Objective: The study is an assessment of the economic impact of allopurinol hypersensitivity syndrome (AHS) in a managed care population. Methods: Due to absence of a specific ICD-9 CM code for AHS, an algorithm was developed using results of a modified Delphi process to identify an AHS episode, and assess its economic impact from claims data. Allopurinol users were identified as those who had a prescription during January 1, 2000 to June 30, 2006. Presence of an AHS episode was assessed during the continuous eligibility period after the first allopurinol prescription. The start date of an AHS episode was termed as the index AHS date, and overall health care costs were computed during a six month period before and after the index AHS date. Statistical differences in costs per patient per six month period pre- and post- AHS were assessed using paired t-tests; differences in proportion with non-zero costs were assessed using McNemar's test. All costs are expressed in 2007 US Dollars. Results: A total of 417 allopurinol users experienced at least one AHS episode during the period following their index allopurinol prescription compared to 124,546 users who did not. The average cost per patient in the six month period following the index AHS date was $8598 higher than the prior 6-month period ($14,338 vs. $5,740, P<0.001). The cost increase was evident for both medical ($12,032 vs. $4,242, P<0.001) and pharmacy components ($2,306 vs. $1,498, P<0.001). The large difference in medical costs was primarily due to large differences in inpatient costs ($7497 vs. $2335, P<0.001), as a significantly higher proportion had a hospitalization following the AHS episode compared to the pre-index AHS period (40.3% vs. 16.8%, P<0.001). Conclusion: This study found AHS to have a significant economic impact contributing to an almost three fold increase in overall health care costs.