Short answer: A formulary is the list of prescription drugs a plan covers, organized into tiers. Lower tiers (generics) cost you the least; higher tiers (preferred brand, non-preferred brand, and specialty) cost more. Placement reflects cost and clinical value, and formularies change over time.
The formulary defines what’s covered and how much you pay. A typical structure runs from Tier 1 generics (lowest cost) up through preferred brand, non-preferred brand, and a specialty tier for very high-cost drugs. Your copay or coinsurance rises with the tier.
Drugs can be excluded entirely, and formularies are updated periodically, so a medication covered this year may move tiers or drop off next year. If a needed drug isn’t covered or is on a high tier, your prescriber can usually request a formulary exception or appeal.