Each health plan has a list of prescription medicines it covers. That list is called a formulary. The list includes generic and brand-name medicines. Your formulary may have 3 or 4 tiers that correspond to how much you have to pay for the drugs. For example, for generic drugs on the first tier, you may only have to pay a $5 co-payment, but for drugs on the highest tier you may have to pay 20% of the total cost. Your doctor may have to call your health plan to get approval to prescribe a certain medicine so you don't get charged the full price. Another way people say this is to say that a medicine needs prior authorization. The plan's goal is to encourage doctors to prescribe effective medicine at the lowest cost.