INTRODUCTION: Transformer-based large language models (LLMs) have transformed the field of natural language processing and led to significant advancements in various text processing tasks. However, the applicability of these LLMs in identifying related drug-adverse event (AE) pairs within clinical context may be limited by the prevalent use of non-standard sentence structures and grammar. METHOD: Nine transformer-based LLMs pre-trained on biomedical domain corpora are fine-tuned on annotated data (n = 5088) to classify drug-AE pairs in unstructured discharge summaries as causally related or unrelated. These LLMs are then validated on text segments from deidentified hospital discharge summaries from Singapore (n = 1647). To assess generalisability, the models are validated on annotated segments (n = 4418) from the Medical Information Mart for Intensive Care (MIMIC-III) database. Performance of LLMs in identifying related drug-AE pairs is then compared against a prior benchmark set by traditional machine learning models on the same data. RESULTS: Using an LLM-Bidirectional long short-term memory (LLM-BiLSTM) architecture, transformer-based LLMs improve F1 score as compared to prior benchmark with BioM-ELECTRA-Large-BiLSTM showing an average F1 score improvement of 16.1% (increase from 0.64 to 0.74). Applying additional rules on the LLM-based predictions, like ignoring drug-AE pairs when the AE is a known indication of the drug, results in a further reduction in false positive rates with precision increases of up to 5.6% (0.04 increment). CONCLUSION: Transformer-based LLMs outperform traditional machine learning methods in identifying causally related drug-AE pairs embedded within unstructured discharge summaries. Nonetheless the improvement in performance with rules indicates that LLMs still possess some degree of imperfection for this causal relation detection task.