OBJECTIVES: Rheumatoid Arthritis (RA) can be treated with TNFα inhibitors after the failure of conventional disease-modifying antirheumatic drugs like methotrexate. The percentage of German patients treated with TNFα inhibitors has been rising from 2 % in 2000 to 20 % in 2008. In 2012, adalimumab was the most popular TNFα inhibitor and the best selling drug in the German statutory health insurance system with net expenditure of 581 mn €. We aim to analyze the cost-effectiveness of adalimumab for the treatment of RA in Germany. METHODS: We set up a Markov Chain Monte Carlo lifetime model to simulate 10,000 hypothetical patients. Initially, patients can achieve one of three responses according to American College of Rheumatology criteria or fail the therapy. Each response is associated with an initial improvement in functional status. In each cycle, treatment might be discontinued due to loss of efficacy or adverse events. RESULTS: In the base case, patients gain 2.64 quality-adjusted life years (QALYs) with methotrexate monotherapy and 6.25 QALYs if adalimumab combination therapy is added to the treatment algorithm. The incremental cost-utility ratio (ICUR) is 32,210 € based on German list prices. After deduction of mandatory rebates and taxes, the ICUR is only 23,755 €. Adalimumab combination therapy lowers indirect cost from 295,070 € to 235,531 €. The ICUR based on total cost is 15,728 € (7,274 € after deducting taxes and rebates). ICURs further improve for younger baseline age. Limiting the simulation time to 5 or 10 years increases ICURs. CONCLUSIONS: Adalimumab therapy for the treatment of RA is cost-effective in Germany even in the base case scenario, which uses incorrectly high list prices and ignores indirect cost savings. Our analysis shows that cost-effectiveness analysis of drugs for chronic diseases need to consider indirect costs and need to take a lifetime modeling perspective.