OBJECTIVES: CML is a clonal myeloproliferative neoplastic disorder characterized by a reciprocal translocation between chromosomes 9 and 22, t(9;22)(q34;q11) leading to the formation of the BCR-ABL fusion gene.  With the introduction of imatinib, a BCR-ABL tyrosine kinase inhibitor (TKI), survival has improved with durable long-term responses.  Nilotinib is a more recently approved second generation TKI indicated for treatment of CML as first- and second-line therapy.  Shorter-term clinical trials (24 months) have shown that nilotinib produces a faster cytogenetic response compared to imatinib, but long-term survival outcomes have not yet been reported in clinical trials.  The objective of this analysis is to explore the cost-effectiveness of nilotinib compared to imatinib for the treatment of newly diagnosed CML in chronic phase. METHODS: Using a healthcare payer perspective, a 72-month Markov state transition model was developed in Microsoft Excel 2007.  Major cytogenetic response, progression, and survival rates were obtained from a 24-month head-to-head clinical trial and a 72-month single arm trial evaluating long-term responses with imatinib.  Nilotinib as a second-line therapy was allowed for patients who progressed while on imatinib.  Drug costs were obtained from the Red Book. Hospital and outpatient costs were obtained from reimbursement rates from the Centers for Medicare and Medicaid Services.  Sensitivity analyses were conducted to test various assumptions. RESULTS: The base case analysis resulted in 0.1 life years gained for nilotinib compared to imatinib.  Resultant quality-adjusted life years (QALYs) for nilotinib and imatinib were estimated to be 4.39 and 4.23, respectively. The additional cost for treating with nilotinib was $213,895, resulting in an incremental cost effectiveness ratio (ICER) of greater than 1 million dollars per QALY saved. CONCLUSIONS: Based upon this analysis, the small additional survival benefits associated with nilotinib do not translate into a favorable ICER for first-line treatment of CML in chronic phase.