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HMOs Unique Features And Lingo


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A formulary is one of the methods by which HMOs manage care by managing the drugs membersmay receive.

A formulary is a list of the only prescription medications that the HMOs doctors may prescribe. The traditional HMO does not pay for drugs which a doctor prescribes which are not on the formulary.  More current HMOs may pay a part of those drugs.

  • Formularies usually cover most standard drugs.
  • Formularies generally emphasize generic drugs which provide the same benefit as drugs with a brand name but at less cost.  According to the FDA, a "generic drug" is identical, or bioequivalent to a brand name drug in dosage form, safety, strength, route of administration, quality, performance characteristics and intended use.  Although generic drugs are chemically identical to their branded counterparts, they are typically sold at substantial discounts from the branded price.
  • Formularies sometimes stress one particular brand name drug over others if the HMO can purchase a large enough volume to qualify for discounts. 
  • Formularies may determine the order in which similar medications are prescribed. For instance, by providing that the high cost forms of drugs be reserved for members who have bad reactions or other problems with the less expensive alternatives.

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