OBJECTIVES: Hepatic encephalopathy (HE) is associated with high morbidity and mortality. Rifaximin-α 550mg reduces the recurrence of episodes of overt HE, and hospital utilisation. We characterised the cost effectiveness of rifaximin-α 550mg versus standard care (lactulose) in patients with liver cirrhosis in Sweden.  METHODS: This economic evaluation used a Markov state transition model. The outcome metric was the ICER, derived from estimates of the cost/QALYs. The payer perspective was that of the Swedish healthcare system. Outcome data were from two rifaximin-α 550mg trials. Population outcome data were from a complementary study of patients with liver cirrhosis treated in Sweden. Swedish Costs data (2012) were derived from published sources. Health-related utility was estimated indirectly from disease-specific quality of life RCT data. The time horizon was five years. Costs and benefits were discounted at 3.5%. Extensive sensitivity analyses were carried out. Real world data were also applied into the model for length of stay in hospital and the number of admissions.   RESULTS: The average cost of the included elements of care was SEK302,520 (€32,667) for rifaximin-α 550mg and SEK393,777 (€42,522) for lactulose, a difference of -SEK91,257 (-€9,854). The corresponding values for benefit were 2.38 QALYs/person and 1.83 QALYs/person, respectively, a difference of 0.55 QALYs over the five year period. This translated into a dominant base-case ICER at five years, meaning that rifaximin-α 550mg was both less costly and more beneficial. Key parameters that impacted the ICER included length of stay in hospital and the number of admissions to hospital. Evaluation to 10 years also resulted in a dominant ICER, although the lifetime ICER was SEK5,918 (€639) per QALY. CONCLUSIONS: In Sweden, treatment with rifaximin-α 550mg in patients with recurrent HE in the context of liver cirrhosis was cost effective compared to standard care, by reducing episodes of overt HE.