This paper describes the management of a hospital formulary that is operated by voluntary co-operation of prescribes. 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 self-audit and peer review. Evidence of compliance with recommended policies, and consequent control of drug expenditure are presented.