Get a Formulary Exception

mgbrousse
Jun 2
4 min read

By Martine G. Brousse (still not AI!)

"The Medical Bill Whisperer"™

Patient Advocate, Certified Mediator

AdvimedPro

June 2, 2025

Every insurance plan relies on medical policies, FDA approvals and cost-saving strategies to justify which drugs are covered, and under what conditions.

How to beat a rejection of coverage and get an exception to this formulary? Let’s explore.

A. What is this “formulary”?

It is the list of drugs, oral, infused and injected, which an insurance plan covers, meaning agrees to pay for.

Specific requirements must be met for coverage, including:

· The prescribed treatment is appropriate for the diagnosis, and follows the manufacturer’s guidelines (dosage, way of administration, frequency etc)

· The prescribed drug is medically necessary: it is needed to cure, maintain, minimize or positively affect the condition or clinical circumstance. An example is an antihistamine used to counteract an allergic reaction, or chemotherapy to cure a cancer.

· The prescribed drug is FDA approved: it has been shown to be safe and effective to treat that specific diagnosis

· The terms of the insurance medical policy are followed: this can mean that other courses of treatment must have been used and failed, or that only specific diagnoses are covered, or that certain tests or scans must prove the condition exists

· The prescribed drug is obtained through In Network vendors: either local brick-and-mortar pharmacies or through the insurance’s preferred mail-in order company (OptumRx, Express Scripts, Costco online, Amazon Rx, CVS/Caremark etc)

B. Coverage can be denied:

If one – or more – of the above requirements are not met, the insurance can deny coverage of a formulary drug:

· Diagnosis or condition do not meet criteria for coverage

· Medical records are insufficient or do not explain the need for the prescription

· Treatment is “off-label”, meaning not FDA approved as prescribed. Either the drug does not follow the manufacturer’s guidelines for use, or it has not been proven safe and effective for this condition

· The Pharmacy or mail-order company is not In Network or preferred, and your plan only covers those vendors who are.

Another main reason for denial is that the prescribed drug is NOT in the formulary:

· It might be too new. The FDA approves about 40-50 “novel” drugs every year, and it might take time for inclusion in a formulary.

· The prescribed drug is Brand name, and the formulary offers at least one generic option. The plan is only obligated to provide one option when more are available, and not every version of every kind of drug out there. Limiting the formulary to generic options when available saves the insurance – and members – money.

· The insurance and/or its PBM has a special deal. A Pharmacy Benefit Manager (PBM) is a company hired to manage prescription drug benefits for insurance plans. Handling administrative tasks, claim payments and the authorization process for prescription drugs, they negotiate with manufacturers and pharmacies to set prices and provide Rx for members. In effect, asset managers, not doctors, can decide what drug is included in the formulary, when it is payable and for which patient, based on cost rather than clinical criteria. This leads to "preferential" drugs being on the formulary, forcing patients to switch between brands at the whim of these PBMs.

C. Get a “Formulary Exception”

1. File a special request

· Every plan has a special process – and form – for the prescribing physician to request a “formulary exception” and coverage of a non-listed drug.

· Upon submission of the form with clinical and other documentation to justify the medical need, a medical director, pharmacist or specialized nurse can issue an “exception” to cover a specific treatment or drug.

· If that request remains denied, the physician can file an appeal, which is a separate request for a review of the decision, based on medical records, standard of care evidence, professional articles, medical policies and any other supportive justification.

2. Rx shortages are a valid reason to request an exception, and are easily granted.

3. A pharmacist can request a one-time exception if they are out of stock

4. Secondary conditions can impact a request positively. For example, if another prescribed treatment causes a side effect which does not technically meet the requirement for coverage based on a diagnosis, the prescribing physician can argue that, by extension, the treatment should be covered.

5. Drug interaction, allergic reactions to the formulary option, tried and failed treatments are all valid and accepted reasons to request exceptions.

In conclusion: A formulary is very fluid. What is offered is based both on customer needs and on profits (insurances call that “cost-saving”). But the list can change from month to month, based on availability, demand, manufacturers’ rebates, FDA mandates and other criteria.

Patients are impacted when the formulary changes a treatment, imposes unacceptable choices, limits access or makes arbitrary “cost-saving” decisions.

The good news is that patients have rights, and one of them is to obtain Formulary Exceptions based on clinical needs and medically-based evidence.

Martine Brousse was a long-time Billing Manager for Physicians before switching to the side of patients in 2013. The move has allowed her to apply her deep expertise and vast experience of the intricacies of resolving all types of medical bill and claim payment issues in ways that directly and positively impact her clientsʻ finances.