Formulary management implications in a Massachusetts integrated health system consisting of a physician group practice clinic, an HMO, a hospital, a long-term care facility, a physician-hospital organization, a home care agency, and a clinical laboratory are described. Two formularies govern drug therapy for most patients in the system. The formulary of the group practice (Fallon Clinic) is used for 180,000 patients covered by the HMO. The formulary of Saint Vincent Hospital influences drug use in the hospital and the system's long-term care facility. Both formularies require formal review before a drug is added and have structured processes for nonformulary requests. Entities in the health system are still being integrated at the operational level. The system does not have a formal position on integration of the formularies, but information exchange and collaboration occur because of overlap in the membership of the committees that approve the two formularies. Formulary decision-making has been coordinated to account for systemwide needs (for example, enoxaparin was not added to the hospital's formulary because of concerns about continuity of drug therapy after discharge, and the hospital's formulary includes the oral agents on the clinic's formulary). The systems uses one group-purchasing organization and one wholesaler; one person negotiates separate contracts for the hospital and the clinic. System coordination of formulary management has had little effect on daily activities of the pharmacy staff. Drug use among ambulatory patients in this integrated health system is influenced by the clinic's formulary, and drug use among patients in the hospital and subacute care beds is influenced by the hospital's formulary.