Although adverse drug reactions (ADR) are common, there is little knowledge on their direct, indirect and intangible costs. Our study is focused on the direct costs caused by ADR leading to hospital admission. The objective is to quantify the achievable ®nancial bene®ts if avoidable ADRs were actually prevented by appropriate measures. A literature search on two subjects was done, ®rst on length of stay (LOS) of hospital admissions due to ADR as a proxy measure for direct costs and second on their preventability. Thirteen studies on the length of stay of hospital admissions due to ADR, published between 1975 and 1996, were identi®ed. The median LOS is 8.7 days (lower quartile 8X0 days; upper quartile 12X3 days). Assuming 4.5 million admissions to departments of internal medicine in Germany with a cost of DM 465 per hospital day and a median proportion of 5.8% of medical hospital admission to be due to ADR this yields direct costs of 1050 million DM per year in Germany. A cost table for other regions is provided. Preventability of ADR was the subject of 14 publications that revealed about 30% of all ADRs to be preventable. With regard to Germany this means that 350 million DM per year could be saved by preventing adverse drug reactions. These conservative estimates Ð no indirect and intangible costs, no ADRs that occur during hospital stay, no ADRs in outpatient care are included Ð show a considerable economic burden of ADRs. As about 30% of these ADRs are considered avoidable policymakers are asked to invest more into ADR monitoring and preventive measures. Their bene®t would surmount costs and at the same time increase the quality of care.