OBJECTIVES: In Australia omalizumab (OM) is indicated for moderate-to-severe allergic asthma. Two randomised controlled trials conducted in patients with severe asthma compared optimised asthma therapy (OAT) (includes maximal inhaled therapy) versus OM+OAT. This analysis was to identify a patient subgroup in which clinical need, comparative costs and effectiveness of OM is greatest. METHODS: A Markov model incorporating local treatment algorithms and data from the trials was developed. Patient subgroups were defined according to baseline use of maintenance oral corticosteroids (MOCS), Asthma Control Questionnaire (ACQ-5) and Asthma Quality-of-Life Questionnaire (AQLQ) scores, FEV1, exacerbation history and combinations of these. Costs and effectiveness of OM+OAT were compared with OAT alone. OM was continued only while patients exhibited treatment response. Various definitions of response were examined to optimise continuation criteria. Model parameters included: clinically significant asthma exacerbations; hospital admissions; emergency visits; change in MOCS dose; impact of MOCS on risk of certain chronic conditions; ACQ-5, AQLQ and EQ5D utility index scores. The model estimated numbers of clinically significant severe asthma exacerbations, deaths, life-years and QALYs gained due to OM. RESULTS: OM+OAT showed optimal cost-effectiveness in patients uncontrolled on or intolerant to MOCS, with a baseline ACQ-5 ≥2.0 or AQLQ ≤5.0. Response for OM continuation was optimally defined as a reduction in ACQ-5 ≥0.5 or ≥25% reduction in MOCS dose without deterioration in ACQ-5. These patients benefitted most from OM because they had severe disease, and were able to reduce exacerbations and MOCS dose and associated MOCS risks. The low baseline AQLQ score meant these patients had greatest propensity for quality-of-life improvements and QALY gains, resulting in the public subsidy recommendation in this patient subgroup by the PBAC in Australia. CONCLUSIONS: Patients using MOCS with a baseline ACQ-5 ≥2.0 or AQLQ ≤5.0 are those in whom OM shows optimal cost-effectiveness in the Australian healthcare environment.