OBJECTIVES: Prescribing errors are a major cause of iatrogenic morbidity in hospitalised patients and interventions aimed at preventing these errors may result in monetary benefits and health gains. We performed a study to estimate whether costs of prevention are outweighed by these benefits. METHODS: During a one-week period in 2000 all medication orders were analysed in two Dutch hospitals (1100 beds in total) and prescribing errors were identified and classified. Medical and nursing staff were not aware of the procedure. A cost-benefit analysis was performed from the health-care perspective. Net cost estimates were based on the time invested by the hospital staff to correct the error and included potential time savings for the nursing staff. Estimates of net benefits were based on the possible consequences of the prescribing error for nursing care, drug use, laboratory tests, length of stay and potential interventions. RESULTS: In total, 3540 medication orders were analysed, of which 351 (~ 10%) contained prescribing errors. Classification of prescribing errors revealed that ~ 60% of errors would be without clinical consequences, whereas ~ 40% of errors would at least require extra monitoring from the nursing staff. Net costs related to time investment of the pharmacy staff were ~ €300. Estimated net benefits of this time investment were ~ €9900. These net benefits were broken down as follows: extra care from nursing staff of €300; extra drug use and laboratory tests of €1900; extra length of hospital stay of €6000; acute coronary intervention of €1700. CONCLUSIONS: It can be concluded that net costs of time investment by the pharmacy staff to prevent prescribing errors were more than offset by related net benefits.