Abstract: Pharmaceutical formulations comprise (i) microcapsules which consist essentially of a biocompatible polymeric wall material encapsulating a drug, and (ii) a lipid soluble surfactant which is mixed with the microcapsules or is incorporated within or coats the wall material of the microcapsules. Such formulations may be presented as an aerosol or dry powder for inhalation. Microcapsules with surfactant incorporated in the wall material may be suspended in a pharmaceutically acceptable water-immiscible oil and the resulting suspension emulsified in an aqueous medium to obtain a formulation for oral administration.