Insurance Changes and Generic Switching: How Formulary Updates Affect Your Prescription Costs in 2025

Every January, millions of people on Medicare Part D wake up to find their favorite medication suddenly costs more-or isn’t covered at all. It’s not a glitch. It’s a formulary update. These are the annual changes insurance companies and pharmacy benefit managers (PBMs) make to decide which drugs they’ll pay for, and at what price. In 2025, these changes hit harder than ever, thanks to the Inflation Reduction Act. If you’re taking chronic meds-like insulin, arthritis drugs, or heart medications-you need to know what’s coming.

What Exactly Is a Formulary?

A formulary is a list of drugs your insurance plan covers. It’s not random. It’s divided into tiers, and each tier has a different cost. In 2025, here’s how it breaks down:

• Tier 1: Preferred generics-usually $1 to $10 copay
• Tier 2: Non-preferred generics and some preferred brands-around $47
• Tier 3: Non-preferred brands-$113 on average
• Specialty Tier: High-cost drugs like biologics-$113 or 25% coinsurance

Insurers push you toward the bottom tiers because they’re cheaper. That’s why you might get a letter saying your brand-name drug is no longer covered-and your new option is a generic version. Sometimes, that’s fine. Other times, it’s a shock.

Why 2025 Is Different

Before 2025, Medicare Part D had a coverage gap-nicknamed the "donut hole." You’d hit a spending limit, then pay full price until you reached catastrophic coverage. That’s gone now. Starting January 1, 2025, you pay nothing out of pocket after hitting $5,030 in total drug spending. Once you hit $8,000, you’re in catastrophic coverage with 100% coverage.

But here’s the catch: to make this work, insurers had to cut costs elsewhere. That means fewer brand-name drugs on the formulary, and more pressure to switch you to generics and biosimilars. CVS Caremark, for example, removed nine specialty drugs in 2025 and added 11 biosimilars-including Kanjinti and Trazimera, which replace older, pricier versions like Herzuma and Ogivri.

It’s not just CVS. UnitedHealth’s OptumRx, Express Scripts, and Cigna all made similar moves. The goal? Save money. The side effect? You might get switched without your doctor’s input.

Generic Switching: Good or Bad?

Switching from a brand-name drug to a generic isn’t always a bad thing. Generics have the same active ingredients, same dosage, same effectiveness. The FDA requires it. Many people save hundreds a month-like one user who switched from Humira to Amjevita (a biosimilar) and cut her monthly cost from $500 to $50 with no change in how she felt.

But not all switches are equal. Some drugs, especially for conditions like epilepsy, thyroid disorders, or autoimmune diseases, need to be stable. A small difference in inactive ingredients can throw off your body’s response. That’s why some doctors resist generic switches.

And here’s the real issue: non-medical switching. That’s when your insurer changes your drug-not because your doctor says so, but because it’s cheaper. In 2024, these kinds of switches jumped 23% year over year. One Reddit user, MedicareWarrior87, wrote: "My Humalog insulin copay jumped from $35 to $113 overnight. No warning. No choice."

How to Spot Changes Before They Hit

Insurers are required to send you a notice 60 days before a formulary change takes effect. But here’s the problem: many people don’t open these letters. Or they get them in the mail after the change has already happened.

Don’t wait. Check your plan’s formulary between October and December every year. You can find it on your insurer’s website-look for "2025 Formulary" or "Drug List." If you’re on Medicare, log into Medicare.gov and use their Plan Finder tool. Type in your exact medication name, including dosage. It will show you:

• Is it still covered?
• What tier is it on?
• What’s the copay?
• Are there alternatives?

Also, talk to your pharmacist. They see these changes every day. They’ll know if your drug is being pulled or if a cheaper generic just hit the shelves.

What If Your Drug Gets Removed?

If your drug is taken off the formulary, you have options:

1. Request a formulary exception. Your doctor can submit a letter saying the generic won’t work for you. In 2024, 82% of tier change requests were approved. But if the drug was completely removed? Only 47% got approved.
2. Ask for a transitional supply. If your drug is being removed, you’re entitled to a 30-day supply at the old price. This gives you time to appeal or switch.
3. Use an expedited exception. If you’re at risk of hospitalization without your current drug, you can request a 24-hour review. This is for urgent cases-like someone on insulin or seizure meds.

Don’t stop taking your medication while you wait. Call your pharmacy first. They can often hold a supply while your exception is processed.

The Biosimilar Revolution

Biosimilars are the new frontier. They’re not generics-they’re near-identical copies of biologic drugs, which are made from living cells (like Humira, Enbrel, or Stelara). Until recently, insurers were hesitant to cover them. Now? They’re pushing them hard.

In 2024, the FDA approved 17 new biosimilars. That’s a 34% jump from 2023. And in 2025, insurers are more confident than ever that these drugs work. Dr. Sally Blount from the FDA said in June 2024 that PBMs no longer need the "interchangeable" label to cover them. That’s a big deal. It means more biosimilars will hit formularies faster.

By 2027, experts predict biosimilars will make up 45% of the market for targeted therapies-up from 28% in 2024. If you’re on a biologic, expect to be switched soon. And if you’re worried? Ask your doctor: "Is there a biosimilar that’s been proven safe for my condition?"

What’s Coming in 2026

The biggest change isn’t in 2025-it’s in 2026. Under the Medicare Drug Price Negotiation Program, the government will start negotiating prices for 10 high-cost drugs. The first batch? Stelara, Prolia, and Xolair. Starting January 1, 2026, all Medicare Part D plans must cover these drugs at the negotiated price.

This is historic. For the first time, the government is forcing insurers to cover certain drugs, no matter the cost. And it’s not just these three. By 2029, 20 drugs will be on the list. That means fewer exclusions, more stability-and potentially lower prices across the board.

But here’s the catch: insurers might respond by cutting other drugs even harder. So while your Stelara might get cheaper, your other meds could get moved to higher tiers. Stay alert.

Real Talk: What You Can Do

This isn’t about fighting the system. It’s about navigating it. Here’s what works:

• Review your formulary every fall. Don’t wait for a letter.
• Keep a list of your meds, doses, and costs. Update it every time you refill.
• Ask your pharmacist: "Is there a cheaper option?" They know the deals.
• Don’t panic if you get switched. Many biosimilars work just as well.
• Know your rights. You can appeal. You can get a 30-day supply. You can request an expedited review if you’re at risk.

And remember: the system is designed to save money. But you’re not a line item. If a change affects your health, speak up. Your doctor, your pharmacist, and your insurer all have to listen.

What to Watch for in 2025

Keep an eye on these trends:

• More diabetes and respiratory drugs being moved to generics
• Insulin prices dropping as biosimilars enter the market
• More plans eliminating prior authorizations for generics
• Increased use of step therapy-trying a cheaper drug first before approving the brand

And if you’re on a specialty drug? Start asking now: "Will this be replaced by a biosimilar? When? What’s the evidence?" The answers might save you thousands.

Final Thought

Insurance changes aren’t personal. But your health is. Formulary updates are a business tool-but they’re also a health tool. The goal isn’t to make you pay more. It’s to make the system affordable. But that balance is fragile. If you’re on a medication that keeps you alive, don’t assume it’s safe. Check. Ask. Advocate. Your next prescription shouldn’t come with a surprise bill.