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Small-sized (less than 150 nm) long-circulating liposomes (LCL) may be useful as drug-targeting vehicles for anti-inflammatory agents in arthritis, since they selectively home at inflamed joints after i.v. administration. Previously it was shown in experimental arthritis that encapsulation of glucocorticoids (GC) as water-soluble phosphate esters in PEG–liposomes resulted in a strong improvement of the anti-inflammatory effect as compared to the free drug. In the present study, we compared the therapeutic activity and adverse effects induced by 3 different GC encapsulated in LCL in an attempt to further optimize the therapeutic index of liposomal GC in arthritis. Our data showed that with GC (dexamethasone, budesonide) of higher potency than prednisolone, the therapeutic activity of liposomal GC can be increased. However, side effects at the level of body weight and hyperglycemia were noted, related to the sustained free GC level observed after injection of the liposomal GC. An inverse relationship with the clearance rate of the free GC in question was shown. This study stresses the importance of a high clearance rate of the GC to be encapsulated for achieving a maximal therapeutic index with liposomal GC. Therefore high-clearance GC, which until now are only applied in local treatment approaches, may be very useful for the development of novel, highly effective anti-inflammatory preparations for systemic treatment of inflammatory disorders.