Drug Formulary: The Cornerstone of a Managed Pharmacy Program

Drug formularies have migrated from the inpatient hospital environment to the ambulatory outpatient setting. Although formularies in use by managed health care organizations may vary widely in their design, they have quickly become the cornerstone of the managed pharmacy benefit. A carefully designed formulary can direct drug use to the safest and most efficacious products that may ultimately lower total drug costs. Other managed health care drug formulary considerations are presented. A method is described to develop a drug formulary. The drug evaluation matrix (DEM) provides a systematic, reproducible drug selection process based on efficacy, safety, and cost. DEM allows the user to assign different weights to these factors during the drug evaluation process. The product of DEM is a drug formulary that is therapeutically complete, consistent with accepted medical practice and maximizes cost efficiencies achievable from a drug formulary.