OBJECTIVES: The aim is to explore the economical benefits of quetiapine extended-release (XR) compared to quetiapine immediate-release (IR) in treating patients with schizophrenia in hospitals and outpatient care in the Finnish setting. The analysis explores the effects of titration time and probability of relapse on expected annual costs.   METHODS: The analysis estimates the total direct healthcare costs for a patient with schizophrenia over a one-year time horizon. One-year probabilities of relapse were derived from literature. Costs were gathered from national unit cost report in 2007 and length of stay data was based on a Finnish register study. Due to short-term perspective no discounting was applied. In addition to deterministic approach, an Excel based simulation model was used for the probabilistic analyses and one-way sensitivity analyses.   RESULTS: Total costs in average were €25,687 and €26,736 for patients treated by quetiapine XR and quetiapine IR, respectively. The results of the stochastic model indicated that quetiapine XR was associated with cost savings of €1300 per patient per year. Most sensitive parameters were length of inpatient periods and unit cost of quetiapine IR. Approximately 94% of the saving was due to effects of faster titration and 6% due to difference in relapse rates.   CONCLUSIONS: The results of this model suggest that expected total costs for patients treated with quetiapine XR are lower than for patients treated with quetiapine IR. The potential increase in hospital drug budgets due to introduction of quetiapine XR may be offset by lower inpatient care costs associated with quetiapine XR.