There was a noticeable increased in drugs expenditure in 1997. The increment was 82.8% compared to 27% in the year before. This increment did not balance with the increment of patients attendance at the Health Centres in the district; which was only 43.7 % . The causes of this increment were studied. The cost of 14 commonly prescribed drugs and 10 non-drugs items were analysed. It did not show any significant increased in the price before and after privatisation of the drugs supply to Remedi Pharmaceutical (M) Sdn. Bhd. ib 1996. Therefore the quantity of the 14 drugs used were studied. There was a remarkable increased in quantity of drugs used in the district ranging from 21 % to 148 %. This might be due to taking over of the hospital outpatient department (now known as Melaka Tengah Health Centre) by the Health District Office on 1^st January 1997. Moreover most stable cases of hypertension, diabetes and asthma were referred by the specialists to continue their treatment at the Health Centres. Some of the Institute Jantung Negara's cases were also being followed up by our clinics.