What Is a Non-Formulary Brand?

Companies create brand names for their products to label and differentiate them from competition. Drug companies invest millions of dollars to convince you to ask your doctor for their brand by name. In some cases, there are perfectly good reasons you should do so, and, in others, there are not. As long as you have the funds and are willing to spend them, you can ask your doctor not to okay generic substitution, and she will most likely agree. On the other hand, if you want to get the highest value from your dollars, you will want to avoid non-formulary brand-name drugs.

Formulary

• Every prescription drug plan has a formulary. A formulary lists the prescription medications covered by a drug insurance plan and lets you know the amount of your copay for each medication.
  Insurance companies classify brand-name drugs not contained on their formularies as "non-formulary brand" drugs and put them in their formulary's top tier (see Tiered Formularies, below).
  You will pay more for a non-formulary drug. The tab could be its full cost, but more likely will be the difference between the cost of the available generic and the brand-name drug.

Brand-Name Drugs

• Pharmaceutical companies patent new drugs they bring to market. The patent, which prevents others from copying the drug, allows the company time to recoup some of its research and development costs without price competition. Insurance companies call those patented medicines "brand name" drugs.
  You usually can tell if a drug is a "brand" because its name will be a registered trademark and you will see the little "circle R" between its brand and its generic name.

Generics

• Eventually, patents expire, and competitors (or even the originating company) begin marketing significantly less expensive generic equivalents. Before a company can sell a generic drug, the Food and Drug Administration (FDA) must evaluate and approve its use. Generics approved by the FDA will create the same results as the brand named drug.

Tiered Formularies

• Most insurance companies organize their formularies into three tiers or levels.
  A tiered formulary offers its lowest copay for generic drugs, charges you a little more for brand-name drugs still under patent (that is, you have no option but to take them if you need them) and a lot more for what formularies call "non-preferred" drugs. Non-formulary brand named drugs fit into this category (most often, they are brand-name drugs you choose to purchase in spite of available generics), and new drugs whose cost is higher than alternative therapies (though these may eventually become tier two drugs).

Your Formulary

• Visit your health insurance company's website to see the medicines on its formulary or call them and ask for a copy of the formulary. Medicare requires that all the companies who provide Medicare Part D (prescription drug) coverage post their formularies on the Internet. Those few companies who do not offer Part D insurance usually will publish their formularies on the Internet as well.