It is now well documented that substantial disparities exist in the quality and quantity of medical care received by minority Americans, especially those of African, Asian and Hispanic heritage. In addition, the special needs and responses to pharmaceutical treatment of these groups have been undervalued or ignored. This article reviews the genetic factors that underlie varying responses to medicines observed among different ethnic and racial groups. Pharmacogenetic research in the past few decades has uncovered significant differences among racial and ethnic groups in the metabolism, clinical effectiveness, and side-effect profiles of many clinically important drugs. These differences must be taken into account in the design of cost management policies such as formulary implementation, therapeutic substitution and step-care protocols. These programs should be broad and flexible enough to enable rational choices and individualized treatment for all patients, regardless of race or ethnic origin.