The efficacy, safety, and cost-effectiveness of ceftazidime and cefepime were evaluated in a prospective, noninterventional, investigator-blinded study involving 100 patients with hospital-acquired pneumonia. There were 50 patients in each group. Clinical success rates were 60% and 78% for patients treated with ceftazidime and cefepime, respectively (P=.05). Microbiologic eradication rates were 55% for ceftazidime and 77% for cefepime (P=.04). In those patients in whom Pseudomonas aeruginosa was isolated, the organism was eradicated in 14 (70%) of 20 cefepime patients and in seven (50%) of 14 ceftazidime patients. The frequency of concomitant antibiotic use was less in the cefepime group (ceftazidime, 37 [74%] of 50 patients; cefepime, 22 [44%] of 50 patients; P=.004), particularly with vancomycin (ceftazidime, 11 [22%] of 50 patients; cefepime, one [2%] of 50 patients). Cefepime was more cost-effective than ceftazidime (ceftazidime, $395.93 ± $355.22; cefepime, $266.59 ± $200.1 7; P=.05). Sensitivity analysis of efficacy rates demonstrated that ceftazidime would have to be 51 % more effective than cefepime to change the economic outcome. In conclusion, these data support cefepime as a cost-effective alternative to ceftazidime in the therapy for hospital-acquired pneumonia.