Managed care and physicians' perceptions of drug formulary use

Objectives: To investigate the effects of managed care on drug formulary use and to determine whether these effects have changed over time. Study Design: We use longitudinal data from the Community Tracking Study physician surveys and compare the effects of managed care on drug formulary use between 2000-2001 and 2004-2005. Methods: Ordinary least squares regression models are estimated to quantify the effects of managed care on drug formulary use. Data from 2000-2001 and 2004-2005 are pooled together, and the year trend effect is represented by a dummy variable for 2004-2005. Results: We find that the coefficient measuring the effects of managed care on drug formulary use declined from 0.37 (P <.01) in 2000-2001 to 0.27 (P <.01) in 2004-2005. However, this relative decline in the effects of managed care on formulary use reflects not an absolute decline in formulary use in managed care but an increase in formulary use in the nonmanaged care sector. For the typical physician who has a mix of managed care and nonmanaged care patients, drug formulary use increased overtime. Conclusions: Differences in drug formulary use between managed care and nonmanaged care declined from 2000-2001 to 2004-2005. The overall level of drug formulary use increased, reflecting an increase in the nonmanaged care sector.