Rheumatoid arthritis and osteoarthritis are prevalent and costly conditions. A large proportion of the direct costs associated with these conditions relates to management of iatrogenic side effects. The cyclooxygenase (COX)-2-specific inhibitors lead to equivalent control of pain and disability compared with traditional NSAIDs. However, the COX-2-specific inhibitors have significant potential to reduce health-care costs, principally through the reduction of side effects. These cost savings are most likely to be realized through reductions in costs associated with dyspepsia and upper gastrointestinal ulcers and bleeding. Reduced indirect costs through improved disability scores and improved health-related quality of life are also predictable with the use of COX-2-specific inhibitors. This is accomplished without the attendant increase in risk to the gastrointestinal tract associated with traditional NSAIDs.