Do drug formulary policies reflect evidence of value

UMMS Affiliation

Department of Quantitative Health Sciences

Publication Date


Document Type



Boston; Cost Savings; Cost-Benefit Analysis; Decision Making, Organizational; Deductibles and Coinsurance; Drug Costs; Evidence-Based Medicine; Florida; Formularies as Topic; *Health Policy; Health Services Needs and Demand; Humans; Insurance Coverage; Insurance, Pharmaceutical Services; Medicaid; Organizational Policy; Outcome Assessment (Health Care); Patient Selection; Pharmacy and Therapeutics Committee; Quality-Adjusted Life Years; Registries; Reimbursement, Incentive


Biostatistics | Epidemiology | Health Services Research


OBJECTIVE: To investigate the extent to which preferred drug lists and tiered formularies reflect evidence of value, as measured in published cost-utility analyses (CUAs).

METHODS: Using 1998-2001 data from a large registry of cost-effectiveness analyses, we examined the 2004 Florida Medicaid preferred drug list and the 2004 Harvard Pilgrim Pharmacy Program 3-tier formulary, and compared cost-utility ratios (standardized to 2002 US dollars) of drugs with preferred and nonpreferred status.

RESULTS: Few drugs on the formularies had any cost-utility data available. Of those that did, median cost-utility ratios were somewhat higher (less favorable) for Florida's preferred drugs compared with the nonpreferred drugs (25,465 dollars vs 13,085 dollars; P = .09). Ratios did not differ for drugs on tiers 1 and 2 of the Harvard Pilgrim formulary, although they were higher for tier 3 and for excluded drugs (18,309 dollars, 18,846 dollars, 52,119 dollars, and 22,580 dollars, respectively; P = .01). Among therapies reported to be cost-saving or to have cost-utility ratios below 50,000 dollars, 77% had favored status in Florida Medicaid and 73% in Harvard Pilgrim. Among dominated drug interventions (reported to be more costly and less effective than alternatives), 95% had favored status in Florida Medicaid and 56% in Harvard Pilgrim.

CONCLUSIONS: This study underscores the paucity of published cost-utility data available to formulary committees. Some discrepancies prevail between the value of drugs, as reflected in published cost-utility ratios, and the formulary placement policies of 2 large health plans.


Am J Manag Care. 2006 Jan;12(1):30-6.

Journal/Book/Conference Title

The American journal of managed care

PubMed ID


Related Resources

Link to Article in PubMed