Objective: This study aimed to determine the total costs of back pain and spinal disorders (ICD10: M50 - M54) to German society in 2005 as well as to identify different patterns of health service utilization of a patient sub-population with recurrent back pain. In addition, potential cost savings by implementing guidelines were estimated. Methods: The costs of low back pain were assessed by measuring both direct costs of providing health care to patients, and indirect costs as the value of productivity losses. Furthermore a decision tree was constructed to demonstrate different ways of managing recurrent low back pain. Data was obtained from two German health insurance funds for all identified back pain patients in 2005. The estimation of potential cost savings was based on assumptions of the Bertelsmann foundation expert-panel. Results: In Germany, total cost of low back pain reached €6.3 billion in 2005. The indirect costs due to productivity losses accounted for 39% of the total costs. Total annual direct costs amounted €3.8 billion, with an average direct cost of €230 per patient. Nearly 42% of the direct costs were induced by outpatient treatment, 24% by physical treatment, 18% by pharmaceuticals and 14% by hospitalisation. Patients with chronic or recurrent back pain (21% of the study's population) were accountable for 43% of the direct costs. By modelling scenarios of best practice medical care, potential cost savings add up to 24% of the direct costs of the patient sub-population with recurrent back pain. Conclusion: Overall, the study confirms the high economic burden of back pain for the German society. Best practice medical care was associated with substantial cost saving opportunities. Further research is needed to establish the cost-effectiveness of treatment based on guidelines in a prospective study design.