FORMULARY MANAGEMENT Cost-Effectiveness Analysis and the Formulary Decision-Making Process

ormularies have existed in various forms for nearly 100 years.1 Beginning as a simple list of available drugs, they have evolved into a dynamic guide for the selection and application of preferred drug therapies by pharmacists and physicians in clinical applications. Formularies have been uti-lized widely at the hospital, community, and national levels with distinct functions in cost containment as well as quality assurance.2 Traditionally, formularies have been used to pro-mote the rational use of drugs and to set drug use standards.3 Pharmacy and therapeutics (P&T) committees make formulary decisions and evaluate whether the benefits of therapies out-weigh the risks primarily based on the documented safety and efficacy of new drug formulations. However, with drug expenditures increasing at the rate of 14 % to 18 % a year in ambulatory care and a national drug bill for 2001 that reached between $160 billion and $170 billion, cost considerations have become paramount.4 The underlying factors for higher drug expenditures, in addition to price increases, are an aging population, longer life spans, improve-ments in the diagnosis and treatment of diseases, rising preva-lence of chronic diseases, the advent of “lifestyle medications,” increases in the number of new drugs into the market, and increases in spending on drug promotion, including direct-to-consumer (DTC) advertising. The May 2002 report from th