At its most basic level, a 'formulary' is a list of medicines. Traditionally, a formulary contained a collection of formulas for the compounding and testing of medication (a resource closer to what would be referred to as a pharmacopoeia today). Today, the main function of a prescription formulary is to specify particular medications that are approved to be prescribed under a particular insurance policy. The development of prescription formularies is based on evaluations of efficacy, safety, and cost-effectiveness of drugs.
By the turn of the millennium, 156 countries had national or provincial essential medicines lists and 135 countries had national treatment guidelines and/or formulary manuals.
United States 
In the US, where a system of private healthcare is in place, a formulary is a list of prescription drugs available to enrollees, and a tiered formulary provide financial incentives for patients to select lower-cost drugs. For example, under a 3-tier formulary, the first tier typically includes generic drugs with the lowest cost sharing (e.g., 10% coinsurance), the second includes preferred brand-name drugs with higher cost sharing (e.g., 25%), and the third includes non-preferred brand-name drugs with the highest cost-sharing (e.g., 40%).
When used appropriately, formularies can help manage drug costs imposed on the insurance policy. However, for drugs that are not on formulary, patients must pay a larger percentage of the cost of the drug, sometimes 100%. Formularies vary between drug plans and differ in the breadth of drugs covered and costs of co-pay and premiums. Most formularies cover at least one drug in each drug class, and encourage generic substitution (also known as a preferred drug list).
United Kingdom 
In the UK, the National Health Service (NHS) provides publicly funded universal health care, financed by national health insurance. Here, formularies exist to specify which drugs are available on the NHS. The two main reference sources providing this information are the British National Formulary (BNF) and the Drug Tariff. There is a section in the Drug Tariff, known unofficially as the “Blacklist”, detailing medicines which are not to be prescribed under the NHS and must be paid for privately by the patient.
In addition to this, local NHS Trusts, including Hospital Trusts and Primary Care Trusts (PCTs), produce their own lists of medicines deemed preferable for prescribing within their locality or organisation; such lists are usually a subset of the more comprehensive BNF. These formularies are not absolutely binding, and physicians may prescribe a non-formulary medicine if they consider it necessary and justifiable. Often, these local formularies are shared between a PCT and hospitals within that PCT's jurisdiction, in order to facilitate the procedure of transferring a patient from primary care to secondary care, thus causing fewer “interfacing” issues in the process.
As in the United States, NHS trusts actively encourage generic prescribing, in order to save more of the budget allocated to them by their Strategic Health Authority, and ultimately, the Department of Health.
National formulary 
A national formulary contains a list of medicines that are approved for prescription throughout the country, indicating which products are interchangeable. It includes key information on the composition, description, selection, prescribing, dispensing and administration of medicines. Those drugs considered less suitable for prescribing are clearly identified.
Examples of national formularies are:
- Australian Pharmaceutical Formulary
- British National Formulary
- British National Formulary for Children
- Sri Lankan Formulary
- United States National Formulary, since bought out and merged with the United States Pharmacopeia
- FASS is the Swedish national formulary, the abbreviation standing for Farmaceutiska Specialiteter i Sverige. Usage of the database is free of charge and it has no promotional texts or advertising. Fass has been developed by the Swedish Association of the Pharmaceutical Industry (LIF) in close cooperation with Sweden’s pharmaceutical industry, with additional assistance from the Medical Products Agency, the Pharmaceutical Benefits Board and the National Corporation of Pharmacies. Information on interactions is derived from a joint development between the Departmentof Pharmaceutical Biosciences at Uppsala University and the Swedish Association of the Pharmaceutical Industry (LIF).
See also 
- Chilean pharmaceutical policy
- Medicare Part D
- Medicare Prescription Drug, Improvement, and Modernization Act
- Prescription drug prices in the United States
- Seneka Bibile
- Specification (technical standard)
- Sri Lanka National Pharmaceuticals Policy
- State Pharmaceuticals Corporation of Sri Lanka
- National Drug Code System
- Formulary Definition
-  The New Medicare Drug Benefit: Formularies and Their Potential Effects on Access to Medications
- New York State Department of Health
- FASS – the Swedish Medicines Information Engine information booklet from The Swedish Association of the Pharmaceutical Industry (LIF). Updated 2008