OBJECTIVES: A reimbursement policy issued by the Federal Joint Committee in Germany to reassess the benefit of cholinesterase inhibitors every six months in order to receive continued coverage by the Statutory Health Insurance triggered an additional need to periodically assess the cost-benefit of galantamine in the treatment of mild-to-moderate Alzheimer’s disease (AD). An economic model specifically designed for the purposes of such an assessment was developed using the most up-to-date IQWiG guidelines for cost-benefit assessment. METHODS: The model uses a discrete event simulation to predict the course of AD through changes in cognition, behavioral disturbance, and function over time, and compare the costs and benefits of galantamine versus no-drug treatment and ginkgo biloba. Clinical data were mainly derived from analyses of pooled data from clinical trials. Epidemiological and cost data were obtained from literature and public data sources. Costs (2009 €) from the perspective of the German Statutory Health Insurance were used. Both costs and benefits were discounted at 5%. Sensitivity analyses were performed to assess the robustness of the model outcomes. RESULTS: Over a 10-year period, galantamine on average delays time to severe stage of the disease by 3.57 and 3.36 months, compared to no-drug treatment and ginkgo biloba, respectively.  Galantamine also reduces time spent institutionalized by 2.34 and 2.21 months, compared to no-drug treatment and ginkgo biloba, respectively. The use of galantamine is projected to yield net savings of €3,978 and €3,972 per patient compared to respective treatments. CONCLUSIONS: Our analyses suggest that compared to no-drug treatment and ginkgo biloba, treatment with galantamine not only improves clinical benefits, but also achieves savings in healthcare costs associated with care for patients with mild-to-moderate AD in Germany.