What is Tier Pricing With Prescription Medications?

LAS VEGAS - Jan. 13, 2023 - PRLog -- Have you ever wondered why the amount that you pay at the pharmacy counter varies so much depending on the prescription that you're filling? Generics, certain brand name prescription drugs and even some types of medications can all have wildly different coverages. In most cases, what you pay for a drug is dependent on your insurer's tier pricing.

What Are Drug Tiers?
Your health insurance company's formulary is a list of all the different drugs that their plans cover. Within the formulary, there are drug tiers. These tiers determine the level of coverage your prescription drug plan offers for a specific type of medication. Many prescription drug plans use a 4-tier system, while some insurers have an additional 5th or even 6th-tier system. Your insurer's formulary and tier system are available on the company website or in the documents you received when you enrolled in your prescription drug plan.

Why Is Tier Pricing Used?
The primary purpose of tier pricing is to help health insurance companies manage their costs. In most cases, the drugs listed on a plan's formulary are both effective and the most economically priced for treating a condition. To promote the use of generics or more cost-effective brand name drugs, health insurance companies may cover a larger portion of the costs for Tier 1 and Tier 2 drugs.

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