OBJECTIVES: The objective of this study was to evaluate the cost effectiveness of an automated medication system (AMS) integrating electronic medication administration record (eMAR), automated drug dispensing and barcode assisted. METHODS: The economic evaluation was performed alongside a controlled before-and-after effectiveness study. The primary outcome measure was number of errors in the medication administration process observed prospectively during a 3-week period. To determine the difference in error rate after implementation of AMS, logistic regression was applied with the presence of error(s) as the dependent variable and time, group and interaction between time and group as the independent variables. The cost analysis used the hospital perspective and employed a short-term incremental costing approach. The total 6-month costs with and without the AMS were calculated as well the incremental costs. The number of avoided administration errors was related to the incremental costs to obtain the cost effectiveness ratio expressed as the cost per avoided administration error. RESULTS: The AMS resulted in an overall reduced risk of errors of 81% in the intervention compared to the control ward (OR 0.19 [0.10-0.34]). The procedural error rate was reduced from 0.20 to 0.002 (OR 0.18 [0.09-0.35]) and the clinical error rate was reduced from 0.03 to 0.01 in the intervention ward (OR 0.24 [0.07-0.83]). The cost analysis showed that the AMS increased the cost with 16,843 €. The cost-effectiveness ratio was estimated at 2.60 € per avoided administration error, 2.91 € per avoided procedural error and 19.38 € per avoided clinical error. CONCLUSIONS: The automated medication system was effective in reducing the error rate in the medication administration process at a higher cost. The cost-effectiveness analysis showed that the automated medication system was associated with affordable cost-effectiveness rates.