What is the difference between a formulary and a preferred drug list?

A formulary and a preferred drug list are concepts often used interchangeably, but they have distinct characteristics in the context of prescription drug coverage. A formulary is a comprehensive list of prescription medications that an insurance plan, such as AARP - MedicareRxPlan, covers. This list is created to help manage costs and ensure that members have access to necessary and effective medications. It typically categorizes drugs into tiers, with varying levels of coverage and costs, which can influence a member's out-of-pocket expenses. On the other hand, a preferred drug list is a subset of the overall formulary. This list specifically highlights medications that are favored by the plan, often because they are less expensive, effective, or both. Drugs on the preferred list usually have lower copayments or coinsurance when compared to non-preferred drugs, which may be included in the formulary but are subject to higher out-of-pocket costs. In summary, while both the formulary and the preferred drug list aim to provide access to necessary medications, the formulary includes all covered drugs, while the preferred drug list highlights those with more favorable cost-sharing structures. For further details, it may be helpful to visit the AARP - MedicareRxPlan website.