#1 Know your formulary
A formulary is a list of drugs that are either covered or not covered by your health plan or insurance company. You want to be on drugs that are “on formulary” of your health plan as often as possible.
Within the designation of on formulary some drugs will be more preferred than others. The more preferred the drug the less both you and your insurance company will have to pay for it. This presents to you as a lower copay or less coinsurance amount.
Medicare requires plans to cover at least two drugs in a therapeutic category. That means two different drugs that works in a similar way and are used for the same disease, such as high blood pressure. Most non Medicare plans will have two drugs per therapeutic category as well.
Certain drugs will be non formulary, which means they are not the cheapest option for you or your insurance. These drugs will have a higher cost to you.
Another group of drugs will be excluded from your formulary. For purposes of Medicare these would be drugs for things such as weight loss or cosmetic uses.
Other insurance companies may choose to also excluded drugs that are high cost and not as effective as other drugs on the market. For excluded drugs you will be expected to pay the full out of pocket cost of the drug.
In certain cases a drug may be on formulary or non formulary and have special coverage rules. These rules may require:
- Your doctor obtain a prior authorization so the drug is covered
- Limit the quantity of the drug you can obtain
- Require that you have tried another drug in the same class before you can take the one you were just prescribed
- Make you use a particular pharmacy to fill the medication
Your formulary may change over time, even if you have the same insurance. You want to make sure that you pay attention to mail or emails from your health plan about these changes as they could result in major changes to your out of pocket costs. If a drug you take has a change in formulary, you need to talk to your doctor to see if other options are available.
Generic drugs are the name that is usually hard to pronounce that is next to the brand name.
Example: Nexium (esomeprazole)
Esomeprazole is the generic in this example.
This is the name that was given to the brand name drug as it came through the FDA clinical trial process. It is the exact same chemical, only a generic is made by a different manufacturer from the original brand product.
Most people have heard that generic drugs can provide a cost savings. However, most don’t realize how significant the savings can be.
Are generics as good as the brand?
The FDA makes all manufacturers of human drugs follow a process called Current Good Manufacturing Practice (CGMP). CGMP means that the drug is made in a safe manner, in a sterile environment and has the ingredients it claims to contain on the label.
For any drug to become an approved generic it must meet these FDA requirements for CGMP, the very same way a brand drug is tested.
How do I know the drug will work?
The FDA confirms that generic drugs work like brands. They do this with a 2 letter system.
- First letter: A rated = The FDA considers this to be therapeutically equivalent (works the same) to the brand.
- Second letter: B rated = The FDA considers this to be bioequivalent (distributed in the body the same way).
These big words just mean that the drug will have the same clinical effects in the body as the brand drug it was compared to. If the drug is AB rated, your pharmacist can give you the generic.
How to save money
When your doctor decides to write a prescription for you, the first thing you should ask before you leave the office is if that drug is generically available? If not, have the conversation with your doctor that you are looking to save money on medication and you need their help.
If you are already on a drug and want to know it if is generic, you can do one of the following:
- Call your pharmacist and ask
- Google the drug name and the word generic
Some formularies will have set the most preferred level of copay for generic drugs. The copays will typically go up from there.
#3 Best Copay Tier
When you have insurance one of the best ways to understand how to save cash is to understand drug copay tiers.
Tiers are just like they sound, a way to break drugs into different levels based on how much they cost. Your insurer will create a list of tiers that you can find in insurance enrollment information or online via their website. If your health plan uses a pharmacy benefit manager (PBM) their website may also have this information.
Today it is common to see health insurers with 4, 5 or even 6 or more tiers. See the table showing how the tiers can differ below.
|Tier #||What is Included||Cost to you|
|1||Preferred generic– Generics with more than |
one manufacturer and more competition
|2||Generics- New generics or generics with |
only one manufacturer
|3||Preferred Brand – Brand that gives best deal |
to your health insurance
|4||Non preferred Brand – Brand that doesn’t |
have a deal with your health insurance
|5||Non formulary – Brands that may require |
extra authorizations before insurance will pay
|6||Specialty – Very high cost, high touch point |
Don’t forget about your deductible
Do you have a health plan that has a deductible or high deductible health plan? If so, keep in mind that you will have to meet the deductible first.
What that means is you will pay full drug price until the deductible is met. Once that happens you will pay the copay or a coinsurance only.
It makes sense to keep the drugs you use in the lowest tiers to spend the least money over the course of the year.
