How Medicare Prescription Drug Costs Work

Medicare Part D and Medicare Advantage plans with drug coverage group medications into tiers. Your tier affects how much you pay at the pharmacy.

Preferred Generic Drugs

Lowest-cost medications on the plan.

FDA-approved generics
Usually the lowest copay
Often $0 to a few dollars
Same active ingredients as brand-name drugs

This is usually the cheapest option.

Standard Generic Drugs

Generic drugs that cost slightly more.

Still FDA-approved generics
Higher copay than preferred generics
Much cheaper than brand-name drugs

Still affordable, just not the lowest tier.

Preferred Brand Drugs

Brand-name drugs with lower negotiated costs.

Brand-name medications
Lower cost than non-preferred brands
Higher cost than generics

Used when generics aren’t available or appropriate.

Non-Preferred Brand Drugs

Brand-name drugs that cost more.

Higher out-of-pocket cost
May require approval or limits

Covered, but usually more expensive.

Specialty Drugs

High-cost drugs for complex conditions.

Used for serious or chronic illnesses
Highest costs
Often charged as a percentage

These work differently than everyday prescriptions.

Pharmacy Choice Matters

Preferred Pharmacies

Lower copays
Contracted with the plan

Standard Pharmacies

Covered
Higher copays

Using a preferred pharmacy can save money.

Preferred vs. Standard Pharmacies

Medicare drug plans group pharmacies as preferred or standard. The difference is cost, not quality.

Preferred Pharmacies

Lower copays or coinsurance
Usually the cheapest option
Same medications and service
Chosen by the plan for lower pricing

Standard Pharmacies

Still in-network
Higher copays than preferred pharmacies
Same covered drugs

What Matters Most

Same prescription, different price
Preferred pharmacies cost less
Pharmacy status varies by plan and location
Status can change each year

Quick Example

Preferred pharmacy: $0–$5
Standard pharmacy: $10–$20+

Pro Tip

Always check if your pharmacy is preferred before enrolling — it can save you money all year.

Important to Know

Every plan has its own drug list
Costs and coverage can change yearly
Prices vary by drug, pharmacy, and dosage

Important Information & Disclosure

Anthony's Healthcare provides Medicare education and guidance only. We are not affiliated with or endorsed by the U.S. government, the federal Medicare program, the U.S. Department of Veterans Affairs (VA), or any state Medicaid agency, or any insurance carrier.

Medicare consists of multiple parts (Part A, Part B, Part C, and Part D), each with its own rules, costs, and coverage limitations. Medicare Advantage (Part C), Prescription Drug Plans (Part D), Medicare Supplement (Medigap) policies, and Special Needs Plans (D-SNP, C-SNP) are offered by private insurance companies that are approved and regulated by Medicare.

Coverage, premiums, deductibles, copayments, coinsurance, provider networks, formularies, service areas, and extra benefits may vary by plan, carrier, county, and contract year and are subject to change. Extra benefits such as dental, vision, hearing, fitness programs, transportation, over-the-counter allowances, food or grocery benefits, meals, and in-home services are not guaranteed and may have limitations or eligibility requirements.

We do not offer every plan available in your area. Any information we provide is limited to the plans we do offer. Please contact Medicare.gov, 1-800-MEDICARE, or your local State Health Insurance Program (SHIP) to get information on all your options.

Information provided is for educational purposes only and does not guarantee eligibility, coverage, or enrollment.