OBJECTIVES: To determine whether Alzheimer's disease patients prescribed donepezil concurrently with an interacting drug will have higher hospitalization rates than those not on donepezil. METHODS: 1999 MEDSTAT Marketscan data was used to obtain subject information. Of 2955 Alzheimer's patients included in this study, 1674 received donepezil and 1281 patients did not. Mean patient age was 79.6 years; 37.9 percent of these patients were male. Multivariable logistic regression was used to isolate the impact of drug interactions with donepezil on the propensity to incur a hospitalization. RESULTS: Each of ten interacting drugs increased the probability of hospitalization when taken with donepezil. These interacting effects were particularly large for ranitidine, which increased hospitalization by 22%, haloperidol by 18%, diltiazem by 9%, and ciprofloxacin by 9%. These interactions raised the expected costs of hospitalization substantially as well. CONCLUSION: This research strongly suggests that drug interactions with donepezil pose significant risk for hospitalization in Alzheimer's patients.