OBJECTIVES: To perform a cost-effectiveness analysis of Indacaterol for moderate to severe COPD vs monotherapy treatment with Tiotropium or Salmeterol, both options available at the Public Health Care System in México. METHODS: A Markov model was designed. The model identifies five states for COPD according to FEV1: low, moderate, severe, very severe, and death; the first four states include the possibility of having a non-severe or a severe exacerbation. Transition probabilities were obtained from two randomized control trials: INHANCE and INLIGHT-2 which compare a weighted average of patients receiving Indacaterol 150µg and 300µg versus Tiotropium 18µg, and Salmeterol 200µg, daily. Thirty-nine percent of patients with Indacaterol moved from severe to moderate state of improvement in FEV1 at 12 weeks of treatment, compared with 31% of patients on Tiotropium arm. Cycle duration was 12-week, time horizon 3 years, discount rate 5%. Effectiveness was evaluated by QALYs using utility values where severity states are related to FEV1.  This data was obtained from pivotal clinical trials, while utilities for each state and exacerbations from the literature. Direct medical costs include, besides rutinary treatment, the cost of exacerbations expected in each treatment. The cost values of them were calculated with the cost list of the Mexican Institute of Social Security. Drug costs come from public tenders 2011. Probabilistic sensitivity analysis (PSA) was performed using Monte Carlo technique. RESULTS: Monthly drug cost of treatment with Tiotropium and Salmeterol is 14.08 and 23.2% higher than Indacaterol, respectively. The expected three–year average costs and QALYs per patient with each treatment are: Indacaterol US$1020/2.125; Tiotropium US$1169/2.11; and Salmeterol US$1159/2.11. Indacaterol is a dominant strategy. PSA shows robustness in the model. CONCLUSIONS: Indacaterol was a dominant alternative as it had lower cost and more effectiveness than their comparators. These results showed that is possible to achieve cost-savings and  potential clinical benefits with Indacaterol.