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Impact of Formularies on Clinical Innovation

Frederick K. Goodwin, MD

Published: November 1, 2003

Article Abstract

It is important to consider, in light of how innovation has so often occurred, whether today’s managedcare environment is conducive to continued psychopharmacologic innovation. The initial step inthe development of a new area in psychopharmacology has historically relied in large part on individualclinicians who pursued unconventional methods of treatment. When a set of guidelines such asa formulary (a list of drugs eligible for reimbursement compiled by a managed care organization) becomesrestrictive, it decreases clinician innovation. In addition to this long-term threat to innovation,studies have found greater restrictiveness in formularies to be associated with higher health care utilization.Thus, restricted formularies that are based on a naive interpretation of “therapeutic equivalence”may slow the advance of medical science without even achieving the only goal that could possiblyjustify such restrictions—cost control. If innovation is to flourish, formularies must be flexibleand advisory, not restrictive. Preserving the climate for innovation in health care requires the managementculture to focus on the long-term impact of policies on quality and innovation as well as on theoverall health cost in the system.

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