OBJECTIVES: The multi-component Fufang (non-leguminous traditional Chinese herbal formulas with multi-interactive compounds) Xian Ling Gu Bao (XLGB) in capsular form was officially approved by China FDA for the management of menopausal osteoporosis and related conditions based on its safety and efficacy evidence. This study was conducted to evaluate the cost-effectiveness of XLGB versus placebo in the management of postmenopausal osteoporosis from Chinese payer’s perspective. METHODS: A decision-tree model based on the BMD change efficacy information from a randomized clinical trial (RCT) was developed to estimate the outcomes of XLGB treatment over 10 years. After one-year treatment of XLGB or placebo, changes in bone mineral density (BMD) in femoral neck were utilized to predict the10-year risk of hip fracture and thus the risk of hip-fracture related mortality. The 10-year hip fracture risk was assessed via FRAX ^® WHO Fracture Risk Assessment Tool