What is the tier list for prescription drugs?

A prescription drug tier list (or drug formulary) is a system health insurance plans use to group medications by cost and coverage level, with lower tiers costing you less out-of-pocket.

Most insurance and Medicare Part D plans use a 3- to 5-tier structure:

• Tier 1 (Lowest Cost): Preferred generic drugs. These have the lowest copayments or coinsurance and are identical in safety and effectiveness to brand-name versions.
• Tier 2 (Low-to-Medium Cost): Non-preferred or standard generic drugs, and sometimes select low-cost brand-name medications.
• Tier 3 (Higher Cost): Preferred brand-name drugs. These are brand-name medications that the plan favors because of better clinical value or cost deals, though they usually cost more than generics.
• Tier 4 (High Cost): Non-preferred brand-name drugs (and expensive generics). These have higher copays or a percentage-based coinsurance because lower-cost alternatives exist.
• Tier 5 (Highest Cost): Specialty drugs. These include high-cost biologic or specialty medications used to treat complex or chronic conditions (like cancer or multiple sclerosis), usually paid via a percentage coinsurance.
• Tier 6 (Special/Varies): Zero-cost preventive medications or routine adult vaccines offered by select plans.

Drug tiers are cost-sharing categories used by health insurance plans and SmithRx to determine how much you pay out-of-pocket for prescription medications.

Lower tier numbers mean lower costs, while higher tiers represent brand-name or complex specialty drugs with higher copayments or coinsurance. Exact definitions vary by plan, but a standard 5-tier structure generally breaks down as follows:

Tier 1: Preferred Generic Drugs

• What it is: Commonly prescribed generic medications.
• Cost: Lowest copayment or out-of-pocket cost.
• Example: Basic generic blood pressure or cholesterol medications.

Tier 2: Non-Preferred or Standard Generics

• What it is: Other generic drugs that may cost slightly more than preferred generics.
• Cost: Low-to-moderate copayment.
• Example: Alternative generic formulations or slightly higher-cost generic drugs.

Tier 3: Preferred Brand-Name Drugs

• What it is: Brand-name drugs that the insurance plan favors because they do not have a direct generic equivalent or have favorable pricing contracts.
• Cost: Moderate-to-high copayment.
• Example: Brand-name medications for chronic conditions without a generic alternative.

Tier 4: Non-Preferred Brand-Name (and Some Generics)

• What it is: Brand-name or high-cost generic drugs that are not preferred by your plan. These often require prior authorization or step therapy.
• Cost: High copayment or coinsurance percentage.
• Example: Newer brand-name drugs that have cheaper alternatives in lower tiers.

Tier 5: Specialty Drugs

• What it is: High-cost, complex medications used to treat serious, chronic, or rare conditions like cancer or rheumatoid arthritis. They often require special handling or specialty pharmacies.
• Cost: Highest cost-sharing, usually paid as a percentage (coinsurance) rather than a flat copay.
• Example: Injectable biologics and specialized oncology treatments.

You can find your prescription's tier by checking your health insurance provider's online member portal or looking at your plan's official drug list (also called a formulary).

Ways to Find Your Drug Tier

• Check your online member account: Log into your insurance company's website or mobile app, go to the pharmacy or prescription benefits section, and use their drug lookup tool.
• Review the plan's formulary PDF: Search for your specific insurance plan name and "drug list" or "formulary" online, then look up your medication's name in the document's alphabetical index.
• Call member services: Call the phone number listed on the back of your insurance card and ask a representative to tell you the tier and copay for your specific medication.
• Ask your pharmacist: Call your local pharmacy, give them your insurance and medication details, and they can look up what tier your drug falls under.

What Drug Tiers Mean

Insurance plans split medications into categories called tiers, where lower tiers cost less out-of-pocket:

• Tier 1: Lowest cost, mostly generic drugs.
• Tier 2 / Tier 3: Medium cost, preferred or non-preferred brand-name drugs.
• Tier 4 / Tier 5: Highest cost, specialty medications for complex or chronic conditions.

Ozempic typically falls on Tier 3 (preferred brand) or Tier 4 (non-preferred brand/specialty) depending on your specific commercial insurance or Medicare Part D plan.

Insurance Tier Placement

• Tier 3 (Preferred Brand): Many insurance plans place Ozempic here, offering lower out-of-pocket copays.
• Tier 4 (Non-Preferred / Specialty): Other plans categorize it as a non-preferred or specialty drug, which results in higher cost-sharing or percentage-based coinsurance.
• Coverage Rules: Coverage generally applies only when prescribed for FDA-approved Type 2 diabetes and frequently requires prior authorization.

Medicare Part D drug plans use a tiered system where medications are grouped into levels based on cost and type, with lower tiers costing less.

Standard Medicare Drug Tiers

• Tier 1 (Preferred Generic): Lower-cost generic drugs and certain preventive vaccines. Typically has the lowest copay.
• Tier 2 (Non-Preferred Generic / Generic): Most other generic medications.
• Tier 3 (Preferred Brand): Preferred brand-name drugs and specific insulin products (capped at a maximum of $35 per month).
• Tier 4 (Non-Preferred Drug / Non-Preferred Brand): Non-preferred brand-name and high-cost generic drugs.
• Tier 5 (Specialty Tier): Unique, very high-cost, or specialty drugs (often exceeding $950 per month). This tier usually uses coinsurance (a percentage of the drug's cost) rather than a flat copay.

Key 2b26 Part D Cost Details

• Annual Out-of-Pocket Cap: Capped at $2,100 for all covered Part D drugs.
• Maximum Deductible: Up to $615 depending on your specific plan.