OBJECTIVES: Analyse the costs and outcome of treating osteoporosis in Germany with either a combination of Alfacalcidol , Alendronate and 500 mg calcium (regime 1) or plain vitamin D, Alendronate and 1000 mg calcium (regime 2).   METHODS: A Markov model was created and a time horizon of 2, 5 and 10 years were evaluated. Patients could be in the state of well, fracture, post fracture and dead. Data were extracted from published clinical trials and register based studies. RESULTS: Treatment regime 1 are associated with lower costs compared to treatment regime 2. The drug costs in regime 1 are above the drug costs in regime 2 (€2191/patient vs. €1392/patient). However, when taking into account that the risk of fractures is significantly lower for patients treated in regime 1, treatment regime 1 becomes cost saving over a 2 year time horizon compared to regime 2 (€3142/patient vs. €4782/patient). Regime 1 is also the most effective alternative measured in QALYs. On a 2 year time horizon the patients in treatment regime 1 gain 1.4956 QALYs. In comparison, patients from regime 2 gains 1.4242 QALYs, i.e. regime 1 is dominating regime 2. In 2003, around 7.8 million Germans, or around 25% of the population above the age of 50, were estimated to suffer from osteoporosis. Taking into account the savings per patient when treating with regime 1, there is a significant saving potential for Germany. CONCLUSIONS: Lowest total cost of treatment is obtained when osteoporosis patients are treated with Alfacalcidol in combination with Alendronate and 500 mg calcium. Even though the initial cost of plain vitamin D, Alendronate + 1000 mg calcium is lower, the Alfacalcidol regime is more cost effective, due to a significantly lower risk of fractures. Furthermore, the Alfacalcidol regime is more effective measured in QALYs.