Pharmacy-and-therapeutics (P&T) committees have been established by most hospitals and serve as the primary formal communications link between pharmacy and the medical staff. The P&T committee is responsible for all matters related to the use of medications in the institution, including the development and maintenance of the formulary (the continually revised compilation of drug products available to the medical staff). The basic objectives of a P&T committee are to specify drugs of choice and alternatives, based on safety and efficacy; to minimize therapeutic redundancies; and to maximize cost-effectiveness. Procedures necessary to strengthen the role of P&T committees and improve their decision-making processes are discussed. The increasing concern with controlling health care costs will support the continued expansion of P&T committees, formularies, and the formulary system.