OBJECTIVE To compare prescribing patterns between a group of fundholding practices and a group of non-fundholding practices in north east Scotland using a method which provides more accurate statements about volumes prescribed than standard NHS statistics. METHODS The pharmacy practice division of the National Health Service in Scotland provided data for selected British National Formulary sections over two years. Each prescription issued was converted using the World Health Organisation "defined daily dose" mechanism. METHODS Six fundholding groups (nine practices) in Grampian and Tayside regions and six non-fundholding practices in Grampian. RESULTS During the past two years both fundholding and control practices reduced the volume of their prescribing for the classes of drug analysed. The unit costs of drugs in some classes, however, rose substantially, contributing to higher costs per patient. The unit costs rose more in the control practices (24%) than in the fundholding practices (11% in Tayside, 16% in Grampian). CONCLUSIONS The use of defined daily doses helped identify cost and volume trends in specific areas of prescribing in fundholding and control practices. The basis on which funds are set needs improving, and defined daily doses may prove useful for setting volume targets within drug classes for all practices, whether fundholding or not.