The high mortality, morbidity and cost associated with adverse drug reactions (ADRs) represent an important public health concern. Cutaneous ADRs, the most common ADRs constitute of 15 to 30% of the total ADRs. The economic impact of cutaneous ADRs is not known. The present study analyzed the cutaneous ADRs reported to the Regional Pharmacovigilance Center, Manipal Teaching Hospital, Western Nepal and established their causality, severity, preventability and calculated the cost of drug therapy in managing them. The filled ADR reporting forms received by the center from September 2004 till August 2005 were analyzed. Additional patient details were obtained from the medical records department. Altogether, fifty seven ADRs were reported (men 22 and women 35). Mean ± SD age distribution was 30.21 ± 17.89 years. Department of Dermatology reported 22 (38.59%) ADRs followed by Medicine department 14 (24.56%). Antibiotics were responsible for 18 (31.57%) cases of ADRs. Maculopapular rashes were reported in 18 (31.57%) of the cases followed by contact dermatitis in 9 cases (15.78%). The causality assessment (Naranjo algorithm) revealed that 47 (82.45%) ADRs could be probably attributed to the suspected drugs, 50 (87.71%) ADRs were Moderate (Level 3) [Modified Hartwig and Siegel scale] 2 (3.5%) of the ADRs could be definitely preventable (Schumock and Thornton scale). Fifty four (94.73%) patients were prescribed 181 drugs (average 3.17) for managing the ADRs. Antihistamines were most commonly used [56 (30.93%)] followed by corticosteroids [53 (29.28%)]. The average treatment duration was 13 ± 7 days with an average cost burden of USS 1.58 ± 1.41 for drug therapy. Early detection and prevention may be beneficial in minimizing the economic implications of the cutaneous ADRs. © 2006 - IOS Press and the authors. All rights reserved.