Alzheimer's disease (AD) is one of the most widely known of the organic mental disorders described as dementias. It is apparent, in both the USA and the UK, that AD imposes a large economic burden in terms of both formal and informal costs. In the UK, one estimate is that annual costs are about £1,039 million at 1990/91 prices and another, even higher, at £4,684 million. There is an extremely heavy burden on informal caregivers, and on agencies providing social services and residential accommodation.

After the onset of AD, the progress of the illness results in declining levels of functioning and increased dependency for patients, factors linked to higher needs for care. Evidence from clinical trials indicates that some drugs may retard the effects of this decline. Economic evaluation of treatments has focused on drug therapies and their ability to alter this progress. One suggestion is that, through delaying the decline and consequent institutionalisation of the patient, effective drug therapy would have economic benefits and reduce health service costs, but this point has not been clearly demonstrated and is open to question.