The drug costs associated with a centralized drug-distribution system were compared with those of a newly implemented decentralized unit dose and i.v. admixture system in a university teaching hospital. Three months before and three months after implementation and stabilization of the new drug-distribution system, the mean drug cost per patient day was determined for each of 22 nursing stations. Variations in drug use were monitored to eliminate the influence of patient mix or treatment protocol. Data from 2 of the 22 nursing stations were excluded from analysis because of large variations in drug use. Twelve nursing stations demonstrated lower drug costs per patient day with the new drug-distribution system. Overall, an 18% reduction in drug costs per patient day was achieved. In this hospital, a decentralized drug-distribution system was associated with lower drug costs than the traditional distribution system.