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Adverse drug events (ADEs) are one of the most frequent causes of iatrogenic injury. Because International Classification of Diseases, 9th Revision, Clinical Modification (ICD-9-CM) codes are routinely assigned to inpatient discharges, they could provide a method to detect ADEs within a hospital, a state, and the nation.The objective of this study was to determine validity of selected ICD-9-CM codes in identifying inpatient ADEs.An expert panel identified 416 ICD-9-CM codes to represent ADEs (flagged ADE codes). Retrospective chart review using a structured tool was performed to ascertain code performance in detecting ADEs.Subjects included 3103 inpatients from all 41 acute care hospitals in Utah in 2001: 1961 inpatients sampled randomly (random sample) and 1142 inpatients sampled from the discharge records with at least one flagged ADE code (flagged sample).Measures were ADEs identified by structured review.The flagged sample yielded 1122 flagged ADE codes recorded in patient charts with 704 representing ADEs (63%). Two hundred eighty-six of the 704 verified ADE codes (41%) were determined to be inpatient ADEs. In the random sample, 32 of 58 ADEs (55%) causing hospital admission were detected by the ADE-flagged codes. Only 23 of 224 inpatient ADEs had been assigned a flagged ADE code (10%).Flagged ADE codes have an overall positive predictive value of 63% and detect just over half of ADEs causing hospital admission. These codes have a positive predictive value of 25% for inpatient ADEs but detect only 10% of overall inpatient ADEs. Flagged ADE codes provide an imperfect but immediately available ADE surveillance system.