Insurance FAQs

Frequently Asked Questions

Prescription drug coverage is an essential component of your health insurance. Questions below are frequently asked by our customers:

Q:  What is a Copayment?

A:  A copayment is the set amount you pay for prescriptions out of your pocket. This amount is determined by your insurance plan, and typically dependent on number of days supplied, brand vs generic, and formularly/tiers (see below).

Q:  What is a Prior Authorization (PA)?

A:  In order for certain medications to be covered under your plan policy, the approval (“Prior Authorization”) must be received prior to medications being dispensed. The Prior Authorization review may include benefit verification and a clinical review to determine whether the medication is medically necessary.  Our pharmacy can initiate the PA process through your prescriber.  Your prescriber will be in contact with your insurance provider.  As a pharmacy, we have no access to the on-going PA process.  The approval decisions will be communicated to the Physician/Provider, and denial decisions will be communicated to you and the Physician/Provider in writing.  The processing time can be as long as a few days up to a week or more.

Q:  What is Formulary?

A:  A formulary, or drug list, is a list of medications that your prescription plan covers.  Different insurance companies offer different formularies, based on the particular plan you have chosen.

Q:  How do you learn about your Formulary?

A:  You may learn what medications are on your formulary by calling the Member Services number on the back of your insurance card.  Formularies are often split into levels, which are called tiers, with the benefit you receive depending on what tier a given drug is placed in.

  • Two-tiered formularies have generic medications in tier 1 and all brand name drugs in tier 2.
  • Three-tiered formularies have generics in tier 1, Preferred brand names in tier 2 and non-Preferred brand names in tier 3.
  • Four-tiered formularies have the same tiers as three-tiered formularies with an added tier 4 for specialty medications.
  • Five-tiered formularies have Preferred generics in tier 1, non-Preferred generics in tier 2, Preferred brands in tier 3, non-Preferred brands in tier 4 and specialty brands in tier 5.

Prescription Drugs

Q:  What is a brand name drug?

A: The brand name is the trade name the drug manufacturer uses to advertise and sell the product.  When a drug is first made, it is covered by a patent, which protects the investment in the drug’s development by giving the manufacturer the sole right to sell the drug while the patent is in effect (can be up to 15 years or more).

Q:  What is a generic drug?

A:  A generic drug is identical or bioequivalent to a brand name drug in dosage form, safety, strength, route of administration, quality, performance characteristics and intended use.  When brand name drug patents or other periods of exclusivity expire, manufacturers can apply to the FDA to sell generic versions.

Q:  Are generics the same as brand name drugs?

A:  Federal law requires that companies seeking approval for generic versions of approved drugs must demonstrate that their products are the same as the original brand name drug in terms of

  • Active ingredients
  • Strength
  • Dosage form
  • Route of administration
  • Label

In addition, the company must demonstrate that the generic form is absorbed and distributed to the part of the body at which it has its effect at acceptably similar levels to the brand name drug. And all drugs—new or generic, in clinical trials or approved, prescription or over-the-counter—must be manufactured under controlled conditions that assure product quality.  Sometimes, the generic drugs are even made in the same manufacturing plants as the brand name drugs.

Q:  Why do generic drugs cost less than brand name drugs?

A:  When a drug manufacturer applies to the FDA to market a generic version of a brand name drug, the application process does not require the drug sponsor to repeat costly animal and clinical research on ingredients or dosage forms already approved for safety and effectiveness.  Thus, they can pass those savings on to the consumer.

Prescription drugs VS Over-the-Counter Drugs (OTCs)

Q:  What is the difference between prescription drugs and OTC drugs?

A:  Prescription drugs are:

  • Prescribed by a health care practitioner
  • Dispensed at a pharmacy
  • Prescribed for and intended to be used by one person
  • Regulated by FDA through the New Drug Application (NDA) process. This is the formal step a drug sponsor takes to ask that the FDA consider approving a new drug for marketing in the United States. An NDA includes all animal and human data and analyses of the data, as well as information about how the drug behaves in the body and how it is manufactured. For more information on the NDA process, please see “The FDA’s Drug Review Process: Ensuring Drugs Are Safe and Effective1.”

OTC drugs are:

  • Drugs that do NOT require a doctor’s prescription
  • Bought off-the-shelf in stores
  • Regulated by FDA through OTC Drug monographs. OTC drug monographs are a kind of “recipe book” covering acceptable ingredients, doses, formulations, and labeling. Monographs will continually be updated adding additional ingredients and labeling as needed. Products conforming to a monograph may be marketed without further FDA clearance, while those that do not, must undergo separate review and approval through the “New Drug Approval System.”

Q:  Why are some drugs available as both a prescription and an over-the-counter drug?

A:  A medication that is marketed as both a prescription medication and an OTC medicine may contain the same active ingredient; however, the dosage strength and form, the dosing regimen or the indications may differ between the prescription and the OTC versions. For example, the prescription version of the drug may come in a higher strength and may have to be taken more often than the OTC version of the drug.  When a medicine is available as both prescription and OTC, it is usually first approved as a prescription drug, and the company later applies to have an OTC version approved.

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