Economic impact of ambulatory care formulary restrictions at a large county health system.

PURPOSE: Study results documenting substantial cost savings achieved by an outpatient indigent-care pharmacy program through formulary modifications and optimized purchasing practices are presented. METHODS: Wholesale purchasing data were retrospectively evaluated to compare drug expenditures before and after a large Florida hospital's adoption of a tiered formulary system for three ambulatory care facilities serving mostly uninsured patients. The outcomes assessed included the average cost per prescription and total medication purchases before and after implementation of the tiered formulary, which was phased in over several months and accompanied by intensive educational programs targeting physicians and pharmacy staff. Other outcomes included cost avoidance resulting from an increased emphasis on patient assistance program (PAP) enrollment and the use of "bulk replacement" arrangements for prescription replenishment. RESULTS: During a designated nine-month postimplementation period, the average cost per prescription declined by 4.7% (from $19.86 to $18.92) relative to the baseline value. Six-month spending decreases of 36-58% from prior-year levels were achieved in 7 of the 10 most-purchased drug classes, with an overall 25% decline in medication purchases. Cost avoidance due to more aggressive use of PAPs and bulk replacement programs also yielded substantial program savings. CONCLUSION: Formulary streamlining and other cost-control initiatives at an outpatient pharmacy program were associated with a decrease in the average cost per prescription of $0.94 over a nine-month period. The primary endpoint showed a potential annualized savings of approximately $1 million.