Compensation Glossary

Prescription Drug Formulary

A formulary is a list of prescription drugs that has been approved by a health plan and can be dispensed without prior authorization. Formularies have long been used to control the cost and utilization of prescription drugs. Some formularies are more restrictive than others. Open formularies provide coverage for both listed (or preferred) drugs and non-listed (or non-preferred) drugs, with non-listed drugs requiring a higher co-payment. Closed formularies usually provide coverage only for listed drugs.