Prescription Gotchas: Prior Authorization, Step Therapy, and Formulary Changes

You’ve been taking the same medication for years. Your doctor refills it. You head to the pharmacy only to hear: “It’s been denied.”

What gives?

Welcome to the confusing world of formulary changes, prior authorizations, and step therapy: a trio of roadblocks that can leave even the most seasoned patients scratching their heads.

The worst part?

These issues often crop up after you've already paid for your plan, especially during the beginning of the year or after a plan switch.

How Formularies Work (and Change)

Every health plan maintains a formulary, which is ****a list of medications it covers. These drugs are usually categorized into tiers that determine your out-of-pocket cost. For example:

• Tier 1: Generic, lowest cost
• Tier 2: Preferred brand-name
• Tier 3: Non-preferred brand-name
• Tier 4/5: Specialty drugs

Plans can change these lists any time, not just at open enrollment. A drug that was Tier 2 last year may now be excluded entirely or bumped to Tier 4, dramatically increasing your cost. In 2022 alone, 1,156 drugs had their formulary status changed, with many dropped or moved to higher tiers according to the Center for Medicare Advocacy.

What Is Step Therapy and Prior Authorization?

Step therapy means your insurer wants you to try a cheaper or more "proven" medication first, even if your doctor prescribed something else. You’re expected to “fail” on the cheaper drug before getting access to the one you were originally prescribed.

Prior authorization is when your doctor must submit paperwork proving the medication is medically necessary before it will be covered. This can take days, even weeks.

These barriers are more than annoying; they can be harmful. A recent survey by the American Medical Association found 93% of physicians said prior authorization delays treatment, and 24% said it led to a patient’s hospitalization.

What You Can Do

• Ask your doctor: Is there a therapeutic alternative on a lower tier?
• Appeal the denial: Plans are required to have a formal appeal process. Don’t accept “no” as final.
• Plan ahead: Before changing health plans, compare formularies. Most insurers post their lists online; don’t assume your drugs will still be covered.
• Mail-order pharmacies: These can reduce costs and improve approval turnaround, especially for maintenance meds.

Ways to Save on Prescriptions

Even if your health plan stumbles, there are creative ways to lower your costs:

• GoodRx and other prescription discount cards can help you pay less than your plan’s copay, even without insurance.
• Mark Cuban’s Cost Plus Drugs offers many generics at cost + 15%, with transparent pricing.
• Amazon Pharmacy is expanding and may offer better deals, especially if you have Prime.
• Ask for a 90-day supply: This often brings down the cost per dose and reduces refill hassles.

Prescription costs are frustrating, but you’re not powerless. A smart strategy today can prevent a pharmacy headache tomorrow.