OBJECTIVES: The purpose of the study was to evaluate the cost effectiveness and budget impact of temsirolimus compared to interferon alpha-2A (IFN) in any given population of metastatic renal cell carcinoma (mRCC). METHODS: Economic evaluations were performed from a US managed care perspective over a 30 months period. Cost of treatment was the summation of drug’s cost, administration cost, premedication cost, and cost of associated adverse events. Outcomes measure for economic evaluations was progression free life months gained. Cost effectiveness was conducted using a Markov state-transition model in TreeAge®. Time dependent transition probabilities were calculated using multistate Kaplan Meier estimators based on clinical trial data. An Excel-based budget impact model was developed to compare two scenarios, one for the interferon scenario and one for the temsirolimus scenario. Inputs were obtained from SEER registry, clinical trial, and US census bureau. Sensitivity analyses were performed. RESULTS: The model yielded ICER $8944 per progression free life month gained. For a hypothetical managed care plan with 500,000 members, the Budget Impact model estimated 33 patients with mRCC. A 75% (n=25) of mRCC was eligible to receive first line therapy. A 95% (n=24) eligible patients would be treated with IFN. Assuming that temsirolimus was available to 12% of eligible patients the expected 30 months cost would be US $18215.7 per patient compared with $15,557.90 had all patients been treated with IFN alone. CONCLUSIONS: Temsirolimus was found not to be dominantly cost effective compare to interferon alpha-2A. This finding is indicative of two challenges: 1) temsirolimus needs to be available at a reduced cost; 2) its threshold for cost-effectiveness needs to be adjusted according to relative clinical efficacy. The budgetary impact of adding temsirolimus to health plan was estimated to be minimal. While its current availability allows new treatment options, temsirolimus may be too expensive to use in some managed care plans.