Pharmacoeconomics focuses on the costs and benefits of drug therapy and pharmacoeconomic evaluations provide a basis for resource allocation and utilization. It is increasingly becoming important for health policy decision-making. A pharmacoeconomic evaluation may be conducted as an economic assessment incorporated into clinical trials. Such trials should compare the new drug/procedure with an older drug or existing intervention. Four techniques are used for economic evaluation, namely, cost-minimization analysis, cost-effectiveness analysis, cost-utility analysis and cost-benefit analysis. The choice of the evaluation method depends on the nature of outcomes and the context in which the choices need to be made. Pharmacoeconomics is a young science that will improve with application. Its need is undeniable, especially in developing countries.