A formulary is the list of medicines a payer agrees to cover, together with the conditions attached to each one. The payer might be a commercial insurer, a self-insured employer, a hospital, a national health service or a government programme such as Medicare. Such a list exists because no budget stretches to every approved drug at the price its manufacturer asks. Restricting coverage to a selected subset creates leverage over manufacturers, who discount to win placement, and over prescribers and patients, who meet a higher bill or a substitution when a product is left off.

That leverage is why the document matters well beyond pharmacy departments. Placement decides whether an advertisement can end in a dispensed prescription or a rejection at the counter, which makes coverage status a media variable rather than a back-office one. Healthcare demand-side platforms have begun ingesting it directly. DeepIntent said on September 10, 2026 that its marketing cloud now incorporates payer and formulary signals alongside the prescriber and patient data it already held.

How a formulary is assembled

The decision body is the Pharmacy and Therapeutics committee, a panel of pharmacists, physicians, nurses and administrators that reviews clinical evidence, comparative effectiveness and cost for each product under consideration. Manufacturers submit dossiers to it. The dominant template for those submissions is the AMCP Format for Formulary Submissions, published by the Academy of Managed Care Pharmacy, which is advisory rather than mandatory and sets out the clinical and economic evidence decision-makers expect.

Listed drugs are then sorted into tiers, each carrying a different share of cost for the patient. Commercial and Medicare lists commonly run four to six tiers, ordered from preferred generics through preferred and non-preferred brands to specialty products. Placement one tier higher can move a patient's monthly contribution by a factor of several.

Tiering is only half the machinery. Utilisation management attaches conditions to individual listings: prior authorisation requires a prescriber to justify the choice before the claim is paid, step therapy obliges a patient to fail on a cheaper option first, and quantity limits cap the units dispensed per period. A drug can be technically covered and practically hard to obtain.

Behind the published list sits a negotiation invisible in it. Pharmacy benefit managers, which administer drug benefits for plan sponsors, trade preferred placement for rebates off list price. The complement of the formulary, the exclusion list, names products the plan will not pay for at all.

What the rules require

Medicare Part D, created by the Medicare Modernization Act of 2003, is the most heavily specified formulary regime in the United States. Statute requires plans to cover at least two drugs in each therapeutic category and class. For six protected classes, namely anticonvulsants, antidepressants, antineoplastics, antipsychotics, antiretrovirals and immunosuppressants, the Centers for Medicare and Medicaid Services requires all or substantially all drugs to be listed.

Classification runs on a separate standard. Section 1860D-4(b)(3)(C) of the Social Security Act names the United States Pharmacopeial Convention, which publishes the Medicare Model Guidelines under a cooperative agreement with CMS and revises the categories and classes on a three-year cycle. A draft of version 10.0, covering 2028 to 2030, went to stakeholders during 2026.

Concentration on the commercial side is extreme. CVS Caremark, Express Scripts and Optum Rx together process roughly four in five United States prescriptions. Each of their 2026 standard exclusion lists carried more than 600 products, according to the Drug Channels Institute, which counts multiple formulations of the same molecule once.

From apothecary manuals to exclusion lists

The word is older than insurance by several thousand years. A Sumerian tablet from Nippur dated to around 3000 BC is the oldest known example of the form, and early European versions circulated from Florence in 1498. Compiled by Physician-General William Brown and published in Philadelphia in 1778, the Lititz Pharmacopoeia served the Continental Army and is recognised as the first American formulary. These were recipe books, listing preparations rather than restricting payment.

The restrictive sense is a twentieth-century invention. Modern hospital formularies appeared in New York in 1933, the American College of Surgeons issued standards for hospital pharmacy in 1936, and the Joint Commission on Accreditation of Hospitals encouraged P&T committees in 1950 before requiring one for accreditation in 1965. Globally, the World Health Organization published the first Model List of Essential Medicines in 1977 with 186 entries; the 24th edition, released in September 2025, carries 523.

Managed care supplied the commercial turn. The AMCP Format appeared in October 2000 and reached version 5.0 in April 2024, adding guidance on digital therapeutics and health disparities. Large-scale exclusion lists date from 2012. In 2014 CVS Caremark and Express Scripts excluded 134 medicines between them, a figure that has since risen more than ninefold per plan.

Why formulary status moves advertising money

Pharmaceutical marketing has a name for the work that follows a win: pull-through, the campaign that converts newly secured coverage into written prescriptions. It is the point at which access strategy becomes media strategy, and it fails without the underlying listing.

The clearest recent demonstration runs through weight-loss drugs. The share of employers covering GLP-1 medications for weight management fell from 72% in 2025 to 60% in 2026, with 27% redirecting staff to direct-to-consumer platforms and 21% pointing them at spending accounts. Sam Brough, head of brand at the research firm Tracksuit, argued that "more of the cost shifts from insurers onto consumers" as coverage retreats, changing how weight-loss brands compete. Retail pricing filled the gap: Amazon Pharmacy listed the Zepbound KwikPen at $299 a month in cash-pay pricing in March 2026 and later began delivering GLP-1 prescriptions to Medicare patients at $50 under a federal bridge programme, handling prior authorisation itself.

