Increasing constraints on health care reimbursement, competition among hospitals, and new high‐cost technologies all contribute to escalation of costs in hospitals. The goal in the 1990s is to provide optimum, cost‐effective care for patients without compromising quality. Among many proved methods is an effective formulary system with explicit criteria for use of medications, guidelines for use in specialized circumstances, and suggestions for therapeutic alternatives. This last method of cost control received endorsement from several organizations and offers an important function for hospital pharmacists. Hospital pharmacies can play a major role in minimizing antimicrobial costs and promoting optimum patient care. (Pharmacotherapy 1991;11(1 Pt 2):4S‐5S)