This paper describes the management of a hospital formulary that is operated by voluntary co-operation of prescribers. The organizational and philosophical factors associated with the formulary management system in a major teaching hospital environment are discussed. A combination of educative, re-educative, persuasive and facilitative strategies is used to influence prescribing behaviour. Both passive and active methods, including face-to-face intervention methods are practised. The formulary is reinforced with an extensive pharmacy monitoring operation which stimulates facilitative dialogue between pharmacists and prescribers and encourages medical selfaudit and peer review. Evidence of compliance with recommended policies, and consequent control of drug expenditure are presented.