OBJECTIVES: Many pharmacoeconomic studies have applied the decision analytic model or Markov model (collectively termed as static models) to evaluate the cost-effectiveness of pneumococcal conjugate vaccines without taking herd effect into account. The objective of the study is to carry out a cost-effectiveness analysis of 13-valent pneumococcal conjugate vaccine PCV13 in Taiwan using a transmission dynamic model (TDM) to circumvent static models. METHODS: We develop an age-structured TDM populated with parameters from the Taiwanese National Health Insurance Research Database (NHIRD), Centers for Disease Control, government websites and public available sources to evaluate the clinical and economic impact of PCV13. Pneumococcal diseases included in the TDM are invasive pneumococcal diseases (IPD), hospitalized pneumonia and acute otitis media (AOM). One-way deterministic and multivariate probabilistic sensitivity analyses based on 5000 Monte Carlo simulations are performed to explore model uncertainties. Confidence intervals for ICER and cost-effectiveness acceptability curves (CEAC) are calculated for further inferences. RESULTS: In the base-case analysis, 4-dose scheduled universal infant PCV13 vaccination is expected to prevent 5,112 cases of IPD, 535,607 cases of all-cause hospitalized pneumonia, 726,986 cases of AOM, and 420 deaths over a 10-year time horizon. The vaccination program is estimated to yield an incremental cost-effectiveness ratio (ICER) of US$38,045 and US$18,299 from payer and societal perspectives. One-way sensitivity analyses indicated that ICER is most sensitive to vaccine price and recovery rate of pneumonia. Ninety-five percent confidence interval of ICER is US$10,186 to US$34,563 by multivariate probabilistic sensitivity analyses in societal perspective. CONCLUSIONS: With a WHO-recommended cost-effectiveness threshold of 3 times the gross domestic product per capita, PCV13 vaccination program would be cost-effective in Taiwan. With the lack of long-term real data, TDM can be informative to decision makers on evaluating the long term cost-effectiveness of national immunization program.