The case for a value-based formulary: striving for total lowest net cost

Area of Science:

• Health Economics
• Pharmaceutical Management
• Clinical Pharmacy

Background:

• Formularies are crucial for managing drug costs and utilization.
• Traditional formulary decisions often focus on safety, efficacy, and price.
• A comprehensive approach is needed to optimize drug selection beyond basic metrics.

Purpose of the Study:

• To outline the principles of a value-based formulary system.
• To emphasize the role of a full-disclosure financial model in drug selection.
• To highlight the multifaceted considerations for determining drug appropriateness in formularies.

Main Methods:

• Implementing a value-based formulary framework.
• Utilizing a full-disclosure financial model for cost analysis.
• Establishing ongoing due diligence processes for the Pharmacy & Therapeutics Committee.

Main Results:

• Value-based formularies ensure the selection of appropriate drugs at the lowest net cost.
• The process necessitates a high level of due diligence by the Pharmacy & Therapeutics Committee.
• Drug appropriateness determination extends beyond safety, efficacy, and pricing.

Conclusions:

• A value-based formulary, supported by financial transparency, optimizes drug selection.
• Pharmacy & Therapeutics Committees must conduct thorough due diligence for effective formulary management.
• Demographic factors, compliance, and desired medical outcomes are critical for comprehensive drug appropriateness assessment.