What is a Part D formulary tier?

A Part D formulary tier is the cost level a Medicare Part D plan assigns to a drug, which determines the member's copay or coinsurance. Tier 1 is the lowest member cost (typically preferred generics) and Tier 5 is the highest (typically specialty drugs).

Standard tier structure:
- Tier 1: Preferred generics — lowest copay
- Tier 2: Generics
- Tier 3: Preferred brand drugs
- Tier 4: Non-preferred drugs (brand or generic)
- Tier 5: Specialty drugs — coinsurance only, often 25-33%

Plans choose which drugs go on which tier based on a combination of clinical factors, manufacturer rebate flow, and PBM contract structure. Most plans cannot move drugs between tiers mid-year — tier moves are restricted to plan-year resets (typically January 1) unless contractually negotiated.

The same drug often appears on different tiers across plans. For example, the rivaroxaban NDC at $0.98/unit appears on Tier 3 across 1,701 plan-NDC pairs in the 2026 plan year despite 17 generic manufacturers shipping.