OBJECTIVES: AIDS-Kaposi’s Sarcoma (KS) is a cancer that occurs among patients infected with HIV/AIDS. To treat AIDS-KS, the FDA approved the chemotherapy treatments: liposomal anthracyclines (doxorubicin and daunorubicin) and paclitaxel.  At present, there is no economic study evaluating the cost-effectiveness of liposomal anthracyclines versus paclitaxel. This study aims to compare liposomal doxorubicin to paclitaxel through a cost minimization analysis (CMA) followed by a cost effectiveness analysis (CEA) METHODS: Available cost-studies have indicated that liposomal doxorubicin is more cost effective than liposomal daunorubicin thus removed from this analysis. For the CMA and CEA, total costs were calculated based on the Average Wholesale Price (AWP) of 2010 minus 20%, for a more realistic approach of acquisition cost. All costs associated with adverse events were estimated based on a Cancer Institute in US dollars as of 2010. Clinical outcomes were derived from the package insert and one phase III trial comparing the two drugs. RESULTS: The CMA showed that the total treatment with liposomal doxorubicin costs $14,819 compared to $15,135 for paclitaxel. After accounting for response rate of 57% for paclitaxel and 46% for liposomal doxorubicin, the results showed that paclitaxel costs $ 26,553 per response while liposomal doxorubicin costs $ 32,215.One-way sensitivity analysis showed that  our results hold true in a wide range of cost values and the total cost of cycles have the biggest impact in our analysis. Our model was highly sensitive to the response rate due to the small difference in total treatment cost. CONCLUSIONS: In our scenario, paclitaxel is more cost-effective than liposomal doxorubicin. After accounting for all the factors that contribute to cost, and response rate, paclitaxel is more expensive and more cost-effective than liposomal doxorubicin. Future research includes the use of other sources of acquisition cost and a different scenario to validate or refute our results.