Cost estimates for the drug of interest, its comparator and concomitant drugs are an important component of pharmacoeconomic evaluations. However, whilst in general considerable efforts are made by analysts to ensure valid and accurate parameter inputs, the methods for estimating drug costs are often lacking. We reviewed recent pharmacoeconomic evaluations undertaken in Ireland and the UK and documented the sources of data for drug costs and the methods of cost estimation. Methods were often inadequately described and, where adequate information was available, there was considerable variation and limitations in the methods used, thereby reducing the comparability of studies. Data from a sample of studies from other Northern European countries suggested that the findings from Ireland and the UK were not atypical. In order to improve current practice we suggest a methodological checklist for use in future studies.