What is a LU Code in Pharmacy? A Guide to Limited Use Prescriptions

October 6, 2025 •

5 min read

In the Ontario Drug Benefit (ODB) program, certain medications are classified as 'Limited Use', requiring a special code for coverage. This unique identifier, known as a LU or Reason for Use code, is essential for pharmacy billing and ensuring the drug is used for specific, approved medical conditions. Navigating this process is a key part of modern pharmacology and pharmacy practice.

Quick Summary

Limited Use (LU) or Reason for Use (RFU) codes are mandatory identifiers for specific medications under Canadian provincial drug plans. The prescriber writes this code on the prescription to verify the patient meets clinical criteria for coverage. It allows pharmacists to bill the provincial plan, ensuring costly drugs are used appropriately and funded correctly.

Key Points

Definition: An LU code is a Reason for Use (RFU) code required by provincial drug plans, primarily in Canada, for certain prescriptions.
Purpose: It verifies that a patient meets specific clinical criteria for coverage of a 'Limited Use' drug, which is typically high-cost or specialized.
Prescriber Responsibility: The prescribing healthcare provider must include the correct three-digit LU code on the prescription for it to be covered by the drug plan.
Pharmacy Impact: Pharmacists must enter the LU code into the billing system when filling the prescription; without it, the claim will be rejected by the provincial drug program.
Patient Impact: A missing LU code can lead to delayed medication access or having to pay the full cost out-of-pocket if the claim is rejected.
Context: The LU system is used to manage drug costs and ensure appropriate use of specific medications within public healthcare.
Verification: Prescribers and pharmacists can check provincial formularies, like Ontario's ODB e-Formulary, for up-to-date LU codes and eligibility criteria.

What is a Limited Use (LU) Code?

An LU code, also known as a Reason for Use (RFU) code, is a three-digit identifier used in certain Canadian provincial drug programs, most notably the Ontario Drug Benefit (ODB) plan. It is not a code found in the United States, but is specific to the regulatory framework in Canada where a provincial authority oversees drug coverage. These codes are required for prescriptions of specific medications that are designated as “Limited Use” on the provincial formulary. This means the medication is not a 'general benefit' and is only covered by the government plan under specific clinical circumstances or medical conditions.

The purpose of the LU code is to serve as a verification from the prescribing healthcare provider—such as a physician or nurse practitioner—that the patient meets the criteria for the Limited Use drug. By adding this code, the prescriber confirms that the patient's specific circumstances warrant coverage, saving time and preventing claim rejections at the pharmacy.

The Role of LU Codes in Prescription Coverage

For pharmacists, LU codes are crucial for processing claims with provincial drug plans. When a Limited Use drug is prescribed for an eligible patient, the pharmacy system requires the correct code to be entered before a claim is submitted. Without the code, the claim will be rejected by the provincial drug program, and the patient may be faced with paying the full cost of the medication out-of-pocket.

LU codes exist to manage the costs associated with expensive or specialized drugs. By restricting reimbursement to specific clinical situations, provincial governments can control budgets and ensure that these medications are being used for their intended, evidence-based purposes. For instance, a drug for a specific type of arthritis might be a Limited Use medication, and the LU code would indicate that the patient has failed other first-line therapies or has a severe form of the disease.

The Pharmacy Workflow for LU Codes

Pharmacists and pharmacy technicians are on the front lines of interpreting and processing LU code prescriptions. The workflow typically follows these steps:

Receiving the Prescription: A prescription is received from the prescriber. It is checked for the patient's information and the required three-digit LU code or Reason for Use (RFU) code.
Data Entry: The pharmacy staff enters the prescription details into the pharmacy management system. If the medication is a Limited Use drug, the system will prompt for the specific code.
Entering the Code: The LU code is entered into the designated field, which may sometimes be called the MR (Medical Reason) Code field.
Claim Submission: The claim is submitted electronically to the provincial drug program for adjudication. If the correct LU code is provided, the claim will be approved for reimbursement.
Claim Rejection Handling: If a claim is rejected due to a missing or incorrect LU code, the pharmacist must contact the prescriber's office to obtain the correct code. This can cause delays for the patient and extra administrative work for the pharmacy.
Refills: For subsequent refills, the pharmacist may need to ensure the LU authorization is still valid, though a new intervention code may not be needed for every refill.

