The recent Food and Drug Administration approval of drotrecogin alfa (activated) and the potential of several other new therapies may represent the beginning of a breakthrough in the management of critical illness in the intensive care unit. However, their use in clinical practice will likely be dependent on a rigorous appraisal not only of their effects, but also of their costs. Novel therapies can no longer be judged simply by their effectiveness in treating illness, but must also be evaluated on an institutional and societal level on the basis of their cost. These considerations have important implications for the practicing intensivist, who will need to better understand the conduct and design of economic evaluations, including their strengths and weaknesses. In this article, we review the rationale behind economic evaluations of new therapies and the alternative economic approaches available. We then discuss in more detail the elements contained in a cost-effectiveness analysis, the preferred approach to pharmacoeconomic evaluation today.