Traditionally, half of the direct costs associated with chronic inflammatory bowel diseases (IBD) [Crohn's disease (CD) and ulcerative colitis (UC)] have related to hospital inpatient treatment for a sub-group of more severely affected, often therapy-resistant individuals. The advent of effective but relatively expensive biological agents has increased the contribution of drugs to overall medical care costs. This has focussed interest on the relative cost effectiveness of rival therapies for IBD and, in particular, on the affordability of long-term biological therapy. The purpose of this article is to review the available literature on this topic and to identify areas for future research. Head-to-head trials of competing treatment options are uncommon and clinical trials have seldom addressed cost effectiveness. In UC, models have explored the cost utility of 'high-' versus 'standard-' dose 5-aminosalicylic acid (5-ASA) therapy and the theoretical impact of improved adherence with once-daily formulations. In CD, cost-utility models for anti-tumour necrosis factor (TNF) drugs versus standard care have suggested consistently that incremental benefits are achieved at increased overall cost. However, studies of varying design have produced a wide spectrum of incremental cost-effectiveness ratio estimates, which highlights the challenges and limitations of existing modelling techniques.