OBJECTIVES Rituximab (RTX) and abatacept (ABAT) are novel therapies to treat moderate to severe Rheumatoid Arthritis (RA). This analysis was conducted to evaluate the cost-effectiveness of these two therapies in patients with active RA who have had an inadequate response to anti-tumour necrosis factor (TNF) inhibitor therapies from the Ontario Ministry of Health perspective. METHODS A cost-utility model was used to evaluate the direct costs and outcomes of a standard Canadian treatment sequence in the absence and presence of either RTX + methotrexate (MTX) or ABAT + MTX after failure of one anti-TNF. The model simulated 10,000 RA patients over a life time. RTX and ABAT were evaluated against the following standard Canadian treatment sequence after failure of one anti-TNF (etanercept): adalimumab + MTX, infliximab + MTX, leflunomide, gold, cyclosporine and palliative care. Baseline characteristics from REFLEX (Randomized Evaluation of Long-term Efficacy of Rituximab in RA) clinical trial were: mean age, 52.2 years; mean HAQ score, 1.88. ACR response rates from RCTs were placebo-adjusted to minimize bias from cross-trial comparisons. All relevant direct costs were included in the model including drug costs, administration and monitoring, and adverse events. Observational data were used to estimate long-term HAQ progression and average time on treatment for patients responding to therapy. Costs and benefits were discounted at 5% per annum. RESULTS The introduction of RTX following failure of one biologic resulted in a gain of 0.443 QALYs at an additional total cost of $3710 resulting in an ICER of $8380/QALY. The introduction of ABAT following failure of one biologic resulted in a gain of 0.387 QALYs at an additional total cost of $18,588 resulting in an ICER of $48,000/QALY. CONCLUSIONS Rituximab is economically attractive from a Canadian payer perspective and is a cost effective treatment option over abatacept when compared in the studied population.