The Israeli National Health Insurance Law enacted in 1995 determines a list of health services including a list of reimbursed drugs (NLRD). Accordingly, each citizen is entitled to receive health services of established quality within the framework of the available resources. In the last decade, significant advances in R&D have resulted in the emergence of numerous expensive drugs in the pharmaceutical market. Hence, the Pharmacoeconomics Unit at the Pharmaceutical Administration of the Ministry of Health established a mechanism for updating the NLRD, based on the evaluation of clinical, epidemiological and economic data. Prior to the presentation of guidelines for the pharmaceutical industry on submission of economic data as part of a request for the inclusion of a pharmaceutical product in the NLRD, a survey was conducted to examine existing pharmacoeconomic knowledge of the Israeli pharmaceutical industry. The results of the survey indicated that the pharmaceutical industry has very little pharmacoeconomic knowledge. These results prompted a lenient approach to the submission of requests for the next two years during which the industry is expected to develop a firm pharmacoeconomic basis. Guidelines on submission of a request to include a pharmaceutical product in the NLRD were presented to the pharmaceutical industry. The dossier to be submitted by the industry consists of three sections: Clinical – treatment regimens, adverse effects, efficacy and safety in comparison to alternate therapies. Epidemiological – morbidity figures, definition of target population, sales figures. Economic – cost of the suggested treatment compared to that of alternative therapies and an economic evaluation. 260 different requests have been submitted for the 2000 update of the NLRD, according to the guidelines, and are currently being processed. Following the 2000 update, a reassessment will take place, and the guidelines will be changed according to the experience incurred by both the industry and the Ministry of Health.