Gastroesophageal reflux disease (GERD) is one of the most common disorders of the gastrointestinal tract. Clinical presentation can vary from simple heartburn to erosive esophagitis. Some patients require long-term, possibly life-long, therapy. The cost of treatment is substantial, as patients with moderate to severe disease are high consumers of healthcare resources. The goal of therapy is to control symptoms, and to prevent complications, at a reasonable and manageable cost. Formulary decision making is more complex than simply choosing between proton pump inhibitors (PPIs) and histamine H2receptor antagonists (H2RAs); more importantly, it involves choosing the most cost-effective treatment strategy for a patient population. Since there are no long-term prospective economic studies available on the management of GERD, modeling studies provide the primary source of data for decision makers. A critical review of selected studies found that conclusions can vary based on a number of factors. These include the severity of GERD in the population being modeled, effectiveness endpoints, costs (drug and nondrug), and the inclusion of anti-reflux surgery. Effectiveness variables used in these models are generally based on randomized control trials in which endoscopic findings are used to judge success. This differs from the management of symptoms, as is common in clinical practice. In addition, the selection of which randomized clinical trial is used to define effectiveness endpoints can have a significant effect on the outcome. Thus, generalizability of economic studies often limits their value to decision makers. Pharmaceutical manufacturers have funded most of the studies in this area. For formulary decision makers to apply long-term economic analysis to their clinical practice, a critical review of these analyses is essential. Economic analysis can be a supplement to rational clinical judgment and experience in formulary decision making.