Annual health care expenditures currently exceed $2.5 trillion in the United States, a cost burden equivalent to more than $8000 per person per year. Treatment strategies designed to optimize efficacy, ie, avoiding therapeutic failure while minimizing toxicity, hold the potential to reduce this cost burden. For many drugs, variability in outcome is influenced by 1 or more genetic factors. Because many of these genetic factors have only recently been challenged with modern pharmaceuticals, variants of strong clinical relevance are often found at fairly high frequency within the general population. Individualized drug therapy is especially desirable when the therapeutic index is narrow and the consequences of drug toxicity are life-threatening (eg, antineoplastics, anticoagulants, immune modulators). Many such drugs are administered at maximally tolerated doses. Because these doses are often chosen from population averages, as many as one-third of patients exposed may develop unacceptable toxicity, and a significant proportion of patients will not respond. This increases the risk-benefit ratio for individual patients and imposes a sizeable economic strain on the health care system. An important unanswered question is whether genetics will solve this problem or add further cost to health care with relatively little benefit on outcome.