Plan Design Details - Traditional, Managed Care and Target Formularies
Three categories of formulary plans exist: traditional, managed care and targeted
formularies. The plan sponsor decides on the formulary, or multi-tier plan that
would best fit the needs of their employee plan members.
Traditional Formularies
Traditional formularies can be either restrictive or comprehensive. Plans
80, 84 and 88 are examples of existing traditional formularies. These formularies
are used by a large majority of plan sponsors.
| Plan |
OTC Drugs |
Life-sustaining
OTC Drugs |
Prescription Drugs |
Fertility Drugs |
Smoking Cessation |
80 |
√ |
√ |
√ |
√ |
√ |
84 |
X |
√ |
√ |
√ |
√* |
88 |
X |
√ |
√ |
X |
X |
|
* Prescription required |
Managed Formularies
These formularies all have similar objectives:
- Control costs
- Ensure most appropriate therapeutic choices
| National |
Includes a selective list of drugs offering the best efficiency/cost
ratio that promotes first line drugs. The National Formulary represents
85% of drugs most often prescribed. It offers coverage for some over-the-counter
products that represent an efficient solution at a lower cost compared to
prescription drugs. This formulary is best utilized when migrating from
an existing Pay Direct, prescription requiring plan. It is not meant to
be a stand-alone plan. This formulary was created to be used at a more generous
co-insurance level when implementing a multi-tier program to offer an incentive
to the plan member to move towards the most medically and cost effective
drugs. |
| SA (Special Authorization) |
A selective list of drugs created to complete the National Formulary.
This formulary should be used with the National Formulary at a less generous
co-insurance level. This formulary includes drugs that are often more expensive,
and/or represent 2nd or 3rd line treatment options. |
| Provincial Managed Care |
Created to mimic the drug list of provincial programs. Drugs on these
lists are chosen for their efficiency/cost ratio. The formulary excludes
drugs with Exception or Limited Use status by each province. |
| Rx99, Rx00, Rx01, Rx02, Rx03 |
Based on Plan 88, these formularies, which include only prescription
requiring and life sustaining over-the-counter drugs, exclude some drugs
introduced after December 31st of the selected year. They offer a protection
against the addition of expensive 2nd and 3rd line drugs, while allowing
the addition of new generic drugs, new strengths and all drugs added to
the National Formulary (Tier 1). |
Target Formularies
These formularies have various objectives, including:
- Isolate therapeutic classes that contribute highly to increasing the cost
of drug insurance programs (e.g. Lifestyle drugs)
- Promote the use of drugs offering the best efficiency/cost ratio
- Promote the use of generic drugs
| XLE |
This formulary is based on plan 88, which includes only prescription
requiring and life-sustaining over-the-counter drugs. It excludes all Lifestyle
drugs and can be used in a multiple level program. This type of utilization
permits the isolation of these drugs for reimbursement at a less generous
co-pay rate. |
| 28 |
This formulary is based on plan 88. It includes only generic drugs and
can be used in a multiple level program to promote the use of generics. |
| SG |
This formulary is based on plan 88 and includes only single source and
generic drugs. |