A formulary, which may be a brand name or a generic, is therapeutically similar to another drug, but not necessarily equivalent in its chemistry. Formularies are often referred to as therapeutic substitutions. Many experts argue that formulary drugs are often not interchangeable with the drug for which they are being substituted, and that formulary substitutions can be dangerous to patients. In essence, a drug formulary replaces the doctor s judgment in determining the proper prescription drug. In a closed program, non-formulary drugs are not covered at all.
Closed formularies are most prevalent in HMOs.
Studies have shown that patients in plans with closed formularies tend to incur higher Medicare costs and have poorer outcomes than those in plans without such restrictions. Drugs that are considered too costly or whose efficacy is considered less than acceptable are not included on the formulary list. Efficacy should always be the first criteria, but cost is often the driving factor in the selection process. The smaller the formulary list, the more cost effective it is, but the physician is also more restricted in selecting an appropriate medication. A. Formularies, if used, should be selected by an independent committee of physicians, including plan physicians, pharmacists and other clinical experts.