The randomized discontinuation trial (RDT) is a two-phase trial. In phase I all patients are openly treated with the medication being evaluated. In phase II, those who have responded are randomly assigned to continue the same treatment or switch to placebo. Usually, non-compliers and "adverse reactors" identified in phase I are excluded from phase II. To investigate the value of this design, we reviewed the advantages and limitations of discontinuation studies, and compared the RDT design to the classic randomized clinical trial design in terms of clinical utility and efficiency (sample size). A computer model was used to study the efficiency of the two designs under a broad range of assumptions. The RDT design is particularly useful in studying the effect of long-term, non-curative therapies, especially when the clinically important effect is relatively small, and the use of placebo should be minimized for ethical or feasibility reasons. However, its use is limited if the objective of an investigation is to estimate the magnitude of absolute treatment effects and toxic effects in the source population, or to evaluate a potentially curative treatment. Our results indicate that selecting responders prior to randomization has a very strong effect on the relative efficiency of the trial. Further improvement may be achieved by excluding non-compliers and adverse reactors. Under the assumptions tested in our model, the sample size required in phase II of an RDT was only 20-50% of that in a classic trial.