OBJECTIVES: Chronic Obstructive Pulmonary Disease (COPD) has a huge impact on the quality of life (QOL) of patients, diminishing significantly their ability to work and their social activity. The objective of this study was to examine if the recently available treatment for COPD, indacaterol, improved the QOL more cost-effectively than the therapeutic alternatives already available. METHODS: A cost-utility analysis was performed from an institutional perspective (Mexican Institute of Social Security, IMSS). The comparators used were salmeterol and tiotropium, both alternatives available within the National Formulary and recommended by the National Treatment Guidelines for COPD; dosage regimens compared were indacaterol 300 µg vs. tiotropium 18 µg, and indacaterol 150 µg vs. salmeterol 50 µg. QOL data was taken from published literature; the parameter used was health-related (HR) QOL score using St. George’s Respiratory Questionnaire (SGRQ). Resource use data was obtained from the institution; total direct costs of physician consults, lab and image tests, hospitalization and emergency room visits, and treatments were considered. The source of the unit costs was the institution, current for 2010. All costs are expressed in local currency (Mexican Pesos, MXP). The time horizon was less than 1 year; no discount rate was used. The analytical tool used to build the model was a decision tree. A probabilistic sensitivity analysis was performed through a Monte Carlo simulation with 100,000 iterations to confirm the robustness of the model. RESULTS: The results show a cost-utility ratio of $302 MXP for indacaterol, compared to $317 MXP for tiotropium. Likewise, a cost-utility ratio of $298 MXP for indacaterol was obtained, compared to $321 MXP for salmeterol, corroborating that indacaterol is a more cost-effective alternative (dominant) for the treatment of COPD. CONCLUSIONS: From an institutional perspective in Mexico, indacaterol improves QOL more cost-effectively (dominant) than either tiotropium or salmeterol for the treatment of COPD.