What does "non-formulary" mean regarding medication?

When a medication is described as "non-formulary," it specifically refers to a medication that is not included in a specific insurance plan's list of covered drugs. Insurance plans typically have a formulary, which is a curated list of medications that are approved for coverage and reimbursement. By being non-formulary, the medication does not meet the criteria set by the insurance provider, which may result in the patient having to pay the full price out-of-pocket or face higher costs compared to drugs that are on the formulary. This designation is crucial in pharmacy billing and reimbursement because it affects the patient’s access to certain medications and the overall cost of their treatment. Understanding this term helps patients, pharmacists, and healthcare providers navigate insurance coverage efficiently and make informed decisions regarding medication options.