Decisions about epoetin (recombinant human erythropoetin) dosage and target haematocrit in dialysis patients have been determined largely by the high acquisition cost of epoetin, but are made with incomplete knowledge about which target haematocrit gives the optimum clinical benefit. Haematopoietic response to epoetin may be determined by pharmacodynamic factors such as rate and frequency of administration, as well as by individual patient characteristics such as ethnicity. Resistance to epoetin may be due to iron or vitamin deficiency, natural or exogenous inhibitors of erythropoiesis and bone marrow fibrosis. The high acquisition cost of epoetin must be considered along with a number of other factors that can influence the true cost of epoetin treatment. Hidden costs of epoetin treatment include administration costs, changes in other treatments, extra laboratory tests and adverse events. Administration costs and extra laboratory surveillance add little to overall cost. Depletion of iron stores, hypertension, increased blood coagulability and reduced dialyser efficiency resulting from epoetin treatment may all add a small additional component to the true cost. Severe complications with significant cost implications are rare. Amongst the various components of true cost, only the acquisition cost can definitely be reduced by low dosage treatment. Balanced against the true and potential costs of epoetin are a number of benefits which can result in potential savings. The need for blood transfusion is all but abolished, avoiding the cost of transfusion and its complications. Sensitisation against histocompatibility antigens is reduced by avoiding transfusion, and so the waiting time for cadaveric transplantation may be reduced. Rates of hospitalisation for all causes, especially those associated with anaemia, may be reduced by epoetin treatment. By improving well-being, epoetin may allow patients to be transferred to minimal-care units or home where dialysis can be performed much more cheaply. Amongst the various potential benefits of epoetin, the one with the greatest potential to save money for society is improved productivity. To date, productivity improvements with epoetin have been demonstrated only in small studies. If the acquisition costs of epoetin are reduced by low dosage therapy, these potential benefits can cover a large proportion of the total cost of epoetin. Epoetin undoubtedly improves quality of life and activity, but it is not clear which level of haematocrit gives optimum improvement.(ABSTRACT TRUNCATED AT 400 WORDS)