Prescription drug costs, types, and tiers can be complex. Learn what goes into prescription medications and their costs.
Prescription drug costs can vary widely, even for medications that treat the same condition. Many people assume the lowest-cost medication is always the best option, but prescription drug costs can be influenced by several factors.
- Type of drug
- Your health plan's coverage
- Your formulary
- The drug's tier
Understanding how prescription drug coverage works can help you make informed decisions about your medications and identify opportunities to save money.
Most healthy people who have insurance, including Blue Cross and Blue Shield of North Carolina (Blue Cross NC) members, have a drug plan that covers prescriptions from the pharmacy. If you're taking medications or will be soon, it's important to understand how drug costs work and where you might save money. There are three different drug categories: brand-name, generic, and specialty.
Generic drugs have the same active ingredients as brand-name drugs and have received FDA approval. They can have a different shape, size, and color than the brand name drug, but they are just as safe and effective. In most cases, generics cost less than brand-name drugs. However, your out-of-pocket cost depends on factors like your plan's formulary and drug tier.
Brand-name drugs are the original version of a medication made by the manufacturer. For example, Tylenol® is the brand-name for acetaminophen. Brand-name drugs tend to be more expensive than their generic alternatives. Brand-name drugs may not be fully covered by insurance if there is a generic version available.
Specialty drugs treat complex, rare, or chronic conditions. Many of these drugs are injectable medications or have special administration requirements. These medicines tend to cost more than others and are only sold at specialty pharmacies. You should check your plan for your in-network specialty pharmacy options.
Your health plan includes a list of covered medicines called a formulary. Within your formulary, medications are put into categories called tiers.
Your prescription drugs could be in one of the four-tier, five-tier, or six-tier formularies. These tiers are based on drug usage, cost, and clinical effectiveness. This helps determine how much you may have to pay for your medicine.
While generic drugs are often the most affordable option, the lowest-cost choice will depend on your health plan's formulary and tier placement. In some cases, a brand-name drug may be covered at a similar cost to a generic one.
If you're a Blue Cross NC member, you can use our Find Care tool to search for a drug within your specific formulary.
- Tier 1: Lowest-cost tier – Most are generic.
- Tier 2: Medium-cost tier – Most are generic, and some are brand name.
- Tier 3: Higher-cost tier – Most are brand name, and some are specialty.
- Tier 4: Highest-cost tier – Most are specialty.
- Tier 1: Lowest-cost tier – Most are generic.
- Tier 2: Medium-cost tier – Most are generic, and some are brand name.
- Tier 3: High-cost tier – Most are brand name.
- Tier 4: Higher-cost tier – Most are brand name, and some are specialty drugs.
- Tier 5: Highest-cost tier – Most are specialty.
- Tier 1: Lowest-cost tier – Most are generic.
- Tier 2: Medium-cost tier – Most are generic, and some are brand name.
- Tier 3: High-cost tier – Most are brand name.
- Tier 4: Higher-cost prescription drugs – Most are brand name, and some are specialty.
- Tier 5: Some of the highest-cost tier – Most are specialty.
- Tier 6: Highest-cost tier – Most are specialty.
There are several ways to help lower your prescription drug costs. The best option depends on your medication, your health plan, and your treatment needs. Talk with your provider and review your plan's formulary to understand your options.
If you're concerned about prescription costs, ask your provider about all available treatment options. Depending on your condition and your health plan's formulary, a generic drug, brand-name drug, or therapeutic alternative may be the most cost-effective choice.
Your formulary and drug tier placement play an important role in determining what you'll pay for a medication. While generic drugs are often the most affordable option, costs can vary based on your plan's coverage. Reviewing your formulary can help you understand your options before filling a prescription.
Preventive drugs1 are drugs that help prevent disease or other health conditions – think vaccines to prevent flu or iron supplements to prevent iron deficiency anemia.
Most health plans, including Blue Cross NC plans, have an Affordable Care Act preventive drug benefit. This means these medications are available to you at no additional cost or at a reduced cost.
In addition to preventive drugs, which are covered under all prescription drug plans, some plans with Health Savings Accounts (HSAs)2 provide additional preventive coverage of drugs for certain chronic conditions.
The HSA preventive benefit enhancement is available on specific high-deductible health plans. This benefit waives the deductible for preventive drugs for certain chronic conditions.
If there's a medical reason you need a brand-name medication, have your provider follow the steps to get prior authorization for brand-name prescription drugs.
If you are a Blue Cross NC member, all the information your provider needs can be found on our Provider's Prior Authorization for Prescription Drugs page, including any forms they may need to fill out and submit.
Medications not included in your formulary are called non-formulary drugs. If your doctor prescribes a medication that isn't covered on your formulary, he or she will have to fill out a form to request a non-formulary medicine for you.
Get reliable answers to your insurance questions, such as how to get prior authorization and submitting a claim.
Blue Cross and Blue Shield of North Carolina does not discriminate on the basis of race, color, national origin, sex, age or disability in its health programs and activities. Learn more about our non-discrimination policy and no-cost services available to you.
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