In today’s hospital environment, the formulary is more than a list, it’s a digital gatekeeper. For commercial teams in life sciences, understanding how these systems operate and the different types and levels of restrictions that can apply, is essential to shaping strategy, messaging, and account targeting.
How hospital formularies work
Hospital formularies are different from managed care formularies. A hospital’s formulary is a continually updated list of available medications approved for use within the institution. The selection of medication is based on clinical evidence, cost-effectiveness, safety, and alignment with care protocols/clinical practice guidelines.¹ Hospital formularies guide physicians toward preferred treatments and flagging, or blocking, those that are not.²
Importantly, “on formulary” doesn’t always mean “freely available.” Drugs can be³:
Restricted for inpatient or outpatient use only
Limited to certain patient populations or units
Prescribed only by specific services or specialties
Available solely through a particular dispensing system
Some products are approved with no restrictions, while others face layers of operational gating that influence how and whether they’re used.
Impact on ordering behavior
Formulary drugs with broad access are easy to order and often pre-populated within treatment pathways or order sets. By contrast, restricted or non-formulary drugs require extra steps, from additional approvals to system workarounds, which can delay treatment and increase the risk of prescribing or administration errors due to clinician unfamiliarity.²˒⁴
From a workflow perspective, physicians are far more likely to order what’s easily accessible. And when a drug is non-formulary, the path to prescribing it becomes longer, more complex, and often, less likely.⁵
Why this matters for account managers
Account managers should view formulary access not only as a procurement win but as a direct influence on usage. A clinically superior drug can be overlooked if it’s hard to find in the system or subject to restrictions that slow down prescribing.²
That’s why training should emphasize¹˒²˒⁴:
How formularies are created and managed (e.g., via P&T committees)
What “formulary access” actually means
The types and levels of restrictions—and how they impact prescribing behavior
How to build a strong case for inclusion, aligned with hospital goals and patient care protocols¹
Fuel for thought
At OCTANE, we work with life sciences organizations to help their commercial teams connect the dots between formulary status and prescribing behavior. Access goes beyond approval, understanding the digital and clinical systems that drive behavior at the point of care.
When account managers are trained to speak to the operational impact of being on (or off) formulary and to position their product in the context of clinical workflows, they shift from pitching to partnering.
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References
American Society of Health-System Pharmacists. ASHP Guidelines on the pharmacy and therapeutics committee and the formulary system. Am J Health-Syst Pharm. 2021;78(10).
Hydery T, Reddy V. A primer on formulary structures and strategies. J Managed Care & Specialty Pharmacy. 2024;30(2).
GoodRX. A guide to medication formularies: Understanding your prescription medication coverage. Updated 2025. Accessed August 2025.
Nazar Z, Hail MA, Al-Shaibi S, et al. Investigating physicians’ views on non-formulary prescribing: a qualitative study using the theoretical domains framework. Int J Clin Pharm. 2023;45(6).
Andrus MR, Forrester JB, Germain KE, Eiland LS. Accuracy of pharmacy benefit manager medication formularies in an electronic health record system and the epocrates mobile application. J Managed Care & Specialty Pharmacy. 2015;21(4).
