Differences in Managed Care Drug Formularies: What can Consumers Learn?

Pharmaceutical coverage has become an especially important issue in health plan design. This article develops an objective measure of drug coverage generosity in managed care drug formularies. Formulary generosity is important because patients respond differently to drugs within a therapeutic class, and so there is benefit in offering a wide variety of products to prescribing physicians. The measure of coverage generosity considers not only the number of products offered to patients through a formulary, but whether plans systematically exclude more expensive products. The correlation between formulary generosity and health plan member satisfaction is analyzed to see if formulary generosity is perceived by subscribes to be related to perceived health plan quality. The findings are that plans vary widely in offering access to pharmaceuticals but that generosity is not highly correlated with health plan satisfaction.