Coverage data is also becoming a targeting input. epocrates, the clinical reference tool physicians consult during consultations for dosing, interactions and formulary lookups, opened its in-workflow inventory to programmatic buyingon May 26, 2026 through DeepIntent, which had already connected to three electronic health record partners that month. Provider-level addressability arrived in parallel, with StackAdapt releasing self-serve National Provider Identifier targeting on January 6, 2026. The measurement that grades these campaigns, script lift, reads the same claims records that formulary rules govern.

Limitations and disputes

The central criticism is that the rebate structure rewards high list prices. A manufacturer can buy placement with a larger discount off a larger number, leaving patients whose cost-sharing is calculated on list price worse off than the plan.

Ownership compounds the objection. Each of the three largest pharmacy benefit managers belongs to a group that also sells private-label biosimilars, and those products dominated preferred placement for Humira and Stelara on the 2026 lists, according to the Drug Channels Institute.

Clinical substitutability is contested too. An analysis published in Health Science Journal found that 42% of Express Scripts exclusions in 2022 forced patients onto a medicine that was not therapeutically equivalent, or offered no alternative at all. Consultancy Xcenda, owned by the drug distributor AmerisourceBergen, reported that oncology exclusions at the big three rose from two medicines each in 2016 to between 29 and 38 in 2022.

On the advertising side, provenance is thin. When DeepIntent announced the addition of payer and formulary data, it did not identify the source, the de-identification standard applied, or how the records are matched, and PPC Land noted that the company's description of its cloud as the industry's richest and most trusted arrived without third-party evidence.

Not the same as

A pharmacopoeia is a compendium of quality standards for identity, strength and purity, such as the United States Pharmacopeia-National Formulary. It governs what a drug must contain, not who pays for it, despite the shared vocabulary.

The WHO Model List of Essential Medicines is a procurement and policy template intended to guide national lists toward availability. It confers no payment obligation.

Prior authorisation is a condition attached to a listed drug rather than a listing decision, and a product can carry it while remaining on formulary.

A pharmacy benefit manager operates formularies but is not one; the same administrator publishes several lists with different exclusions for different clients.

Recent developments

Federal price-setting reached the formulary in 2026. Maximum fair prices negotiated under the Inflation Reduction Act took effect for the first ten Part D drugs on January 1, 2026, with a second set of 15, including semaglutide products, due on January 1, 2027. The Drug Channels Institute reported in April 2026 that exclusion growth had plateaued at Caremark and Optum Rx while Express Scripts expanded sharply, and argued that falling list prices and direct-to-patient distribution are weakening the leverage exclusions once delivered.

Regulatory pressure on promotion moved in the opposite direction from platform policy. Prescription brands raised multiscreen television spending 53% to $4.95 billion between October 2025 and March 2026 after federal enforcement letters, while Google dropped certification requirements for Authorized Buyers promoting prescription drugs in certain markets from January 2026, having introduced restricted drug term certification for personalised targeting in July 2025.

Timeline

  • Around 3000 BC: A Sumerian tablet from Nippur records the oldest known formulary
  • 1498: An early European formulary is produced in Florence
  • 1778: The Lititz Pharmacopoeia, compiled by William Brown, becomes the first American formulary
  • 1933: Modern hospital formularies emerge in New York
  • 1936: The American College of Surgeons issues standards for hospital pharmacy
  • 1950: The Joint Commission on Accreditation of Hospitals encourages Pharmacy and Therapeutics committees
  • 1965: A P&T committee becomes a condition of hospital accreditation
  • 1977: The World Health Organization publishes the first Model List of Essential Medicines, with 186 entries
  • October 2000: AMCP publishes version 1.0 of the Format for Formulary Submissions
  • 2003: The Medicare Modernization Act creates Part D and names USP to classify covered drugs
  • 2012: Large-scale exclusion lists begin at the major pharmacy benefit managers
  • 2014: CVS Caremark and Express Scripts exclude 134 medicines between them
  • August 2022: The Inflation Reduction Act authorises Medicare price negotiation
  • April 2024: AMCP releases Format version 5.0
  • September 2025: The 24th WHO Model List of Essential Medicines is published, listing 523 medicines
  • January 1, 2026: Negotiated maximum fair prices take effect for the first ten Part D drugs
  • April 2026: Drug Channels Institute reports each big-three 2026 exclusion list exceeding 600 products
  • September 10, 2026: DeepIntent adds payer and formulary signals to its healthcare marketing cloud
  • January 1, 2027: Negotiated prices take effect for a second set of 15 Part D drugs

Summary

Who. Pharmacy and Therapeutics committees decide what goes on a formulary. Pharmacy benefit managers, dominated by CVS Caremark, Express Scripts and Optum Rx, operate the lists for commercial plans and negotiate the rebates behind them. CMS sets the rules for Medicare Part D, and USP supplies the classification. Manufacturers submit evidence dossiers and fund the pull-through campaigns that follow a listing.

What. A list of covered medicines with tiers, utilisation management conditions such as prior authorisation and step therapy, and a published exclusion list naming products the plan will not pay for.

When. The form dates to antiquity, the restrictive hospital version to the 1930s, the managed care exclusion era to 2012, and federally negotiated Part D prices to January 1, 2026.

Where. Every system that pays for medicines, though the commercial rebate structure described here is specific to the United States.

Why. Coverage status determines whether pharmaceutical advertising converts into a dispensed prescription. As formulary support for high-cost categories retreats, demand moves to cash-pay retail channels, and the media strategy for those categories changes with it.