The causes and implications of streamlining and consolidation in academic medical centres in the US have a number of parallels in the research-intensive pharmaceutical industry. In both cases there is increasing competition between institutions (centres or companies), and the costs of research and innovation are rising sharply. However, with increasing emphasis on cost reduction in healthcare, fewer and fewer payers are willing to help underwrite the costs of research and innovation within academic health centres or for new drug development. At the Brigham and Women's Hospital, an ongoing study is investigating the effects of 'reminding' doctors, through an interactive hospital computer system, that the drug they are about to prescribe may not be the most clinically appropriate or cost-effective in a given situation. While physicians are not deprived of the right to prescribe a 'deviant' drug, it is hoped that, unless exceptional circumstances prevail, they will improve their prescribing choice if provided with the correct information at the time of decision-making. This approach reflects a new understanding that teaching institutions are required to educate trainees about the fact that resources are not infinite, and that critical selection among competing products must be a prominent concern for the rest of their professional lives. Attention to such concerns is vital to quality assurance and cost management. However, it is also true that the most cost-effective drug may not necessarily be the one with the lowest acquisition cost, provided that one conducts a thorough interdisciplinary analysis of clinical outcomes and expenditures. As academic medical centres redefine their priorities while attempting to preserve their leadership in innovation, research-oriented drug manufacturers are also developing more creative and efficient goals for their constrained research budgets. Liaisons between academic medical centres and research-driven pharmaceutical companies can help ensure that both types of innovation-based organisations are able to continue their respective missions of discovery into the next century.