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Blue @ Work

3 ways to structure your formulary

Open, closed, or value-based

*This article was last updated June 2022

With 10 cents of every dollar spent on care going toward your employees' medications, prescription drugs make up a large portion of your health care investment. While you don’t have control over rising drug prices, you do have some control over your formulary, or drug list. opens in a new window The way you tailor your formulary can have a significant impact on your pharmacy spend.

What is a drug formulary?

A formulary is a list of prescription drugs that a health plan will cover. The list likely includes brand-name and generic drugs. Most formularies list a few tiers of prescription drugs that correspond with how much they cost — for example, a tier one drug may have a small dollar co-payment and a higher tier drug may require a percentage of the total cost.


Time for a formulary review?

It's a good idea to review your pharmacy benefits on a regular basis to maximize your cost-savings potential. Contact Wellmark's clinical account consultant to get the conversation started.


Types of drug formularies

Open formulary

In an open formulary, your employees have the broadest access when it comes to filling their prescriptions. All drugs that appear on an approved drug list, regardless of tier, are covered as part of their prescription benefits. Most drug classes have multiple generic options that are just as safe and effective as their pricier, brand-name alternatives, but because doctors often prescribe brand-name drugs, your employees may not know if there is a less expensive option available. And, when brand-name drugs and their generic equivalents are available on the same tier — for the same copay — you're paying the cost difference with every refill.

Closed formulary

With a closed or limited formulary design, you can restrict access to certain brand-name or higher-tier drugs to help bring down your overall pharmacy spend. There are closed formulary designs that only cover generics and others that just limit access to the most expensive drugs. You can also design your formulary to allow access to preferred drugs over non-preferred drugs, regardless of tier. When moving to a closed formulary design, you can tailor access based on the needs of your employees.

With a closed formulary, your employees will need to request a formulary exception opens in new window by taking into account its safety, effectiveness and relative cost. Preventive drugs are on the lowest tier, which means they are the highest value at the lowest cost. If there are multiple drugs that treat a specific condition, like diabetes, each is evaluated for its true value and assigned to a different tier. Specialty drugs are spread throughout the formulary depending on their true value, instead of being placed on the highest or specialty-only tier like in a traditional formulary.

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Make regular adjustments

If you haven't reviewed your pharmacy benefits in a while, it might be a good time to meet with a Wellmark representative. The more managed your pharmacy plan is, the more you'll save. Learn about different formulary designs and get advice on the best options for your benefits goals. Contact Wellmark's clinical account consultant at bengstlerj@wellmark.com Send Email to get started.