The charts of 311 patients receiving theophylline (T) and 289 patients receiving ipratropium bromide (IB) for COPD were reviewed to determine the total costs and cost-effectiveness of these 2 agents in 3 different health-care settings. A direct cost-accounting method assessed cost, and a Markov decision-analysis model calculated cost-effectiveness. Costs to treat toxic effects were greater for T versus IB. The types and incidences of toxic effects, by drug, were similar among the three centers. Overall costs for T were $121.40 per patient per therapy-month versus $84.56 per patient per therapy-month for IB, as determined by the cost-accounting method. The marginal cost was $366 for T over IB when extrapolated over 1 year using the Markov model. The Markov model also predicted that patients receiving IB had a greater number of complication-free therapy-months (measurement of effectiveness) than patients receiving T. We conclude that treatment with IB was less costly and more cost-effective than T.