Obviously having formulary restrictions would help, but at the same time, we don't believe formularies are the best way to make doctors take cost-effectiveness more into account when they write prescriptions. Under systems of managed competition, there are ways in which you can, for example, delegate to primary care practices responsibility for part of the cost of the drugs that are prescribed for given patients.
That emphasizes the idea that I referred to: we think that unless you have a system that clearly defines which decision-maker is in charge of all aspects of the health care costs—including physician services, hospital services, and pharmaceuticals—the system is unlikely to work well.
However, of course you are right that formulary involves some partial degree of control over prescription decisions.