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A review of limited lists and formularies: are they cost-effective?

The 'limited list' or 'formulary' concept has been used to promote rational use of drugs and to set standards for drug use. Recently the concept has been aimed more toward containment of drug costs. Effective hospital formulary systems assist in purchasing and inventory management. Application of the formulary concept has resulted in savings within specific classes of drugs and in total hospital drug costs. Key features which promote effectiveness are development of policies by prescriber consensus and continued education along with feedback on drug usage. The formulary concept also provides a foundation for appropriate use of drugs in hospitals. In the community setting, limited lists can achieve cost savings and can assist in the rational use of drugs. National limited lists have been less successful in controlling overall drug costs, probably because they have focused on economic effects, rather than education, feedback or user participation. Properly organised drug rationalisation policies embracing the limited list concept can improve health outcomes by promoting rational drug use. They can also contain or reduce drug costs.