Conditions for conducting excipient compatibility studies via isothermal microcalorimetry were explored using model reactions. The resulting recommended procedure for rapid and practical screening consisted of using binary mixtures (100 mg of each component), the addition of 20% (w/w) water, and monitoring the mixture at 50 degreesC for 3 days using an isothermal microcalorimeter. The correlation between calorimetric excipient compatibility results and formulation stability was investigated for two developmental drugs. A comparison of calorimetric results to actual formulation stability suggested that it was possible to predict relative stability within functional classes. However, caution should be exercised in such predictions, because apparent reaction enthalpies were found to vary three-fold among excipients in the same functional class. Based on these observations, a two-step procedure is suggested for efficient development of stable formulations. First, excipient compatibility screening should be conducted using a rapid calorimetric technique. The calorimetric results are then used to evaluate relative risk of incompatibility for each excipient within a particular functional class. The calorimetric data and the functional requirements of the dosage form are then integrated in developing a limited number of model formulations that are likely to succeed from both a performance and a stability perspective. The second step of the process is to conduct traditional HPLC-based accelerated stability studies on the limited number of model formulations.