Legal issues associated with formulary product-selection when there are two or more recognized drug therapies.

The legal issues associated with selecting drug products under the formulary system when there are two or more recognized drug therapies are discussed. The primary legal issue involved is whether a decision by a health-care provider to use a particular drug product can be viewed as "reasonable" under the circumstances when there are two or more recognized drug therapies for treating a patient. In the institutional setting, the physician diagnoses and prescribes drug products but authorizes, under the formulary system, the selection of alternative agents. Imposition of civil liability on health-care providers for a patient's drug-related injury based on a formulary decision has not yet occurred. Liability would most likely be based on negligence in such a case. The standard of care a medical provider will be measured against is what a "reasonable provider" would do under like circumstances. An institution's decision whether or not to routinely have available a particular drug product that is among several accepted therapies would probably not be viewed as negligent, so long as that decision was based on the objective clinical judgment of the medical staff operating under the formulary system. It is unlikely that a decision to use one of two (or more) drug products would be "negligent" if that decision was based on a current and objective evaluation of the medical literature and supported by a recognized segment of medical opinion.

New Medicare Conditions of Participation for Hospitals.

The new Medicare Conditions of Participation for Hospitals are reviewed, and their effect on hospital pharmacy is discussed. In general, the revised Conditions, which are federal regulations establishing requirements that hospitals must meet to participate in Medicare programs, focus on outcomes and services rather than on procedures and departments. A new standard requiring discharge planning as part of an institution's quality-assurance program implicitly invites pharmacy participation by not limiting responsibility for such a program to the medical staff. The medical staff is accountable to the governing body, rather than co-equal with it, as was the case previously. Hospitals now have greater flexibility in granting staff privileges to nonphysician practitioners; pharmacists could be designated as a category of medical-staff membership. The opportunity exists for initiation and expansion of pharmacy-based medication-administration programs, since the Conditions do not limit such services to nursing or medical personnel. Pharmacists are permitted to receive oral orders for prescriptions. The importance of pharmaceutical services is recognized in the new standards by requirements for drug-therapy monitoring and information and drug-product control. Further, the regulations mandate establishment of a formulary system. The pharmacy-related changes in the Conditions recognize several key professional practice concepts, thus easing implementation of new strategic directions for hospitals and hospital pharmacy.

Repercussions of the Drug Price Competition and Patent Term Restoration Act of 1984.

Recently enacted legislation involving patent terms and the approval of new generic equivalent drug products is described, and the law's potential repercussions are discussed. The Drug Price Competition and Patent Term Restoration Act of 1984 (PL 98-417) consists of two titles that affect introduction procedures and patent requirements for certain types of generic new drug products. Title I allows drug manufacturers to use an abbreviated new drug application when seeking approval to make generic copies of drug products that were approved by the FDA after 1962. Title II encourages drug manufacturers to assume the increased costs of research and development of certain products that were subject to premarketing clearance by restoring some of the time lost on patent life while the product was awaiting FDA approval. Legislative analysts continue to question whether the short-term gains of eased market access to the generic manufacturers will be outweighed by the long-term benefits of patent extensions to the pioneer drug companies. The potential difficulties in the implementation of the Act and unresolved questions of law surrounding the new law are discussed. The possible effects of the new law on the drug manufacturing industry and market composition are described. Since PL 98-417 was implemented in September 1984, little has been settled in the way of implementing its provisions or accurately measuring its nonregulatory impact. It seems certain that the bill will be difficult to regulate and that litigation will proliferate. Furthermore, the impact of the statute on the composition of the drug industry will undoubtedly be substantial.