Pharmacoeconomic evaluation plays a key role in both strategic decisions regarding development of a drug and acceptance of a drug, at an agreed price, by formulary or therapeutic committees. In fact, the questions the pharmaceutical companies need to address during drug development are essentially those that should be addressed by formulary committees. Yet the difficulties facing the majority of companies in addressing formulary guidelines which require pharmacoeconomic evaluation largely arise from the fact that they have failed to undertake such analyses at an early stage of drug development. Dr Paul Langley raised these points at the 1994 Pharmaceutical Conference held in Sydney, Australia, last month.