Three-Tiered Pharmacy Benefits
With a three-tiered benefit, your prescription drugs fall into one of three categories or “tiers.” Each tier has a different copay or out-of-pocket cost. The first tier is for generics, the second is for preferred brand-name drugs, and the third is for nonpreferred brand-name drugs.
Tier 1 = Generics ($)
Generic drugs have the same active ingredients as the original brand-name drug and meet the same U.S. Food and Drug Administration (FDA) standards as their brand name counterparts. Yet generics can cost much less than their brand-name counterparts. Manufacturers of generic drugs do not have the expensive development or marketing costs originally borne by the brand-name drug manufacturer. Today, there are generic equivalents for approximately three-quarters of all brand-name drugs.
Tier 2 = Preferred Brands ($$)
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Preferred brand-name drugs are available for circumstances where a generic may not be available or be the best option for you. Preferred brands have been shown to be clinically safe and effective and they offer greater value to you than nonpreferred brands.
Tier 3 = Nonpreferred Brands ($$$)
Nonpreferred brand-name drugs typically have lower-cost generic equivalent or brand alternatives available. Drugs may be designated as nonpreferred based on safety, efficacy, or cost as compared to generic or preferred brands.