Over the last decade, several new drugs have become available for the treatment of patients with rheumatoid arthritis. These agents include the new disease-modifying antirheumatic drug (DMARD) leflunomide and the biologic agents, tumor necrosis factor (TNF)-alpha antagonists and an interleukin (IL)-1 receptor antagonist. Methotrexate is commonly used as the first DMARD, has a well documented clinical efficacy and slows radiological deterioration. Sulfasalazine appears to have similar properties, albeit to a lesser extent. Leflunomide has similar efficacy as methotrexate but it is less tolerated than sulfasalazine. The adverse effect profiles of these three drugs makes regular laboratory monitoring mandatory. Several combination therapies with DMARDs were proven to be more effective than mono-DMARD therapy. However, until now these strategies have not been widely adopted. TNF antagonists are potent anti-inflammatory drugs, with a rapid onset of effects compared with traditional DMARDs. The IL-1 receptor antagonist, anakinra, has an intermediate place between methotrexate and the TNF antagonists with respect to efficacy. The adverse effects of TNF antagonists include an increased incidence of common and opportunistic infections. Thus far, anakinra has not been associated with an enhanced rate of opportunistic infections. Some of the biologic agents have been associated with worsening heart failure and demyelinating disease. The limited long-term safety data of the biologic agents are a point of concern because, at present, an enhanced risk for malignancies, particularly lymphoma, can not be excluded. Drug costs of traditional DMARDs are up to US dollars 3000 per year, whereas for the biologics the yearly drug costs range between US dollars 16,000 and > US dollars 20,000. Cost-effectiveness analyses are necessary to determine whether or not these high costs are justified. Unfortunately, adequate, prospective, economic evaluations are not yet available. Until these become available, treatment decisions will be based on the balance of direct costs and indirect costs and expected cost savings in the future.