OBJECTIVES: Investigate rational use of prescription drugs in Ministry of Health (MOH) in Saudi Arabia, using WHO level II indicators, and whether these measures are related to Pharmacy and Therapeutics Committee (P&TC) development level. METHODS: The study used retrospective data collected during 2003 from cross-sectional survey and prescriptions audit of 19 different outpatient settings of MOH hospitals in rural and urban areas; because of the scope of the study, we tested only 1 out of 12 indicators of WHO core drug use level II indicators (WHO/DAP/93.1); namely; the number of encounters with antibiotic prescribed. Binary logistic regression technique was used to test the likelihood of antibiotics prescribing across hospital and patient characteristics. RESULTS: Of 2850 patients, the average number of drugs prescribed per encounter was 2.41 higher than recommended target of WHO (<2); In hospitals serving urban areas, the antibiotics prescribing rates were 21.5% and 37.5% of total encounters in urban and rural hospitals respectively (WHO recommended target (<30%)). Antibiotics utilization was significantly higher in rural areas and in hospitals with undeveloped P&TC. The likelihood of antibiotics prescribing was 1.298 in hospitals with undeveloped P&TC compared to developed P&TC, 2.550 for rural compared to urban areas, 1.390 for male patients, 4.462 for patient from (≤1)year, 5.412 for patients (2-4) years, 4.015 for patients (5-14)years, 1.439 for patients (15-44)years. CONCLUSIONS: The data demonstrated that irrational use of medicines might exist in MOH hospitals, antibiotics overutilization in rural hospitals is an indication of it. The irrational prescribing might be associated with geographic areas, particularly, at hospitals serving rural areas. Furthermore, lack of effective P&TC might contribute to irrational prescribing in hospitals serving both urban and rural areas. Adoption of effective formulary system is recommended including adopting effective P&TC and strict guidelines and monitoring of antibiotic use to mitigate the risk of antibiotics resistance.