Here is information from a recent issue of MEDICARE NEWS GROUP:
What Are Formulary Tiers?
“A formulary is a list of drugs covered by a prescription drug plan. Many prescription drug plans, including those sold by standalone Medicare Part D prescription drug plans and Medicare Advantage (Part C) plans with drug coverage, must decide which drugs to include on their formularies.
One of the methods drug plans use to control costs is to divide drugs into tiers and to incentivize the use of drugs in their preferred lower-cost tiers. Generally, drugs on lower tiers are the least expensive and have the smallest beneficiary out-of-pocket costs, while drugs on higher tiers require the largest co-payments.
The lower tiers often consist of less-expensive generic drugs while the higher tiers, conversely, feature either unique or high-cost drugs.
Tiers can be tied to the amount of the co-payment or to rules such as prior authorization, which make the drugs harder to obtain.”