OBJECTIVES: Over the last 15 years pharmacoeconomics research has grown rapidly, but little is known about the actual use of economic information by health-care decision-makers. We conducted a literature review of papers addressing the use of economic information in drug selection for hospital formularies to determine its role in decision-making, the barriers that prevent its use and the importance of these barriers. METHODS: Five bibliographic databases were searched: (1) Medline, (2) Embase, (3) Pascal, (4) NHS Economic Evaluation Database, and (5) International Pharmaceutical Abstracts, from 1991 to 1998. In addition a manual search of the journal PharmacoEconomics and of the reference sections of all retrieved papers was performed. To appraise and summarise the publications we used a 7-point checklist. RESULTS: We assessed 34 papers. Case studies based on personal observations were reported in 27 (79%) papers, surveys in 5 (15%) and literature reviews in 2 (6%). Input that were reported to have a greater impact on decisions than economic information were: (1) the efficacy and safety of drugs (mentioned in 100% of the papers), (2) dosage and administration procedures (50%), (3) quality of life considerations (32%), and (4) clinical experience of practitioners (29%). The most important of the seven identified barriers to the use of economic information in decision-making were: (1) lack of credibility of economic evaluations (65%), (2) economic data did not apply to the setting of the decision-makers (62%), (3) decision-makers had no expertise in appraising economic information (59%), (4) decision-makers did not have economic information and it was not possible to collect it (47%), and (5) lack of collaboration between producers of economic information and decision-makers (41%). CONCLUSIONS: The current use of economic information is limited compared with its potential use. More research is needed to determine decision-makers' needs for economic information and to identify incentives to take this into account.