OBJECTIVES:  Drug related problems (DRPs) in elderly patients can impair the quality of life, increase health care expenditures and reduce the value of medical care. This study was conducted to evaluate patterns of DRPs in elderly and its clinical and economic impact on elderly patients. METHODS:  This was a prospective observational study conducted for a period of 18 months in the in-patient of General Medicine and Emergency Medicine wards. All the patients admitted to these wards and patients visited these department due to DRP(s) were enrolled in the study. All the medical data pertaining to DRPs were collected from medical records and patient interview. Clinical impact of DRPs was measured in terms of number of hospital visits due to DRPs, adverse events during hospitalization, need for critical care to manage DRPs and death. Economic impact of DRPs was measured by direct and indirect medical cost associated with managing DRPs. RESULTS:  During the study period, a total of 923 DRPs were identified among 556 patients. 217 (24%) DRPs were observed at the time of admission among 195 patients whereas remaining were identified during hospitalization. Common DRPs were non-compliance (58%), ADRs (19%), drug-drug interactions (12%) and inappropriate prescribing (7%). DRPs were commonly identified in young elderly age group, male gender, patients with middle socioeconomic class, widows, joint family and with polypharmacy and multiple diseases (p<0.05). Drug related hospital visits were identified for 55 patients (28%). Critical care was needed for 140 (72%) patients among which 5 (4%) of them died. Adverse events were seen in 10% patients due to DRPs. The total hospital cost of all drug related admissions was USD 17,788.65; with direct cost accounting for USD 12,327.02 and indirect cost for USD 5,461.63. CONCLUSIONS: Many DRPs in elderly are preventable with structured patient care and education. Geriatric Pharmacotherapy services by clinical pharmacist can contribute to minimize DRPs in elderly.