OBJECTIVE: The purpose of this study was to assess the cost impact of applying VA Criteria for use of nonsteroidal anti-inflammatory drugs (NSAID). METHODS: These criteria utilize a self-administered Gastrointestinal (GI) Risk Assessment Tool (GI Score). The GI Score is a composite scale used to predict the 1-year risk level for an NSAID-associated GI event (no risk to substantial risk). The risk levels for patients at three facilities were calculated from VA databases regarding demographic, prescription, hospitalizations, and active problem lists. Cost analysis was limited to 2002 VA drug costs and estimated GI-event hospitalization. The perspective was the VA Healthcare System. We assumed no difference in hospitalized GI event rates between NSAID with a PPI or COX-2 inhibitor. RESULTS: There were 19,123 NSAID users at three VA Medical Centers. The following GI Score risk factors were found in these patients: 212 GI hospitalization, 212 concurrent warfarin therapy, 725 corticosteroid therapy, and 583 rheumatoid arthritis. There were 36% over the age of 65. Thirty-two percent of the patients (n=6126) were at high risk for a GI event; 8% substantial and 24% significant. The actual annual drug costs for high risk and low risk patients were $471,898 ($77.02/patient) and $291,960 ($22.46/patient), respectively. Switching to criteria-based therapy is estimated to save 14.7 hospitalizations among the high risk patients. For high risk patients, the base case of adding a PPI to current therapy with decreased GI-associated hospitalizations resulted in a cost of $278,809 ($45.51/patient/year). We applied alternative therapies for sensitivity analysis, switching all high risk patients to a low-cost NSAID with a PPI ($73,433 or $11.99/patient/year) or a COX-2 inhibitor ($1,389,686 or $226.85/patient/year). CONCLUSIONS: Our results suggest the criteria-based therapy (base case) could result in a cost savings to the VA.