Economic analyses of health care interventions can be performed with various levels of sophistication but all aid in decision-making processes which determine funding priorities. Pharmacoeconomics is the application of health economic techniques to the evaluation of drug therapy. In this article the pharmacoeconomic principles underlying the rational choice of an antibiotic for the treatment of urinary tract infections are discussed. Examples of pharmacoeconomic, adverse reaction and non-compliance studies are quoted to illustrate these principles. Efficacy and freedom from adverse effects are the principal determinants of favourable cost-effectiveness ratios, rather than antibiotic costs alone. Doctors should bear this in mind when choosing drugs to treat urinary tract infection.