The objectives of this booklet are twofold. First, to describe in simple terms the state of the art in undertaking economic studies to demonstrate the benefits of new and existing medicines. Second, to remind readers why such analyses are of increasing importance both to individual pharmaceutical companies and to the industry as a whole. The text of the booklet has been prepared in consultation with the newly formed ‘Pharmaceutical Industry Health Economics Group’ (PIHEG) chaired by Nicholas Wells of Glaxo, as well as with the Editorial Board of the Office of Health Economics. However – as with all OHE Reports – it has tried to avoid the pitfalls of ‘Committee drafting’ and its ultimate style and presentation remain the responsibility of myself as author. It is hoped that pharmaceutical executives, and medical and research directors in particular, will read the booklet, in order to understand better how health economists can help to achieve an improved awareness, in economic terms, of the benefits of the