Do Hospitals Still Need a Formulary?

Pharmacy Practice in Focus: Health SystemsMay 2015
Volume 4
Issue 3

For the last few decades, the formulary has been part of a consistent foundation for all hospital pharmacies.

For the last few decades, the formulary has been part of a consistent foundation for all hospital pharmacies. The formulary, as defined by the American Society of Health-System Pharmacists, is a “continually updated list of medications and related information, representing the clinical judgment of pharmacists, physicians, and other experts in the diagnosis and treatment of disease and promotion of health.”1 As the number of new FDA-approved medications and “me-too” drugs grew, hospitals found it important to limit the number of available choices. Fewer choices ensured less chance for error, the ability to have economies of scale in purchasing guaranteed a lower acquisition cost, and the evidence-based approach to selecting a preferred therapy helped to educate clinicians on the best medication to use.

With the transition of the health care system from fee-for-service to fee-for-value, however, I have been wondering if the time and attention focused on maintaining a formulary should be lessened. I recognize this has not been proposed by many, but let me provide a few reasons for my perspective:

Cost reduction—Every organization is reviewing their operations to improve overall efficiencies. This is forcing organizations to find ways to do things smarter or not at all.

Developing accurate medication lists and performing medication reconciliation—Pharmacy departments are utilizing student pharmacists and pharmacy technicians to conduct medication histories upon admission and then ensuring they have an up-to-date list upon discharge. In addition, pharmacists are conducting medication reconciliation activities as patients transition across different settings. This is a critical step to ensuring patient care is optimal.

Reducing readmissions—Financial penalties are being assessed to organizations for inappropriate readmissions, and pharmacy departments are employing strategies to reduce them. From providing medications upon discharge, calling patients after discharge, or setting up clinic visits, steps are taken to ensure that transitions of care go smoothly.

Transitions of care—With the focus on ensuring patients have smooth transitions across the care continuum, specifically from the hospital setting to being back at home, it is important that patients leave the hospital with the same medications they had when they were admitted. This is difficult to do when the many demands of the acute care setting are recognized.

Rising influence of benefit plans—Due to the increasing costs of medications, pharmacy benefit management companies are increasing the number of tiers, changing co-payment structures, and directing where and how patients can receive their medications, and, in rare cases, what medications are used to treat certain disease states. These decisions could be very different from the desires of the hospital or the information contained in its formulary.

Decreasing length of stay—Hospitals are focusing on ensuring a patient’s hospital stay is as short as possible, transitioning them home quickly and safely.

Retail pharmacies—More hospitals are opening retail locations, and because of this, they need to be able to serve all the medication needs of individuals, necessitating access to drugs that may not be on the formulary.

All of these reasons force me to consider whether an institution that limits the number of me-too drugs by promoting strict adherence to therapeutic substitutions does more harm than good. While the formulary does save money on the drug budget through contracting for preferred agents, the chance is high that a patient leaves the hospital with the wrong drug based upon what their insurance covers is high. This leaves the community pharmacy or primary care physician to sort through the insurance issues, as opposed to the hospital pharmacy that implemented the changes taking ownership of the problem. If a patient gets discharged without having been reconciled back to their original therapy, which is highly probable, this therapeutic duplication could lead to paying more out-of-pocket for a nonpreferred agent, or worse yet, an adverse event and readmission—a step more costly to the hospital than what was gained from the therapeutic substitution.

Pharmacists will always be the experts of the medication-use process and are essential for appropriate utilization; however, I do wonder if our finite resources could be put to better use to ensure that we fulfill all of our purposes optimally.

Stephen F. Eckel, PharmD, MHA, BCPS, FCCP, FASHP, FAPhA, is associate director of pharmacy, University of North Carolina Hospitals, and clinical associate professor and director of graduate studies at the University of North Carolina Eshelman School of Pharmacy.


  • American Society of Health-System Pharmacists. ASHP statement on the pharmacy and therapeutics committee and the formulary system. Am J Health-Syst Pharm. 2008;65:2384-2386.

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