The role of the formulary system for effective cost containment is becoming increasingly important. With antimicrobial agents taking up a large proportion of most pharmaceutical budgets, this group of agents is an obvious target for cost reduction. The responsible interchange of selected antimicrobial agents offers a promising method to achieve this goal. The Pharmacy and Therapeutics Committee at Henry Ford Hospital implemented the formulary replacement of cefoxitin with cefotetan on a cost basis after the agents were evaluated and considered to be therapeutically equivalent. Drug usage guidelines were developed to implement this change. Educational materials were distributed to the medical staff, and lectures on the appropriate use of cefotetan were given to the house staff. On implementation, all orders written for cefoxitin were automatically changed to cefotetan in the appropriate dosage. After the first 12 months of cefotetan usage no unanticipated problems with treatment failures or adverse effects were noted. Based on analysis of cefotetan use for the first year, a savings of +4F229,811 was achieved with this interchange.