Formulary First: The History of Hospital Pharmacy Management

Before a single pill hits the cart. Before it reaches the nurse’s hand. Before it ever helps a patient—there’s the formulary.

It’s not just a list. It’s a safety net. A cost-control lever. A behind-the-scenes roadmap for smarter, safer healthcare.

This is the untold story of how hospital pharmacy formulary management evolved. How it became one of the most powerful tools in modern medicine—and why it’s still changing today.

Where We're Headed

We’ll walk through five chapters that shaped how we manage medications in hospitals:

1. Foundations (1920s–1950s) – The rise of hospital-based pharmacy and the beginning of structured medication practices. This era saw the shift from physician-led drug compounding to formal pharmacy departments. Early drug lists began forming as antibiotics and synthesized medications entered common use, laying the groundwork for modern formulary practices.
    

2. The Birth of the P&T Committee (1960s–1970s) – Clinical structure begins with the introduction of Pharmacy & Therapeutics Committees. These multidisciplinary groups—pharmacists, physicians, and administrators—were tasked with evaluating drug safety and efficacy. National organizations such as ASHP and The Joint Commission helped formalize these committees in hospitals nationwide.
    

3. Cost Meets Care (1980s–1990s) – The managed care era emphasized value-based decisions. Formularies became tools to contain costs without sacrificing quality. Hospitals began tiering drug access, conducting drug utilization reviews (DURs), and integrating cost-effectiveness into clinical decision-making. Legislation like OBRA '87 codified review practices.
    

4. Evidence-Based Expansion (2000s–2010s) – Technology and transparency reshaped the field. With the rise of electronic health records and clinical decision support tools, formulary decisions became data-rich. P&T Committees now incorporated real-time data, comparative effectiveness studies, and quality metrics to guide policy. Medicare Part D regulations introduced new requirements around formulary structure and patient communication.
    

5. Strategic Stewardship (2020s–Present) – Data-driven decisions for better outcomes define the modern era. Predictive analytics, artificial intelligence, and population health strategies are now standard in leading institutions. Biosimilars, gene therapies, and precision medicine demand ongoing formulary reassessment. Today’s hospital formulary is a living tool—built not just to manage drugs, but to optimize care delivery across entire health systems.
    

Let’s walk through the decades—and see how this system quietly became the engine behind better care.

Foundations (1920s–1950s)

Hospital pharmacies didn’t always exist. In the early 20th century, doctors handled medications themselves—writing scripts, mixing compounds, and overseeing it all.

But as new drugs entered the scene—antibiotics, synthetic treatments, injectable medicines—the process got too complex. Hospitals began hiring full-time pharmacists. By the 1930s, those pharmacists were creating internal lists to track drugs used most.

They weren’t official. They weren’t regulated. But they were practical. And they worked.

When WWII hit, hospitals had to think like systems. Inventory control became essential. The rise in drug diversity forced hospitals to prioritize, streamline, and manage wisely. That’s where the idea of a formulary—organized, intentional—really began.

The Birth of the P&T Committee (1960s–1970s)

By the 1960s, hospitals needed more than a list. They needed a process.

Pharmacy & Therapeutics Committees answered the call. A collaboration between pharmacists, physicians, and administrators. Together, they decided what made the cut.

Was a drug safe? Effective? Better than what they already had? That’s what they evaluated.

The Joint Commission and ASHP brought consistency. They laid down guidelines. They shaped expectations. And hospital formularies became formal—monitored, reviewed, and accountable.

This wasn’t just about keeping a shelf stocked. It was about clinical excellence.

Cost Meets Care (1980s–1990s)

The 1980s changed everything. Healthcare costs were rising fast. Formularies had to do more than protect patients—they had to protect budgets.

Hospitals began tiering drugs. Generic first. Brand second. Specialty only if necessary.

Utilization reviews—especially those introduced by OBRA ’87—made it possible to flag dangerous combinations or excessive prescribing.

This era didn’t sacrifice quality. It aligned it. Formularies became decision-making tools, helping hospitals deliver better care within budget.

Evidence-Based Expansion (2000s–2010s)

The digital age transformed the game. With EHRs and clinical support systems, formulary management became real-time and data-powered.

P&T Committees weren’t working with paper lists anymore. They had dashboards. Outcomes data. Peer-reviewed studies at their fingertips.

Medicare Part D added structure. Patients needed to understand which tier their medication was in. Hospitals had to justify choices more clearly.

This era brought transparency, consistency, and smarter prescribing.

Strategic Stewardship (2020s–Present)

Today, formulary management is strategic.

Hospitals use predictive analytics. AI models anticipate which drugs might perform best for specific populations. Population health drives planning. Safety and equity guide inclusion.

This is where biosimilars, gene therapies, and ultra-high-cost medications enter the conversation. Formularies aren’t just reactive. They’re proactive.

Done well, they guide entire health systems toward better patient outcomes—and sustainable spending.

Key Milestones and Policies in U.S. Formulary History

The List That Saves Lives

Every dose. Every chart. Every time a medication is given—it traces back to the formulary.

It started as a list. It became a policy. And now, it’s a pillar of clinical strategy.

Hospital formularies reduce harm. They save money. They help doctors make clearer, faster decisions. They bring science and safety together.

It’s not glamorous. But it works. And for every patient who gets the right medication, at the right dose, at the right time—it matters.

References

American Society of Health-System Pharmacists (ASHP). (n.d.). Formulary management resources. Retrieved from https://www.ashp.org

Centers for Medicare & Medicaid Services (CMS). (2006). Medicare Part D overview. https://www.cms.gov

U.S. Department of Health and Human Services. (2020). Office of the National Coordinator for Health IT. https://www.healthit.gov

U.S. Congress. (1987). Omnibus Budget Reconciliation Act of 1987.

The Joint Commission. (n.d.). Medication management standards. https://www.jointcommission.org