OBJECTIVES Purpose of this analysis was to quantify the subgroup of schizophrenia patients with potential treatment benefits associated with the oral atypical antipsychotic Paliperidone ER (PER) according to its clinical profile (limited liability for hepatic drug-drug interactions (DDI) via CYP450) and to assess the budgetary impact of targeted use of PER for treatment of these patients. METHODS In a retrospective study of longitudinal patient data from Germany using IMS Disease Analyzer, medical records from patients with at least one diagnosis of schizophrenia (ICD10 F20-F29) between July 2007 and June 2008 were analyzed. For the last quarter of the study period prescriptions of antipsychotic and concomitant medication of schizophrenia patients were analyzed to identify subgroups of patients regarding potential for DDI and antipsychotic treatment costs. RESULTS Of 8221 schizophrenia patients identified in the data base 28.2% had co-prescriptions with potential for DDI and were regarded as subgroup for well directed use of PER. The average antipsychotic costs/quarter of these patients were €399.0/patient for atypicals; €276.5/patient for generic and €613.2/patient for patent protected atypicals (incl. PER). The average treatment costs/quarter for PER were 551.0 EUR/patient. PER treatment of all patients treated with patent protected atypicals at risk for DDI would reduce the overall antipsychotic expenditure for schizophrenia by 1.9%. PER treatment of all atypical patients with potential DDI would increase the schizophrenia antipsychotics budget by 8.0%. CONCLUSIONS The budgetary impact of well directed used PER is limited by the share of schizophrenia patients with potential DDI. As PER is associated with 10% lower treatment costs compared to patent protected atypicals, PER could reduce costs if used instead of other patent protected atypicals. Reduced risk for DDI complications with PER may lead to additional cost savings that are not captured in this analysis.