OBJECTIVES: Management of patients with bleeding ulcers has evolved over the past five years, partly due to the use of high dose intravenous, and more recently high dose oral proton pump inhibitors (PPI's). We compared the cost effectiveness of the two. METHODS: Patients with bleeding ulcers initially treated endoscopically for high risk stigmata of re-bleeding were considered. The model structure, defined and validated by clinical experts, evaluated rebleeding within 30 days. Probabilities were determined from published literature. Charges and length of stays (LOS) were obtained from a 20% random sample of the NIS2000 (Nation-wide Inpatient Sample) administrative database. Pharmacological costs of high dose 40mg Po BID x 5 days and 80 mg IV bolus followed by 8 mg/hr x 3 days were tabulated separately from the hospitalization costs. A third party payer perspective was adopted; 2001 $US were used. Sensitivity and threshold analyses were carried out. RESULTS: Mean LOS and costs for patients admitted with uncomplicated and complicated ulcer bleeding were 3 and 4.7 days, and $7,993 and $11,802 respectively. Re-bleeding rates for patients receiving oral or IV therapy were 7.3% and 5.9%. No strategy dominated in base-case analysis: IV PPI cost $14.90 more and was 1.44% more effective than oral PPI. IV PPI became dominant when IV PPI re-bleeding rate dropped below 5% or oral PPI re-bleeding rate rose over 8 %. No differences in conclusions were noted over a wide range of cost estimates. CONCLUSIONS: Based on published data, high dose IV PPI for 3 days or oral proton pump inhibition for five days were almost equivalent in terms of outcomes with the IV form being slightly more effective and more costly according to base case analysis estimates. Prospective trials in Western patients are required to confirm the increased effectiveness, and subsequently, the cost-effectiveness of high dose oral PPI.