Ojective: To estimate the total hospital costs of drug-related separations in Australia from 1999/2000 to 2004/05, and separate costs for the following illicit drug classes: opioids, amphetamine, cannabis and cocaine.

Methods: Australian hospital separations between 1999/2000 to 2004/05 from the National Hospital Morbidity Dataset (NHMD) with a principal diagnosis of opioids, amphetamine, cannabis or cocaine were included, as were indirect estimates of additional 'drug-caused' separations using aetiological fractions. The costs were estimated using the year-specific case weights and costs for each respective Diagnostic Related Group (DRG).

Results: Total constant costs decreased from $50.8 million in 1999/2000 to $43.8 million in 2002/03 then increased to $46.7 million in 2004/05. The initial decrease was driven by a decline in numbers of opioid-related separations (with costs decreasing by $11.5 million) between 1999/2000 and 2001/02. Decreases were evident in separations within the opioid use, dependence and poisoning DRGs. Increases in costs were observed between 1999/00 and 2004/05 for amphetamine (an increase of $2.4 million), cannabis ($1.8 million) and cocaine ($330,000) related separations. Several uncommon but very expensive drug-related separations constituted 12.7% of the total drug-related separations.

Conclusions and implications: Overall, the costs of drug-related hospital separations have decreased by $4.1 million between 1999 and 2005, which is primarily attributable to fewer opioid-related separations. Small reductions in the number of costly separations through harm reduction strategies have the potential to significantly reduce drug-related hospital costs.