OBJECTIVE: To quantify and characterize trends in outpatient pharmaceutical expenditures in-patients diagnosed with cancer. METHODS: Medical and pharmaceutical costs (claims) from a large US managed care population were utilized. Members with a confirmed diagnosis of cancer were identified for the years 1995 and 1998. Transaction costs were compiled for all outpatient drugs, and compared between years. Drugs were grouped into four categories: (1) chemotherapy; (2) chemotherapy adjuncts (i.e., drugs which enhanced or extended chemotherapy treatment); (3) supportive therapy (i.e., drugs to treat complications or symptoms related to cancer); and (4) drugs for routine patient conditions unrelated to cancer. RESULTS: There were $17.9 million in claims for drugs in 1995, rising to $27.9 m in 1998, an increase of over $10 m. Chemotherapy was the largest driver of the cost increase, representing 52.4% of the total increase ($5.3 million). Routine patient drugs unrelated to their cancer therapy were the second most important cost driver, accounting for 31% of the increase ($3.1 m). Supportive therapies were third, and accounted for 12% of the total increase ($1.2 m): among this group, antidepressants showed the largest increase in cost, followed by gastrointestinal agents and analgesics. Chemotherapy adjuncts as a class had the smallest impact on total cost increases -- 4.8% of the total increase, or $0.5 m. Within the adjunct group, growth factors (at 4.2%) accounted for the largest proportion of the cost increase, while antiemetics ( the largest dollar amount) decreased between 1995 and 1998. CONCLUSION: Chemotherapy accounted for the majority of the total increase in pharmaceutical cost in-patients with cancer. Drugs used in the treatment of routine conditions (i.e., not cancer-related) were the second largest cost drivers. Supportive therapy was the third largest cost driver. Of the groups studied, chemotherapy adjuncts had the smallest impact on total drug cost increases.