Confounding by indication is a bias frequently encountered in observational epidemiologic studies of drug effects. Because the allocation of treatment in observational studies is not randomized and the indication for treatment may be related to the risk of future health outcomes, the resulting imbalance in the underlying risk profile between treated and comparison groups can generate biased results. Confounding by indication is often present in studies of drugs that are not widely prescribed, because the indications for their use are narrow and not likely to be present in comparison groups; however, this bias is also observed in the study of widely used over-the-counter and prescription drugs, are exemplified by studies of analgesics. In this article we review examples from the published literature to demonstrate how confounding by indication can affect the findings of pharmacoepidemiologic studies relating analgesic use to various health outcomes.