OBJECTIVES: In this study, the effects of devolution of subsidies for pharmaceuticals from the state to the regional health authorities – counties - in Sweden were studied. The aim of the reform in 1998 was to cut the escalating costs associated with risk sharing mechanisms on a national level as well as the third party payer principles. METHODS: The documentation was studied and the history of development and the current opinions were analysed from interviews in nine counties, selected based on their method of devolution. RESULTS: Two main principles were found: either a population-based responsibility for costs; family medicine in primary care was responsible for costs of drugs classified as “basic” (80%) regardless of prescriber, in addition hospital departments were responsible for “special drugs” regardless of prescriber. The other model was a prescriber-based responsibility; each unit of care was responsible for costs of its own prescribing. CONCLUSIONS: Incentives for cost containment are strongest in the prescriber-based models. Integration of drug costs in overall healthcare costs, service to patients and dialogue between providers are supported by the population-based models.