OBJECTIVES: It is well-documented that substantial savings are made when patents of drugs expire. However, another less apparent implication is that there are potential savings when these drugs are used as comparators in future cost effectiveness assessments. This study sought to investigate the implications of price erosion for future cost-effectiveness assessments using docetaxel as an example. METHODS: A model was built to simulate an improvement in progression free survival (PFS) (hazard ratio 0.50) and overall survival (OS) (hazard ratio: 0.70) for a hypothetical new oncology drug versus docetaxel. Utility values were set to 0.82 for PFS and 0.74 for patients with progressive disease. The model was run with a 10-year time horizon using Weibull distributions for extrapolation of PFS and OS curves. Two scenarios were studied. Scenario 1: price of docetaxel set at $3000 per treatment course and unchanged over 10 years; and Scenario 2: price of docetaxel eroded to $32. This reflected real price drops observed in Australia with patent of expiry of docetaxel in 2015. In both scenarios, the cost of the new drug was $5000 (unchanging).  RESULTS: In both scenarios, the estimated incremental quality adjusted life years (QALY) gained per person was 0.67. In Scenario I, the incremental cost of the new drug was $46K and in Scenario 2, it was $115K. The resulting ICERs were $69K per QALY saved and $173K per QALY saved, respectively. A rebate of 60% for the new drug would be needed in order to drop the Scenario 2 ICER under the $70K per QALY saved threshold. CONCLUSIONS: The implications of pricing policies with drug patent expiry are far greater than immediate savings. This is especially the case in jurisdictions where health technology assessment against a cost-effectiveness acceptability threshold is used as the main decision criterion for granting reimbursement of new drugs.