OBJECTIVES: An international review of cost-effectiveness studies of pharmaceuticals published in the last 5 years in peer reviewed journals was undertaken to identify the extent to which “state of the art” methodology and analytical techniques had been employed. METHODS: Three main approaches were taken for this review: (1) A literature search for cost-effectiveness analyses of pharmaceuticals 1994-99 was undertaken using MEDLINE and other databases; (2) A list of “state of the art” methods and analytical techniques (defined as new and innovative, rather than established) were drawn from “methods” papers published in leading health economics journals in the past 10 years, and peer opinion; (3) Application of a simple quality scoring system to assess the quality of the reviewed papers. RESULTS: 30 (currently) economic evaluations of pharmaceuticals have to date been identified, originating from several countries. The “state of the art” methods list included developments in a several main areas: data collection and modelling approaches (e.g. RCTs, meta analysis and scenario analysis), cost measurement, analysis and handling uncertainty (e.g. confidence intervals for ICERs, Monte Carlo simulations, Bayesian approaches to sensitivity analysis). The quality scoring system is still in development (although pilot results hopefully due soon). The main finding was that only a few of the studies reviewed used “state of the art” methods, relying mostly on established approaches to CEA. CONCLUSIONS: The development of new state of the art methods in CEA in recent years, in particular with new developments in statistical applications, has increased potential quality and rigour of CEA results. However, these methods are not yet routinely used in actual pharmaceconomic evaluations and may not be until more fully integrated into the growing number of pharmacoeconomic guidelines (linked to drug reimbursement) being produced in different countries .