# Formulary A **formulary** is the list of drugs a health plan covers, organized into cost-sharing **tiers** (generic, preferred brand, non-preferred, specialty). [[Pharmacy Benefit Managers]] design formularies, and placement on them is the single biggest bargaining chip in U.S. [[Drug Pricing]]. ## Why It Matters Because a drug's sales depend on formulary access, manufacturers compete by offering bigger [[Drug Rebate]]s for preferred placement — the mechanism that drives the rebate economy. Formulary power lets a PBM move markets overnight: when CVS Caremark dropped Eli Lilly's Zepbound to make Novo Nordisk's Wegovy its preferred GLP-1 in 2025, it forced patient switches at scale (see [[CVS Health]]). The same lever can wall out cheaper [[Biosimilar]]s. Formulary exclusion and step therapy are also where drug pricing meets [[Prior Authorization]] and [[Claim Denial]]. See [[Drug Pricing]].