OBJECTIVES: Observational research suggests that personalized medicine practices in human epidermal growth factor receptor-2 positive (HER2+) breast cancer (BC) deviate from practice guidelines.  We compared observed clinical testing and treatment practices to practices that follow guidelines to target adjuvant trastuzumab in HER2+ BC using cost-utility analysis. METHODS: We used a probabilistic decision tree linked to a Markov model to estimate the incremental cost-utility of 2 alternative test-treat strategies to target adjuvant trastuzumab in Canadian BC patients; primary fluorescence in situ hybridization (FISH) vs. primary immunohistochemistry (IHC) with FISH confirmation with trastuzumab treatment for all FISH+ or IHC+. The BC Markov model was calibrated against Canadian BC registry mortality. Population-level observational data informed model probabilities of confirmatory FISH testing, probabilities of treatment based on test results, and HER2+ disease prevalence under the current practice scenario.  Uncertainty was characterized using deterministic and probabilistic sensitivity analyses and cost-effectiveness acceptability curves (CEACs). RESULTS: In the base case analysis assuming 20% HER2+ disease prevalence and perfect adherence to testing and treatment guidelines, primary FISH testing was dominant; it decreased costs by a mean of $815 and improved outcomes by 0.0022 QALYS compared to the strategy of primary IHC with FISH confirmation of equivocal results. Health outcomes were poorer in simulations of current testing and treatment practice. Results were sensitive to HER2+ disease prevalence rate, test accuracy, treatment benefit carryover and testing behaviors. CONCLUSIONS: Improved adherence to treatment guidelines combined with primary FISH testing could improve long-term outcomes and costs in practice. Local disease epidemiology should be considered when formulating personalized medicine policies. Scenario analyis comparisons of guideline adherent vs. practice patterns derived from observational data can provide important insights into the consequences of deviations from practice when forming policy.