Formulary management implications are described for a California health system consisting of 7 hospitals, 4 skilled-nursing centers, 22 medical clinics, 8 urgent care facilities, and a health maintenance organization. Sharp HealthCare serves nearly 1 million people in the San Diego area. A single institutional care division (ICD) pharmacy service has been created under the guidance of a steering committee consisting of a pharmacy operations coordinator and a staff pharmacist from each site, the system pharmacy director, the system senior pharmacy information systems specialists, and the system senior clinical pharmacy specialist. Operations at each site are overseen by an operations coordinator instead of a pharmacy director. Functional teams reporting to the steering committee are standardizing pharmacy processes, including formulary management; this is particularly important because the ICD has pharmacist and nurse per diem pools. Until 1995, formularies were independently managed at each site. Now, one system formulary is being developed. Standard policies and procedures, a nonformulary drug request form, and a monograph format have been completed. The hospitals' autonomous medical staffs have thus far elected to retain individual pharmacy and therapeutics (P&T) committees but approved a revamped formulary review process and systemwide P&T subcommittees. The computer system is being enhanced so that pharmacists anywhere in one of the hospitals will have access to applicable P&T committee-approved guidelines for drug use. Since vendors were advised that the system is establishing one formulary, Sharp has been able in some cases to achieve better pricing than it previously could through its purchasing group. Drug use is influenced by each site's pharmacy and therapeutics committee. The ideal, however, is to have this responsibility consolidated in a single systemwide committee.