This study is to analyze changes in hospital drug price during 1997 economiccrisis comparing purchasing drug prices before and after the depreciation of ThaiBaht. Primary data are collected from three hospitals i.e. Police General Hospital,Siriraj Hospital and Ramathibodi Hospital in the period of 1996 to 1998. A multiple regression model is developed to test factors affecting changes indrug price. The independent variables for explaining changes in drug price arepercentage changes in foreign exchange rate, cancellation of medium price, increasein value added tax rate, changes in Civil Serant Medical Benefit Scheme, duration,and percentage changes in quantity procured. The average first lime of drug price adjustment was 132.3 days after bahtdepreciation, partly due lo long term contract. One percentage depreciation in thevalue of baht increased overall drug prices by 0.22 percent. Prices of essentialdrugs set by original firms increased by 0.20 percent, whereas locally made drugprices changed by 0.24 percent. For the non-essential, original drug prices rose by0.19 percent while those of local made drugs rose by 0.22 percent. Cancellation ofmedium price policy had a positive and significant impact on changes in drug priceswhile other government regulations such as increase in VAT and change in CSMBS didnot have significant influence. Length of time had negative relationship withpercentage changes in drug price. One percentage increased in procurement volumelowered the average prices of drugs by 0.038 percent.