Objective: Lenalidomide in combination with high-dose dexamethasone (Len+Dex), yields improved time to progression (TTP) and survival compared to high-dose dexamethasone alone (Dex). This study aimed to estimate long-term health and cost consequences of Len+Dex versus Dex in Scottish patients with multiple myeloma (MM) who have received one prior therapy. Methods: A discrete event simulation of a patient's course following initiation of Len+Dex or Dex was developed. The model uses patient's response (complete, partial, stable disease or progressive disease) and estimates corresponding TTP and subsequent survival based on Weibull functions derived from pooled data from two Phase III randomized clinical trials and long-term outcomes of UK Medical Research Council MM trials. Adverse events and disease management costs are included. Utility by response level was obtained from literature. Patients remain on treatment until relapse. Disease management costs reflect clinical practice in Scotland. Costs and health outcomes are discounted at 3.5% per annum. In the base case, events and costs are considered over two years reflecting trial follow-up (survival is modeled until death). 1,000 patients are simulated per analysis. Univariate sensitivity analyses are performed around key model parameters. Results: The modeled median TTP is conservative with Len+Dex at 13.5 months compared with 4.7 months with Dex. This translates to QALY gains: 3.19 vs 1.39. Totals costs with Len+Dex were £56,155 compared to £3,819 with Dex, leading to an incremental cost-effectiveness ratio of £28,980 per QALY. Sensitivity analyses showed that outcomes remain consistent through broad changes in key parameters. Conclusion: Lenalidomide delivers significant improvements in quality-adjusted survival in a life-limiting orphan disease and yields an estimated incremental cost per QALY which falls within a cost-effective range.