What is a Formulary?
A formulary is a list of preferred drugs that offer the greatest overall value- and the value is defined as both clinically effective [efficacious] and also financially significant. A drug that works, and that creates financial advantage, is the essence of what goes into building a formulary.
The list of the preferred drugs is designed to influence drug product selection, meaning when the doctor writes a prescription or a patient goes to have the prescription filled, we want to make sure that we’re always using the most cost-effective, clinically appropriate drug. The cost access for a lot of these conditions are also important, so we want to look categorically and not just at drugs in isolation. Lastly, there are different versions of formularies, from what we call an open formulary all the way to an exclusionary formulary.
What Makes a Formulary Effective?
First and foremost, we always want to maximize the use of generic medications since they are the most cost-effective for both the plan sponsor and the patient. Number two, we want to have a list of drugs that maintain clinical integrity, that we’re not featuring inferior drugs over superior drugs.
Number three, we want to make sure that we are managing to the lowest net cost in a category – so, in the case of statins that are used to treat high cholesterol, what is the lowest cost we can achieve for a cohort of patients who are receiving medications to treat high cholesterol, and how do we do that in the most cost-effective way to the plan sponsor and to the patient. Lastly, formularies are dynamic, so it needs to be adaptive to the changes that we have in the marketplace.
Learn more about how to build an optimized formulary and other best practices to help your clients achieve their financial and clinical goals in our free Clinical Strategies Playbook.