title: The impact of a national prescription drug formulary on prices, market share, and spending: lessons for Medicare?
abstract: Several recent bills in Congress to add a Medicare prescription drug benefit would allow the use of formularies to control costs. However, there is little empirical evidence of the impact of formularies among elderly and disabled populations. We assess the effect of a closed formulary implemented by the Veterans Health Administration (VHA) in 1997 on drug prices, market share, and drug spending. We find that the VHA National Formulary was effective at shifting prescribing behavior toward the selected drugs, achieving sizable price reductions from manufacturers, and greatly decreasing drug spending.
authors.affiliation: Department of Health Care Policy, Harvard Medical School, USA.
authors.forename: Haiden A
authors.initials: HA
authors.lastname: Huskamp
authors.forename: Arnold M
authors.initials: AM
authors.lastname: Epstein
authors.forename: David
authors.initials: D
authors.lastname: Blumenthal
mesh_terms: D000368:Aged; D003363:Cost Control / Q000379:methods; D016527:Drug Costs / Q000706:statistics & numerical data*; D011307:Drug Prescriptions / Q000191:economics*; D004363:Drug Utilization; D005260:Female; D005569:Formularies as Topic; D019981:Health Care Sector; D005102:Health Expenditures / Q000706:statistics & numerical data; D006801:Humans; D007356:Insurance, Pharmaceutical Services; D008297:Male; D006278:Medicare / Q000191:economics / Q000458:organization & administration; D008875:Middle Aged; D010818:Practice Patterns, Physicians'; D011787:Quality of Health Care; D014481:United States; D014493:United States Department of Veterans Affairs / Q000458:organization & administration*