Economic evaluation involves the comparative analysis of the costs and consequences of alternative programmes or interventions.1 It has increasingly been used to inform decision making about healthcare in the United Kingdom and other industrialised nations.2 3 4 5 Randomised controlled trials are commonly used as a vehicle for economic evaluations. Indeed, many funders, such as the UK National Institute for Health Research Health Technology Assessment Programme, routinely request that assessments of cost effectiveness are incorporated in the design of randomised trials. This article outlines some of the key issues concerning the design, conduct, analysis, and reporting of economic evaluations based on trials with individual patient data. Economic evaluations that synthesise data from disparate sources using decision analytical models (typically using summary rather than individual patient data) are discussed in an accompanying article.6