Prescription Drug Formulary Explained: Tiers, Drug Lists & How PBMs Manage Your Coverage
✍️ RxDiff Savings Team  |  Reviewed by Thomas Tang, PharmD  |  Last reviewed: July 2026

Prescription Drug Formulary Explained: Tiers, Drug Lists & How PBMs Manage Your Coverage

A formulary is the prescription-drug list used by a health plan. It identifies covered medicines and may show tiers, restrictions, and cost-sharing. Every plan maintains its own current list.

Use RxDiff to compare a current cash price for an exact prescription. RxDiff is free, requires no account or insurance, and is not a pharmacy or healthcare provider.

How formularies work

Plans group medicines into tiers or categories. A tier can affect a copay or coinsurance, but the amount depends on the plan, deductible, pharmacy, and other benefits. Lists and rules can change, so check the current version.

PBMs and coverage rules

A pharmacy benefit manager may administer benefits, process claims, negotiate with manufacturers, and maintain formulary information for a plan. Plans may also use prior authorization, quantity limits, or step therapy; requirements differ by plan.

When a drug is not listed

Ask the insurer whether an exception or appeal is available. Your prescriber can provide relevant clinical information, and a pharmacist can explain listed alternatives or a cash purchase. Discuss treatment decisions with your healthcare professional.

How to check your tier

Compare a current prescription cash price.

Search Drug Prices on RxDiff →

Frequently Asked Questions

What is a formulary?

It is a health plan's list of covered prescription medicines and related coverage rules.

What happens if my drug is not on the formulary?

Ask about an exception, appeal, a listed alternative, or the cash price. Your plan and prescriber can explain the available process.

What do PBMs do?

PBMs may administer pharmacy benefits, process claims, negotiate prices, and maintain formulary information.

What are drug tiers?

Tiers are plan categories that can affect cost-sharing. Names and amounts vary by plan.

What is step therapy?

It is a plan rule that may require trying another medicine before coverage of a requested medicine. Ask about exceptions if appropriate.

How do I find my medication's tier?

Check the current formulary, call member services, or ask your pharmacist.

Medical Disclaimer: This content is for informational purposes only and does not constitute medical or financial advice. Formulary coverage details vary by plan — always confirm with your insurer or pharmacist before making medication decisions. Use RxDiff to compare current drug prices in your area.

Related Prescription Savings Guides

Browse all prescription savings guides