What is step therapy?

Step therapy is a plan utilization-management rule that requires patients to try one or more lower-cost drugs before the plan covers a higher-cost alternative. The patient must 'step up' through the formulary in sequence.

A typical step protocol: Tier 1 (generic) → Tier 2 (preferred brand) → Tier 3 (non-preferred brand) → Tier 4 (specialty). If a Tier 1 drug doesn't work or causes side effects, the prescriber documents this and the plan moves the patient to Tier 2, and so on.

For plan sponsors, step therapy is a cost-control tool but also a member-disruption signal: every step adds friction (pharmacist callback, prescriber paperwork, patient delay). Drugs with many step-therapy requirements across plans (visible in CMS Part D Formulary data) are signals that PBMs are aggressively channeling toward cheaper alternatives.