Inflammatory bowel diseases (IBDs) are chronic, relapsing conditions that have no permanent drug cure, may occur for the first time in early life and have the potential to produce long–term morbidity. In the era of emerging biological drug therapies, the costs associated with IBD have attracted increased attention. This review considers the available information on the macroeconomics of ulcerative colitis and Crohn's disease. In relation to direct medical costs, the consistent findings are: hospital (in-patient) costs are incurred by a minority of sufferers but account for approximately half the total cost; and drug costs contribute less than a quarter of the total healthcare costs. Data for levels of costs associated with lost productivity are more variable, but some studies have estimated that ‘indirect’ costs falling on society exceed medical expenditures. Lifetime costs for IBD are comparable to a number of major diseases, including heart disease and cancer. Over the next 5–10 years, the contribution of drug costs to the overall profile of cost-of-illness will change significantly as biological therapies play an increasing role. A key economic question is whether the health gains realized from exciting new drugs will also lead to reduced expenditures on hospitalization and surgery.