SummaryFew studies assess the economic burden that potentially avoidable adverse drug reactions (ADRs) impose on the National Health Service. Therefore, we performed a first-order, hypothesis-generating heuristic estimate that suggested 392,000 acute admissions were due to ADRs during 2003/4, which accounted for about 0.7% of the Department of Health budget. We assumed that 59% of the ADRs were potentially preventable, equivalent to a potential saving of almost £369 million. Furthermore, we estimated that the community consultation costs reached £1 billion. Of these, 59% could have been prevented, equivalent to a potential saving of £600 million.We used liquid formulations as an example of how savings can offset the costs of initiatives to improve compliance, even using some very conservative assumptions about the downstream benefits. For example, preventing a single day's admission to a psychiatric hospital would fund liquid chlorpromazine instead of solid formulation for a year for three patients.More research is needed into the economics of noncompliance, competing formulations and the association between clinical outcomes and adherence. Furthermore, the analysis contains numerous assumptions and inferences. Nevertheless, we provisionally suggest that the total cost of potentially avoidable ADRs in the community and secondary care is approximately £1 billion a year.