Health and Human Services secretary Tommy Thompson unveiled the final rules establishing the new Medicare prescription drug benefit.
The rules guarantee patients access to a wide variety of medicines while giving insurance companies tools to control costs.
The prescription drug benefit, and the other provisions included in the rules, are elements of the Medicare Modernization Act passed by Congress and signed into law by President Bush on Dec. 8, 2003.
Enrollment for the new prescription drug plans will begin this November.
The final rules, announced on Jan. 21, state:
*An insurance plan can establish a list of preferred drugs, and can refuse to pay for others
*Every prescription drug plan must provide adequate coverage of the types of drugs most commonly needed by Medicare beneficiaries
*Generally, the formulary must have at least two drugs for treating each condition or illness.
The rules do not dictate which specific drugs must be covered.
America's Health Insurance Plans, a trade group for insurers, praised the new rules.
Howard Phanstiel, chairman of PacifiCare Health Systems, an insurer based in Cypress Calif., told the New York Times the rules showed that the government would be a "good business partner."
In a statement, the pharmaceutical industry's trade group, the Pharmaceutical Research and Manufacturers of America (PhRMA) said they were still reviewing the final rules. A spokesman there called the final regulations "a big step" toward implementing the Medicare drug benefit.