OBJECTIVES: Increasing drug utilization, increasing average drug cost, or both may be responsible for pharmaceutical spending growth in the US. Recent trends in outpatient drug utilization were examined to assess the relative contribution of both factors. METHODS: Five-year trends in expenditures and prescribing rates for outpatient drugs were estimated by analyzing the most recently available nationally representative data from the Medical Expenditure Panel Survey (MEPS), National Ambulatory Medical Care Survey (NAMCS) and National Hospital Ambulatory Medical Care Survey (NHAMCS). RESULTS: MEPS data indicate that from 1998 to 2002 outpatient prescription drug expenditures (excluding inpatient prescriptions, over-the-counter medicines and samples) nearly doubled from $78 billion to $151 billion. Total number of prescription drug purchases increased by 37%, while average cost per prescription increased by 41%. Over the same period, NAMCS and NHAMCS data reveal that physician office, hospital outpatient department and emergency department visits accounted for 81%, 8% and 11%, respectively, of medications given at outpatient visits (prescribed or provided). For visits at which medications were given, number of visits increased by 6.9%, 12.6% and 16.6%, and number of medications per visit increased by 6.6%, 8.5%, and 13.5% for physician office, outpatient department, and emergency department visits, respectively. However, the proportion of physician office and outpatient department visits at which drugs were given remained relatively constant at approximately 65%. The proportion of emergency department visits at which drugs were given increased from 71.3% to 75.8%. CONCLUSION: Total drug utilization and average drug cost both increased to a comparable degree between 1998 and 2002. Although the total number of visits and the average number of drugs given per visit increased, the proportion of healthcare visits at which outpatients received drugs or prescriptions was relatively stable. Increased utilization was greater for emergency department visits than for physician office or hospital outpatient department visits.