The goal of a health maintenance organisation (HMO) is to provide high quality, cost-effective healthcare services and products which meet the needs of the membership. Providing and managing pharmaceutical products and services within the HMO is a major aspect of accomplishing this goal. Several decisions must be made in developing, implementing and maintaining a formulary system.
The numbers of people seeking their healthcare from HMOs in the US has increased 4-fold in 10 years, and several model types of HMOs have developed, including network HMOs, group HMOs, independent practitioner associations and staff models. HMOs utilising formulary systems provided cover to 76% of enrollees in 1992. Formulary system management and decision making entails the use of open vs closed formularies and the role of the pharmacy and therapeutics (P & T) committee. Product selection takes into account efficacy, safety, costs, patient acceptance, ease of use, dosage forms, preparation requirements, stability and storage requirements and the reputation of the manufacturer and the service it provides. We list and describe various policy decisions which HMO pharmaceutical decision makers must address if the formulary system is to become an efficient tool for the HMO.