What is a formulary and how does it influence drug costs?

• A. A formulary is the list of doctors approved by the insurer.
• B. A formulary is the insurer's approved list of drugs, organized into tiers; cheaper drugs are favored with lower copays/coinsurance, affecting out-of-pocket costs.
• C. A formulary determines hospital room types.
• D. A formulary guarantees unlimited drug coverage.

Answer: (B)