The increasing number of economic evaluations of healthcare interventions, and of drug therapies in particular, has been well documented. However, surveys have demonstrated that standards of conduct of such studies have not similarly increased. Of particular concern is the lack of development or even consideration of statistical techniques in the reporting of studies. This article addresses issues that must be considered both in the conduct and in the assessment of the quality of studies. Throughout the paper, examples of pharmacoeconomic analyses are used to illustrate the points made. Recommendations for the conduct of future pharmacoeconomic studies are given. Such recommendations specifically relate to the level of testing that is conducted, the choice of statistical tests and the manner in which statistical significance is reported. In addition, existing methods for the statistical analysis of cost-effectiveness ratios and for the determination of sample size in economic evaluations are discussed, and a partial solution to this issue is offered.