OBJECTIVES: Routine clinical practice in UK patients with severe dry eye disease is a combination of artificial tears (AT) and ocular lubricant ointments. This study aims to assess the cost-effectiveness to the UK NHS of the addition of Ikervis® (Ciclosporin A; CsA) to routine practice for patients who have not adequately responded to therapy. METHODS: Using a Markov framework, future health effects and costs were modeled. Eligible patients receive six months therapy with Ikervis® plus AT and ocular lubricants or AT and ocular lubricants without CsA. Upon completion, those who respond sufficiently remain on CsA treatment for the duration of the response, achieving a higher quality of life (HRQoL) and lower AT use. Incremental cost effectiveness ratios (ICER) were expressed in GBP (£) per QALY gained with costs and health effects discounted at 3.5% over a lifetime time horizon. Deterministic and probabilistic sensitivity analyses were employed to assess the effect of uncertainty on the model. Scenario analyses including less stringent improvement criteria, alternative approaches to deriving response stratified utility values and a shorter initial trial period were performed. RESULTS: Compared with AT alone, Ikervis® results in a lifetime cost to the UK NHS of £934 per patient, but offers an additional 0.03 QALYs. The ICER is £35,805/QALY gained. At a commonly accepted cost-effectiveness threshold of £30,000 per QALY, Ikervis® is cost-effective in 32.4% of simulations. Tornado analysis showed the model is most sensitive to the incremental benefit on patient’s long-term HRQoL associated with responding to therapy compared with non-response. CONCLUSIONS: The modelling study showed that from an NHS perspective, health gains can be achieved at a low cost. The Ikervis® ICERs are well below the NICE’s commonly accepted cost-effectiveness threshold of £30,000/QALY gained, indicating that Ikervis® in the target patient population could represent a cost-effective intervention in the UK.