In this review, we provide a conceptual framework of the ideal pharmacoeconomic model for nonsteroidal anti-inflammatory drug (NSAID) use in rheumatoid arthritis, together with a review of selected literature focusing on those areas identified in our model. An ideal pharmacoeconomic model fully accounts for the benefits and costs of this therapy. The benefits include: decreased pain and swelling; increased functional status, which may in turn lead to increased earnings potential; and decreased use of adjunctive therapies. The costs include costs for drug acquisition and administration, monitoring and treatment for adverse effects, as well as preventive measures. Noneconomic 'costs' (i.e. losses in quality of life and/or functional status) must also be included in this equation. Our literature review led to the following conclusions. NSAIDs are highly effective agents for the control of musculoskeletal pain and inflammation, and as such are among the most widely used drugs worldwide. It is well recognised that marked improvements in quality of life occur among arthritic patients receiving NSAIDs. Although careful patient selection and monitoring for potential adverse effects is essential, these drugs are well tolerated by most patients. NSAID-induced gastrointestinal events, ranging from dyspepsia to severe complications that can lead to hospitalisation, surgery and death, are reported more commonly than adverse effects from any other class of drugs. These events represent a substantial economic burden to society and have well documented negative effects on quality of life. Although misoprostol (a prostaglandin analogue) prevents the development of clinically defined NSAID-associated ulcers, its effectiveness on clinically important outcomes such as haemorrhage and perforation is somewhat more modest. Furthermore, there is evidence that some patients may experience substantial losses in quality of life because of the adverse effects of medication (particularly diarrhoea). Therefore, the widespread use of misoprostol prophylaxis not only has important economic consequences, but has important consequences for quality of life. More research is needed to address the critical trade-offs between cost and quality of life that are inherent in the use of NSAIDs.