OBJECTIVES: Evaluate costs and benefits of erlotinib in 2nd or 3rd line treatment of advanced or metastatic Non-Small Cell Lung Cancer (NSCLC) versus docetaxel, pemetrexed or best supportive care. METHODS: Cost-minimization and cost-utility analysis were performed for a time horizon of two years according to a Markov model with 3 health states (“progression free survival”, “progression” and “death”) and monthly cycles. Portuguese National Health System (NHS) perspective was applied. Survival and time to progression were obtained from 3 clinical trials. Base-case analysis included 2nd and 3rd line patients with advanced or metastatic NSCLC. Quality Adjusted Life Years (QALYs) were obtained from a UK study. Resource consumption was estimated by a Portuguese expert panel. Costs were calculated according to official Portuguese database and updated to 2008. Only direct health costs were applied. Annual discount rate: 5% (cost and utilities). Sensitivity analysis included different subpopulations, a three years time horizon and a probabilistic analysis. RESULTS: The cost per patient was lower with erlotinib (€26,478) versus docetaxel (€29,262) or pemetrexed (€32,762) and higher versus best supportive care (€16,112). QALYs per patient were higher with erlotinib (0.250) versus docetaxel (0.225), pemetrexed (0.241) or best supportive care (0.186). Erlotinib was “dominant” in the cost-utility analysis, with a lower cost and a higher efficacy versus docetaxel and pemetrexed. The sensitivity analysis confirmed the robustness of the base-case analysis results. CONCLUSIONS: The use of erlotinib instead of docetaxel or pemetrexed could contribute with annual savings for the NHS (substitution rates: 5%-65%) that would range between €135,046 - €1,755,602 (docetaxel replacement) and €291,801 – €3,793,409 (pemetrexed replacement), with a gain in terms of QALYs.