The use of recombinant human erythropoietin (rhEPO) and intravenous (IV) iron was studied in a group of premature neonates. OBJECTIVE: The study purpose was to conduct a cost benefit analysis of the use of rhEPO and IV iron to reduce the need of erythrocyte transfusions (Ets) in premature neonates. METHOD: Neonates 24-30 weeks gestational age (GA) were considered for admission into the study. Patients were excluded if severe hemolytic or hepatic disease, or renal failure were present. If caretakers did not consent to rhEPO and IV iron therapy, the patients were followed as controls. For patients who were given caretaker consent, treatment included IV iron 1 mg/kg/day in hyperalimention or IV fluids and 400 U/kg/dose of IV rhEPO 3 times per week for 4 weeks, initiated at days 1-5 of life. There were 41 patients in the rhEPO group and 13 in the control group recruited over 12 months. RESULTS: The mean number of Ets performed in the first 4 weeks of life were 2.8 + 2.5 for the control group and 1.9 + 2.7 for the rhEPO group, p=0.28. The direct cost of providing rhEPO and IV iron to the 41 study patients was $8160.11 The direct cost of one Et in our institution is $235.05. No indirect costs (adverse effects) were noted. The average reduction in Ets per patient was 0.9 and if extrapolated to 41 patients would have resulted in cost savings (benefit) of $8673.34. The benefit to cost ratio of this program was 1.1:1. CONCLUSION: rhEPO and IV iron use was associated with a reduction of Ets and proved cost beneficial in a small group of premature neonates < 30 weeks GA.