A computerized pharmaceutical-purchasing cost-management system that can be used to monitor variances in the drug budget is described. Variance reports on inflation, volume of drugs used, and changes in inventory are generated monthly to determine whether the pharmacy is operating within its budget. The reports are processed on an IBM personal computer with the use of a dBASE-III management software package. The price and quantity of each drug, as specified in the standard drug budget, are entered into the system; using approximately four hours per month is required for entry of the quantities and prices of drugs received as noted on the invoice. Variances in the budget are reviewed, and drug-use data are assessed to determine trends. Demand intensity (use per 1000 cases) is also tracked to determine the effects of educational programs on the proper use of drugs. Variance reports generated by a computerized budget-monitoring system provide the pharmacy with timely cost data that can be used to monitor the effects of drug-use guidelines and educational programs on the budget.