#4 Mail Order Pharmacy
Mail order pharmacies will almost always be offered through your insurer today. They will want you to use the mail order as it helps them be more profitable and typically saves you on copay costs.
In fact some pharmacy benefit managers (PBM’s) will actually force you to get your drugs filled by their pharmacy. If your drug is tagged as a maintenance medication (one you take on an ongoing basis) you may have to fill at mail order or face a penalty. The PBM will usually allow you to fill the medication once or twice at your retail pharmacy and then on fill three if you don’t fill at mail they will charge you more.
Mail order pharmacies that are owned by your PBM are different than just an online pharmacy. PBM owned mail orders are fully staffed with licensed pharmacist and follow all of the pharmacy laws that are required by federal or state governments. They have technology and automation to fill scripts efficiently and with very low error rates. They will be much less likely to make a dispensing error than a retail pharmacy overall.
How to I sign up?
Signing up for mail order is normally done by asking your doctor to send the electronic prescription to your mail order. They will know which one based on your insurance or it will be kept in their electronic medical record they keep on you.
After you are signed up, you will receive instructions on how to access the website or mobile app and a phone number to call the PBM. You can request refills online.
How long does it take to get my drugs?
Normally you will receive mail order prescriptions in just a few days, but be aware that it can take up to two weeks. You should plan on having the doctor either give you samples to get you through until you receive the mail order prescription or ask for a short retail prescription.
Your doctor can write for a 14 or 30 day supply at a retail store you can go pick the drug up from while you wait on the mail order.
How much will I save?
Many times the copays for a 90 day supply at mail order will be the same or just a little more than for a 30 day supply at retail. That is a 33% savings right there! Also, shipping is typically free.
If you like the concept of Amazon where they deliver things to you so you don’t have to run another errand then mail order is a no brainer.
Some patients are skeptical and still like to talk to a pharmacist that you know and trust. If that is you, then you should get a first fill of the medication at that retail store. Then talk to your pharmacist and see if they are able to do a 90 day supply themselves through the PBM.
These are new programs many PBM’s have implemented called 90 day retail. That can end up giving you the savings but still allowing you to fill the medication the way you prefer.
Drugs come in different forms. Many times the same medication might exist as a tablet, cream, suppository and or injection. Knowing to ask about different forms of a drug can provide savings for certain medications.
- Chewable tablets Amoxicillin 250mg #60 Cost $20.15
- Tablets Amoxicillin 500mg #30 Cost $3.88
- Suspension Amoxicillin 400mg/ml #2 bottles Cost $10.00
As you can see knowing about the different form can provide you a big cost savings.
Other drugs might have completely different routes of administration. Meaning you don’t take them all by mouth.
Flector (diclofenac) 1.3% patch #30 Cost $337.10
Diclofenac 75mg tablets #60 Cost $6.00
Not only do you save on Flector because of the dosage form, but also because there is no generic for the patch. However, the tablets do have a generic, so you get maximum savings.
Creams and ointments
Creams and ointments come in different sizes. If you have a high deductible and only need a small amount of the cream don’t let them fill the script for a huge 60 gram or larger tube. Ask for the smallest tube you can get.
This could work in the opposite direction as well. If you use a cream and it is a long term treatment, then get the largest tube you can get with your one copay to last as long as possible.
Other dosage form savings
There are many other dosage forms that can provide savings. These include items such as inhalations, eye drops, ear drops, sublingual, nasal, suppository and injection.
Since I can’t list out every savings option, the trick you need to remember is to ask your pharmacist. Make sure you ask “is there another dosage form or different route of administration that would work as well but cost less?”
Collaborate with your Pharmacist
Most people do not realize that your pharmacist is the best free resource you have for medication savings ideas. With our without insurance they can help you find the best deal.
They are also the one who can make sure when you ask your doctor to change a medication to save money that you ask the right questions. Make sure you talk to your pharmacist on the phone or at the store to prepare yourself to talk to your doctor.
Have a Plan to talk to your Doctor
Now that you know what to do in order to save on your medications, there is one thing left to do. Call and ask to talk to your doctor or schedule a visit to talk through your medication. Explain to them that you need their help to save money on your medicine.
If you explain to them that you will be more likely to take your medication if you can afford it, they will be happy to help. Remember doctors do not know what the cost of the medication will be for you when they prescribe it.
Very often when asked to change to a lower cost option, doctors are happy to do so. As long as the drug will provide the desired effects for their patients.
For more step by step, actionable advice check out, 7 Easy Ways How to Save Money on Drugs and 5 Top Reasons to Bullet Journaling Medication Effects.