Alzheimer's disease is one of several diseases of the elderly that has recently come into prominence for a number of reasons. First, its prevalence is set to increase as a result of the aging of Western populations. Secondly, the use of institutional care has fallen as a result of major policy changes in many countries, and this has caused a shift in the pattern of care for the elderly. Finally, the advent of innovative pharmacotherapy has caused third-party payers and clinicians to question the way in which this disease is best managed. International epidemiological data for Western populations point to a potentially considerable increase in the prevalence of the disease over the next 2 decades. Although the cost estimates of the disease vary widely among, or indeed, within different Western countries, they may be considerable. It is clear that innovative strategies, e.g. the use of respite care, sheltered housing and pharmacotherapy, might serve to limit the amount of time patients spend in institutional care. Even a small reduction in this form of care might be sufficient to offset the costs of treatment. What is lacking today are clear demonstrations as to how these new strategies might contribute to the overall management of this complex and multifactorial disease: this should be the joint focus of care providers and the pharmaceutical industry in the near future.