title: Formulary: what it is and how it works.
abstract: Estimates for healthcare expenditures in 1993 exceeded $900 billion, approaching 15% of GNP. Of this, approximately 7.5% ($62 billion) was spent on drugs. More recently, costs show that the US spends over $3,000 per person per year on healthcare. Although no one disputes that the cost of healthcare is rising, generally the rate at which it rises is not as rapid in a managed care environment compared to a fee-for-service one. Because of this, the boundaries of managed care and pharmacy benefits management (PBM) continue to expand. Outpatient drug benefits, for instance, are being carved out of the medical benefit offered by several types of insurance programs. This is mainly a result of point-of-sale claims processing and enhanced information system data base reporting making the drug portion easier to identify and separate from other medical claims. Self-funded employers are now actively seeking PBM companies to contract with for this type of service. The services being offered by PBM companies include: Pharmacy networks in which plan members fill prescriptions at a discounted or contracted rates. Disease state management. Drug utilization review. Financial reporting. Formulary management. The main component of formulary management is the development and distribution of a drug formulary. This article discusses what a drug formulary is and how it works.
authors.affiliation: Pharmacy Gold, Inc, St. Paul, MN, USA.
authors.forename: G
authors.initials: G
authors.lastname: Smith
mesh_terms: D003362:Cost-Benefit Analysis; D019468:Disease Management; D016527:Drug Costs; D017723:Drug Utilization Review; D005569:Formularies as Topic; D006264:Health Benefit Plans, Employee / Q000191:economics / Q000458:organization & administration; D007256:Information Systems / Q000458:organization & administration; D008329:Managed Care Programs / Q000191:economics / Q000458:organization & administration; D010818:Practice Patterns, Physicians'; D016896:Treatment Outcome; D014481:United States