Are Medicare-Approved Drugs Tiered?


Quick Answer

Medicare prescription drug plans list covered drugs in tiers, which is a way of placing a class of drugs into a cost category. The lower the tier of a drug, the less expensive it will cost. Drugs in a higher tier will cost the subscriber more.

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Are Medicare-Approved Drugs Tiered?
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Full Answer

Medicare prescription plans are called Medicare Part D. It is the prescription drug benefit program that is designed to subsidize the cost of prescription drugs as well as prescription drug insurance premiums for Medicare beneficiaries.

Depending on the prescription insurance plan, some plans make changes to their formulary. A formulary is Medicare's list of covered drugs and the way in which they are categorized by cost. During the coverage year, a drug that was originally on one tier can change to a more or less costly drug at any time. It is required by the drug insurance company to provide written notice at least 60 days before the date of the change becomes effective.

Drugs on a higher tier have a higher co-pay. Brand drugs, drugs that are originally created by a particular pharmaceutical company and are patent protected, are on a higher tier. Once the patent has run out, usually after several years, the drug becomes eligible to be manufactured by other companies and is available to be made by other companies and is called a generic drug. Generic drugs are usually classified on a lower tier and cost less, even though they are required to contain the same active ingredients as the brand drug.

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