OBJECTIVES: Melanoma is a particularly aggressive form of skin cancer, the incidence of which continues to increase. Whilst no new therapies had been developed for approximately 25 years, new treatments – including the immunotherapy ipilimumab – have been licensed. The objective of this study was to assess the cost-effectiveness of ipilimumab in previously treated metastatic melanoma. METHODS: A semi-Markov model, based around survival curves from the MDX-010-20 trial, was constructed. Because of the unusual shape of the survival curve (exhibiting a plateau of survival at around 15% of patients after an initial steep fall), the survival data was split in to three sections, modelled using Kaplan-Meier data (0-18 months), parametric curve fits (18-60 months) and registry data (>60 months). Utility, drug dosage and patient weight data were taken from the trial, while costs were taken from published sources and NHS Reference Costs. RESULTS: Ipilimumab was projected to result in a substantial increase to life when compared to best supportive care (2.77 vs 1.07 life years), with a correspondingly large increase in quality-adjusted life years (2.06 vs 0.82). As a result of drug therapy, costs also increased from £11,747 to £89,607, giving ipilimumab an incremental cost-effectiveness ratio of £65,303 (excluding any vial sharing). Sensitivity analysis indicated the greatest areas of uncertainty were the methods used to extrapolate of survival curves beyond the 56-month trial data and the utility values used. CONCLUSIONS: The modelling of survival curves should be tailored depending on the shape of the data –parametric survival curve fitting may not always be appropriate. The results of the model showed that ipilimumab has the potential to lengthen life substantially (40.1 vs 11.4 months). From this, the degree of innovation (extent of survival gain) is such that ipilimumab could be considered cost-effective under the NICE End of Life guidance and Kennedy report as a ‘step-change’.