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How Much Will Your Prescription Drugs Cost You? Reading Prescription Drug Formularies

Since we often get questions from people who have health insurance who are confused about how much their prescription drugs cost them, today we though we’d put together a quick guide to figuring out the costs of your prescription drugs. We know it’s confusing to try to figure out all the co-pays and co-insurance for your drugs, and we won’t say it’s totally straightforward, but with a little time and patience, you can get a pretty good picture of what you’ll be spending on your prescription drugs in a given month.

You can find the co-pays or co-insurance for your prescription drugs in your health insurance plans prescription drug formulary. You should have received a copy of your prescription drug formulary when you signed up for your health insurance. You should also be able to find a copy on your health insurer’s website.

The prescription drug formulary will list your prescription drugs and their co-pays/co-insurance by “tier,” with Tier 1 drugs being the cheapest and Tier 4 drugs being the most expensive. Here is the rule of thumb on prescription drug tiers:

Tier 1 has the lowest co-payment and usually includes generic medications. Tier 1 co-pays will usually run between $10 and $25.

Tier 2 has a higher co-payment than tier 1 and usually includes cheaper brand name medications and more expensive generic drugs. Tier 2 co-pays usually run between $15 and $50.

Tier 3 drugs are generally the more expensive brand name drugs, and usually the ones your insurance company doesn’t want you to get a prescription for because their cost is higher. Tier III drugs will cost us even more than the lower tiers. Tier 3 copays usually cost between $25 to $75.

Tier 4 drugs are generally newly approved specialty drugs that are usually very expensive. Since they are so expensive, health insurers usually want both you and your doctor to think twice before you start using them regularly, so they’re generally set on a co-insurance scheme where the patient (you) ends up having to be responsible for 25% to 30% of the prescription drug’s cost. That may not sound so bad, but when you’re talking about drugs that cost thousands of dollars, the costs can add up really quickly.

And if you’re unconvinced about how much specialty drugs can cost you, we came across this example of specialty drug costs recently:

For Judy Ariba, one of the most harrowing moments in her battle against a rare form of leukemia occurred after she had already endured a long hospital stay and grueling chemotherapy: Her bill for a prescription cancer drug jumped from $10 to $1,700 a month.

“No one has $1,700 a month,” said Ariba, 63, of Siloam Springs, Ark. “I sat here and cried for a while, thinking ‘I’ve gone through all this, and now I will get sicker and die.’”

Ariba’s drug costs soared because her former employer, a Florida-based construction firm, switched to a new health plan that required her to shoulder 25% of the $6,800 monthly cost of Tretinoin, a drug for acute promyelocytic leukemia.

Ariba was caught in one of the most difficult issues facing employers and consumers who pay for health insurance: How to deal with an increasing number of expensive “specialty” drugs for conditions ranging from cancer to multiple sclerosis.

Specialty drugs offer hope, but can carry big price tags

Do you know how much your prescription drugs cost you? Tell us about it in our prescription drug forum!

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  3. TriCare Will Offer FREE Generic Drugs, Cuts Some Prescription Drug Co-Pays
  4. Retirement: Would Moving Across a State Line Help You Pay For Your Medicare and Prescription Drugs?
  5. UnitedHealth Group Announces $2 Generic Prescription Drugs in Medicare Plans

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