What is a Preferred Drug List (PDL) or Drug Formulary?
A PDL is a list of medications arranged by therapeutic classes such as Allergy, Heart Disease, Gastrointestinal, Cholesterol Reduction, etc. PDL’s, often referred to as Formularies, are developed by Pharmacy and Therapeutics (P&T) committees comprised of pharmacists and practicing physicians. Medications for the PDL are selected based upon their safety, efficacy and cost-effectiveness. The committee reviews scientific literature, reports and clinical studies. They consult with other health care professionals and utilize expertise and experience from their practice to select medications with the greatest therapeutic value.

What are single-source brand drugs? How they compare with generics?
In addition to the therapeutic classes, another important factor is whether a drug product is a generic, single-source brand or a multi-source brand. When a medication is first introduced into the market, the original manufacturer, known as the innovator, is granted a patent. The innovator is the single (sole) source for the product and is allowed to market it – without competition – until the patent expires. The innovator generally prices this patent-protected single-source brand quite high in order to recover their research, development, and marketing costs. Once the patent expires, other manufacturers are free to produce the same product under its generic name. Generic medications must adhere to the same stringent FDA standards and regulations as the brand in order to qualify as a generic equivalent. In fact, the major pharmaceutical companies that develop brand products often own the generic equivalents. Generics offer greater cost-effectiveness, often costing 50% to 90% less than their brand counterparts.

Once competing generics are available, the original brand drug becomes known as a multi-source brand (M.S.B.) and generally costs significantly more than its generic counterparts. The innovator continues to market their product at its brand price, and periodically increases the brand price, even though more cost-effective generics are available. The cost difference between the price of the brand and the price of the generic represents a significant and unnecessary cost to health benefit plans and beneficiaries.

There are also significant differences in the cost-effectiveness of single-source brand drugs within the same therapeutic class. For instance, one single-source brand for the treatment of hypertension might cost 30% less than another. The medications are not the same, but their therapeutic action is the same. Their effectiveness in lowering blood pressure is comparable, and the safety and possible side effects are similar, but one is more cost-effective than the other.

How does the PDL affect me?
For those pharmacy benefit programs that incorporate a Three-Tier and Four-Tier Plan Design, your copay is determined by the PDL. Tier-1 and Tier-2 products are often referred to as preferred products. Generic medications offer the best opportunity for cost effective therapy and are therefore available at the lowest (Tier-1) copay. Both you and the health plan benefit from the use of generics when they are available. If the medication you need is not available generically, a single-source brand product may by the only effective medication. In this case, the more cost-effective single-source brand products are available at a mid-level (Tier-2) copay. The higher-cost single-source medications in the category are still available, but at the higher (Tier-3) copay.

Multi-source brand products (brands with generic competitors) are usually available, (depending upon your health plan) but at the variable (Fourth-Tier) copay. If you or your physician chooses to use a multi-source brand product, when an FDA approved generic is available, you pay the difference between the cost of the brand and the cost of the generic, in addition to the brand copay. Your health plan is responsible for the generic benefit and any difference is applied to the members copay.

How should I use the PDL?
Be an informed consumer. Using the PDL document, discuss your treatment options with your physician and pharmacist. Generic medications always offer the best value for both you and the health plan. All generics are available for the Tier-1 copay, whether listed on the PDL document or not.

Next to the generic medications, the best values are the Tier-2 brand medications listed on the PDL document. All Tier-2 medications are listed on your PDL in (all Caps) Capital letters. These medications are available for the lower Tier-2 brand copay. If you are taking a Tier-3 medication, ask your health professional if either a Tier-1 or Tier-2 product would be appropriate. If so, then both you and the health plan may benefit from the use of more cost-effective medication. If not, the health plan allows for the use of the Tier-3 medication, but at the higher copay. The PDL document lists some, but not all, of the single-source brand products that are Tier-3 copay. Single-source brand products not listed on the PDL document are Tier-3 copay. New medications on the market are Tier-3 until reviewed and classified at a quarterly meeting of the Pharmacy and Therapeutics (P&T) Committee.

Important
Coverage for any medications listed on the PDL document is subject to THE INDIVIDUAL PHARMACY BENEFIT PLAN. A specific drug or an entire category MAY be excluded from coverage under a particular pharmacy benefit plan. For instance, if Oral Contraceptives, as a category, are excluded from any pharmacy benefit plan, then even though they are listed on the PDL document, they would not be included or covered under that particular pharmacy benefit plan.

Will the PDL change?
Yes. The P&T Committee meets quarterly to consider adding and removing medications. Each month, as patents expire, some drugs become available generically for the first time. New medications may become available and other products are withdrawn from the market by the manufacturer or the FDA. After each P&T Committee meeting there is the possibility of revision of the PDL. When this happens, new PDL documents will be distributed.

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