How LU Codes Affect Patients

For patients, LU codes introduce a layer of administrative process to receiving medication. While the prescriber is responsible for providing the code, patients should be aware of the process to avoid potential delays or confusion. If a patient is prescribed a Limited Use drug, it is good practice to ensure the LU or RFU code is clearly indicated on the prescription.

Impact on Coverage: A missing LU code can result in the patient being denied coverage and potentially needing to pay the full, unsubsidized price for their medication.
Delay of Treatment: If a pharmacist has to follow up with a prescriber to get the correct code, the dispensing of the medication can be delayed.
Exceptional Access Program: If a patient does not meet the LU criteria for a drug, they may need to seek coverage through an Exceptional Access Program (EAP), which requires a more extensive application process.

Comparing Limited Use (LU) to General Benefit (GB) Drugs


Feature	Limited Use (LU) Drug	General Benefit (GB) Drug
Coverage Condition	Covered only under specific, pre-defined clinical criteria.	Covered for all eligible patients without special conditions.
Authorization Process	Requires a specific Reason for Use (RFU) code on the prescription.	Does not require a special code; standard prescription is sufficient.
Prescriber's Role	Must confirm patient meets criteria and write the LU code on the prescription.	Only needs to write the prescription for the medication.
Pharmacist's Role	Must verify the presence and accuracy of the LU code for reimbursement.	Processes the claim following standard billing procedures.
Patient Impact	May experience delays if the code is missing; must meet specific criteria for coverage.	Coverage is more straightforward, assuming general eligibility for the drug plan.
Cost Control	Used by drug plans to control costs for expensive medications.	Costs are managed through other mechanisms, such as price agreements.

Navigating the Process for Prescribers

For physicians and nurse practitioners, navigating the LU code system is a standard part of prescribing for patients on provincial drug plans. To streamline the process and avoid callbacks from pharmacies, prescribers can use the online formulary resources provided by the provincial government, such as the Ontario Drug Benefit (ODB) e-Formulary, to look up the correct LU code and clinical criteria for a given medication. Many Electronic Medical Record (EMR) systems also have built-in functions that prompt for and populate the correct LU code when a limited use drug is selected. Taking this extra step during the initial prescription helps ensure uninterrupted care and prompt dispensing for the patient.

Visit the official Ontario Drug Benefit (ODB) Formulary to search for Limited Use drug criteria.

Conclusion

LU codes are a vital component of the provincial drug benefit system in Canada, designed to ensure fiscal responsibility and clinically appropriate use of high-cost medications. For pharmacists, these codes are an essential part of the billing and reimbursement workflow, requiring careful attention to detail. For patients, understanding the purpose of an LU code can help them navigate the prescription process more smoothly and understand their coverage limitations. Ultimately, the system provides a structured approach to managing access to specialized medications, benefiting both the healthcare system and the patients it serves by ensuring treatment is both necessary and funded correctly.

Frequently Asked Questions

The prescribing healthcare provider, such as a doctor or nurse practitioner, is responsible for writing the correct LU code on the prescription.

If a pharmacy submits a claim for a Limited Use drug without the required LU code, the provincial drug plan will likely reject the claim for reimbursement, and the pharmacy must contact the prescriber for the correct code.

You can ask your pharmacist or check the provincial drug benefit formulary online. For example, in Ontario, the ODB e-Formulary lists all drugs and their coverage status, including which ones are 'Limited Use'.

LU codes are specific to certain Canadian provincial drug programs, like the Ontario Drug Benefit (ODB) plan. The US has different systems, such as prior authorizations, but not the same LU code structure.

A General Benefit drug is covered for all eligible patients, while a Limited Use drug is only covered if the patient meets specific clinical criteria, which must be verified with an LU code.

Yes, the authorization period for an LU code can be limited to a specific time frame, such as one year, or may be indefinite. Your pharmacist or prescriber can provide details on the authorization period for your specific medication.

The Exceptional Access Program is a pathway for obtaining coverage for drugs not normally covered under the provincial plan, including in cases where a patient does not meet the specific LU criteria for a medication.