t worry. The first step is to work with your provider or reach out to your insurance company. They can help review the formulary and suggest alternative medications that are covered. Insurance plans usually offer various options within each drug tier, so there may be a viable alternative. Staying within the formulary also helps you stay compliant with your plan’s rules and rebate programs.

In the case that none of the covered options are a good fit, there is still a process in place to request coverage for non-formulary drugs, known as a formulary exception.

What is a Formulary Exception?

A formulary exception is a request to your insurance company to cover a non-formulary drug. This request is typically initiated by your provider, who will provide supporting documentation, accompanied by a letter of medical necessity (LMN), to explain why the requested medication is necessary for your treatment. LMNs are reviewed by a pharmacist and it is common that a PBM will review them on behalf of the plan sponsor. 

The process for requesting or filing a formulary exception can vary by insurance company, but in most cases involves providing medical justification, including your health history, the drug’s effectiveness, and reasons why the covered alternatives on the formulary may not work for you.

Common reasons for formulary exceptions include:

• Medical Necessity: The prescribed is necessary for treatment and there are no formulary alternatives as safe or effective.
• Step Therapy: Your plan may require you to try a less expensive drug such as a generic or biosimilar before approving a more costly non-formulary drug. If step therapy proves ineffective or causes side effects, your doctor can request a formulary exception.
• Off-label use: If a medication is prescribed for an off-label use, meaning it's not FDA approved for that specific condition, your doctor may request a formulary exception. In this case, studies or clinical evidence showing the drug’s effectiveness for that condition can be submitted to support the request.

Steps to Take for a Formulary Exception:

1. Talk to Your Doctor: Discuss the covered options with your doctor. If they believe that the non-formulary drug is necessary for treatment, they can help initiate the formulary exception process.
2. Gather Supporting Documents: Your doctor will need to provide detailed information, including medical records, previous treatments, and reasons why the non-formulary drug is medically necessary.
3. Submit the Request: Once the documentation is ready, your doctor will submit the formulary exception request to your insurance company.
4. Appeal If Denied: If the request is denied, work with your provider to review why the decision was denied. If not all supporting documentation was provided or if there is anything else needed there is an appeal process that your provider can help you with.

Factors to Consider When Your Provider Submits a Formulary Exception

After submitting a request for a formulary exception, the next step is to wait for the insurance company to review the documentation and make a decision.  If approved, your prescription will be covered, but if denied, you may have the option to appeal the decision after discussing with your provider. This process can take some time, so it is important to understand what factors might influence the decision. 

Save on Prescription Drug Costs with SmithRx

Understanding your health insurance plan’s formulary and how non-formulary drugs fit into the coverage process is crucial for understanding your prescription costs. Non-formulary drugs, which refer to drugs not covered by your insurance plan, may require you to take special steps to have them covered. If your doctor prescribes a non-formulary medication, they can submit a formulary exception to your insurer, explaining why the drug is necessary for your treatment if you have tried the covered alternatives. Factors like medical necessity, failure of covered alternatives, and supporting evidence, can help strengthen your request. If your request is denied, you and your provider may have the option to appeal if it’s truly medically necessary, ensuring you receive the necessary medication at the most affordable cost.

At SmithRx, we’re dedicated to helping you navigate the complexities of prescription drug coverage. As a transparent, modern PBM, we partner with HR teams and brokers to make sure companies are giving their employees access to affordable medications. Whether you are dealing with non-formulary drugs or just looking to save on prescriptions, SmithRx can help.

‍Speak with a SmithRx representative to learn more about formularies, non-formulary drugs, and how we can help you access the low-cost prescriptions and save money.