The VA National Formulary generated controversy, which motivated congressional scrutiny and a directive to the VA to commission this report reviewing the experience with the National Formulary and formulary system. This Institute of Medicine committee was pleased to assist the Congress with this review, in part because the committee saw in the VHA example an opportunity to understand and anticipate problems that all publicly funded programs are likely to encounter in this new age of pharmaceuticals. The Congress asked the committee to review the restrictiveness of the National Formulary, its impact on the costs and quality of care in the VHA, and how it compared to formularies and drug management practices in the private sector and in other public programs, especially Medicaid. Detailed in the pages that follow, the committee's findings and conclusions on these questions are, the committee believes, highly instructive, though not always in the ways that we anticipated.

Contents

• THE NATIONAL ACADEMIES
• VA PHARMACY FORMULARY ANALYSIS COMMITTEE
• Preface
• REVIEWERS
• Executive Summary
• 1. Introduction
  • LEGISLATIVE AND EXECUTIVE BRANCH HISTORY
  • FORMULARIES AND FORMULARY SYSTEMS: HISTORY AND DEFINITIONS
  • GENERIC SUBSTITUTION
  • THERAPEUTIC INTERCHANGE
  • LOCAL VA FACILITY AND VISN FORMULARIES AND THE NATIONAL FORMULARY
  • REPORT OUTLINE
• 2. Is the VA National Formulary Overly Restrictive and Does It Prevent Physicians from Meeting the Health Care Needs of Veterans?
  • BACKGROUND
  • SIZE AND COVERAGE OF THE NATIONAL FORMULARY
  • ADDITION OF NEW DRUGS AND FORMULARY REAPPRAISAL
  • THE NONFORMULARY PROCESS
  • THERAPEUTIC INTERCHANGE
  • OTC DRUG COVERAGE, GENERIC SUBSTITUTION, AND PHYSICIAN SATISFACTION
  • SUMMARY
• 3. What Are the Potential Costs to VA Health Care Associated with the National Formulary for Drugs?
  • INTRODUCTION
  • THE VHA NATIONAL FORMULARY AS IT AFFECTS COSTS
  • ANALYTICAL FRAMEWORK
  • DATA
  • EMPIRICAL METHODS
  • RESULTS OF THE IOM COMMITTEE ANALYSIS OF COST EFFECTS
  • IS THERE EVIDENCE THAT CHANGES IN FORMULARY POLICY HAVE RESULTED IN INCREASED UTILIZATION ELSEWHERE IN THE VHA SYSTEM?
  • COSTS ASSOCIATED WITH IMPLEMENTING AND MANAGING THE NATIONAL FORMULARY
  • CONCLUSIONS
• 4. What Are the Effects of the National Formulary and Related Policies on Quality of Care?
  • BACKGROUND INFORMATION
  • QUALITY OF CARE IN THE VHA AND EFFECTS OF THE NATIONAL FORMULARY
  • PHARMACY, CLINICAL, AND FORMULARY PROGRAM ELEMENTS RELEVANT TO QUALITY OF CARE
  • P&T COMMITTEES
  • THE VA PBM COMPLEX
  • POLICIES AND PROCEDURES
  • EFFECTS OF THE NATIONAL FORMULARY ON USE OF DRUGS BY THE VA
  • ADVERSE DRUG EVENTS
  • PATIENT COMPLAINTS—ADVOCATE, VETERANS OF FOREIGN WARS, AND SURVEY DATA
  • PHYSICIAN COMPLAINTS AND SURVEY DATA
  • SUMMARY STATEMENT
• 5. How Does the VA National Formulary Compare with Private Insurance Formularies for Drugs and Devices and with Other Government Formularies?
  • INTRODUCTION
  • IMPLEMENTATION OF DRUG MANAGEMENT STRATEGIES IN MANAGED CARE
  • IMPACT OF STATE LEGISLATION ON MCO PRACTICE
  • PUBLIC-SECTOR PROGRAMS
  • DEPARTMENT OF DEFENSE
  • GENERAL COMMENTS ON COMPARISONS
• 6. The VA National Formulary and Veterans Health Care
  • INTRODUCTION
  • BACKGROUND AND CONTEXT
  • THE VETERANS HEALTH ADMINISTRATION
  • RESTRICTIVENESS
  • COSTS
  • QUALITY
  • COMPARISONS
• References
• Acronyms
• APPENDIX A Interim Report of the Committee on VA Pharmacy Formulary Analysis to the Department of Veterans Affairs and the Congress of the United States
• APPENDIX B Academy of Managed Care Pharmacy's Managed Care Formulary and Pharmacy Benefit Design Survey
• APPENDIX C Additional Cost Information
• APPENDIX D. Glossary
• APPENDIX E Drug Classes and Drug Index
• Committee Biographies

Support for this study was provided by the Department of Veterans Affairs (Contract No. V-101-(93)P-1637, Task Order 10). The views presented are those of the Institute of Medicine VA Pharmacy Formulary Analysis Committee and are not necessarily those of the funding organization.

NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the committee responsible for the report were chosen for their special competences and with regard for appropriate balance.