OBJECTIVES: By testing a methodology that combines labelled and non-labelled public expenditure, this report aims to produce first estimates of the amounts European governments spend on the illegal drug problem. METHODS: The European Information Network on Drugs and Drug Addiction (REITOX) was asked to list any budgeted labelled drug-related fund found after reviewing government budgets for the year 2005 in 30 countries. In order to ensure consistency in comparing figures over time and across countries, labelled expenditure was classified according to the International Classification of the Functions of Government (COFOG). Since not all drug-related expenditure is identified as such in budgets, modelling approaches were used to estimate the amount embedded in other programmes and interventions. Non-labelled drug-related expenditure was obtained by using a top-down costing approach to estimate the proportion of expenditure causally attributable to drug use. Wherever possible, REITOX explored feasible definitions of ‘attributable proportions’ for estimating non-labelled drug-related expenditure under two COFOG functions: public order and safety and health. RESULTS: On the whole, countries have a considerable amount of quality information available on this type of costs, although calculating the non-labelled constituent is often an arduous task. Estimates from reporting countries extrapolated to European level arrived at a total cost of drug-related public expenditure in 2005 of €34 billion, which is equivalent to 0.3% of the sum of the GDP of all of the countries. This represents an average expenditure of €60 per European citizen per year.CONCLUSIONS: Whilst such figures should still be used with caution (the methodology still needs refining and country data is in no way uniform), one observation the report makes is that the disbursements identified mainly refer to public expenditure made at central government level. The future inclusion of sub-national government expenditure will certainly increase the amounts of public expenditure estimated.