OBJECTIVES: The treatment of rheumatoid arthritis (RA) is usually initiated with disease-modifying anti-rheumatic drugs (DMARDs).  In patients who do not tolerate or respond to DMARDs, treatment with a biologic agent may be considered.  This study aimed to estimate the cost effectiveness of adalimumab+methotrexate (ADA+MTX) relative to standard DMARD therapy for treating early- and late-stage RA in Italy. METHODS: Separate discrete event simulations were performed to model the clinical and treatment pathways of early and late RA. Patients’ clinical course was modeled as a function of baseline characteristics, treatment efficacy, risks of adverse events, treatment withdrawals, and death. Treatment efficacy was based on American College of Rheumatology (ACR) response, which was translated into Health Assessment Questionnaire (HAQ) scores to facilitate the assignment of costs and utilities. Survival, quality-adjusted life years (QALYs), and direct medical costs were estimated over a lifetime.  Inputs of demographics, treatment efficacy, the ACR-HAQ relationship, and utility scores were extracted from several ADA+MTX trials; risks of adverse events, withdrawal rates, prices, and resource use from the literature; and life expectancy from Italian life tables. Assumptions regarding resource use and HAQ progression were consistent with published RA models. RESULTS: For early RA, the incremental cost-utility ratio (ICUR) for ADA+MTX over DMARDs-only treatment (after failing two doses of MTX and followed by rescue therapy) was estimated to be €15,770/QALY (3.37 QALYs gained and €53,100 incremental costs).  For late-stage RA, the ICUR for ADA+MTX relative to DMARDs only (after failing three doses of MTX and followed by rescue therapy) was estimated to be €20,129/QALY (1.84 QALYs gained, €37,081 incremental costs).  Sensitivity analyses indicated that ADA+MTX was cost effective over a range of key parameters. CONCLUSIONS: The results of these simulations indicate that treatment of early and late RA with ADA+MTX is cost effective relative to DMARDs-only treatment in an Italian setting.