The effect of a closed formulary on prescription drug use and costs

Abstract

This study examines the effect of a closed formulary on pharmaceutical use and spending. We compared an employer plan that implemented a closed formulary in July 1997 to a control group with an open formulary, for the nine months preceding and following implementation of the formulary. When controlling for age, gender, and chronic disease score, the closed formulary was associated with significantly lower increases in utilization and expenditures, a higher prior authorization rate, and a reduced rate of continuation with chronic medications in the nine months following its implementation. These findings have implications for the design of prescription drug benefits.