BACKGROUND: Gastrointestinal side effects carry a significant cost related to the use of NSAID medications. METHODS: The economic burden of NSAID-induced gastric side effects is estimated using the cost-of-illness methodology. Costs are calculated using both a prevalence (top-down) approach and an incidence (bottom-up) approach. RESULTS: Using the top-down approach, the total cost in 1998 of NSAID-induced ulcers was MSEK 329-586, direct costs accounting for 76%-83%. The bottom-up approach gives an estimate of MSEK 320, of which MSEK 290 was direct cost. About one-quarter of total costs for ulcer disease can be attributed to the use of NSAIDs. CONCLUSIONS: Gastrointestinal side effects carry a significant cost from the use of NSAIDs, costs that are as important as the price of NSAIDs. This should be considered when choice of drug and prophylaxis is being made.