OBJECTIVES: Clozapine is a drug of choice for treating neuroleptic resistant schizophrenia, but it has serious side effects. Risperidone has shown efficacy in managing neuroleptic-resistant schizophrenia, without agranulocytosis. To our knowledge, economic evaluations of both drugs in this patient population have not been performed.The objective of this study was to estimate a difference in hospitalization costs for schizophrenic patients on clozapine vs. risperidone over one-year period. METHODS: Estimates of length of stay (LOS) reduction in patients receiving the clozapine or risperidone were obtained from the medical literature by searching MEDLINE and HEALTHSTAR. Two articles examining LOS reduction for patients receiving risperidone and clozapine were identified, and yearly reduction in LOS was examined. To estimate a reduction in hospitalization costs, average daily hospitalization charges from the Healthcare Cost and Utilization Project database were obtained for the diagnosis of schizophrenia (defined as ICD9-codes 295.40-295.45, 295.80-295.82, 295.85, 295.90-295.92, and 295.95). Hospital charges were converted to costs by using a cost-to-charge ratio. All costs were expressed in 2000 US dollars. RESULTS: After starting risperidone, 35 patients had a decrease in LOS by 51 days per year. After starting clozapine, 172 patients had a 132-day decrease in LOS per year, with a difference of 81 hospitalization days, favoring clozapine. The resulting difference in hospitalization costs between patients on clozapine and risperidone patients was estimated as $1,052 per inpatient day. Estimated benefits of reducing hospitalization costs for clozapine patients as compared to risperidone were $85,212 per patient per year. CONCLUSIONS: Clozapine seems to result in reduction in LOS, potentially leading to lower costs of treating schizophrenic patients, as compared to risperidone. More studies are necessary to quantify economic impact of clozapine in this patient population.