OBJECTIVE: The purpose of the study was to assess cost-effectiveness of novel DMARDs for RA therapy from the managed care perspective. METHODS: Utilizing a claims database, RA patients initiated on various dose regimens of leflunomide (LEF), etanercept (ETA) and infliximab (INF) in 1999 or 2000 were followed for 12 months post drug index date and mean RA-related direct medical charges were calculated for each study cohort. Twelve-month estimates of the American College of Rheumatology response criteria (ACR 20) and mean change in the Health Assessment Questionnaire Disability Index (HAQ DI) were used as effectiveness measures from published clinical trials. Average (CE) and incremental cost-effectiveness (ICER) ratios were calculated and one-way sensitivity analyses were performed.RESULTS: Mean RA-related direct medical charges (95% CI) for LEF, ETA and INF for 1-year of therapy post-index date were $16,107 (14654, 17856), $25,550 (24251,26711) and $55,195 (49928, 60305). Twelve-month ACR 20 estimates were 52%, 72% and 42% and mean changes in HAQ DI were -0.45, -0.62 and -0.29, respectively. The LEF CE [ACR 20] was $30,976 compared to $35,486 (ETA) and $131,417 (INF) while LEF CE [HAQ DI] was $35,794 compared to $41,210 (ETA) and $190,329 (INF). Sensitivity analyses of key parameters: cost, ACR20, HAQDI did not influence the rank order of results. Worst-case estimates for LEF [ACR 20=0.51; HAQ DI=-0.41] resulted in a CE of $31,583 and $39,286, which was lower than the base-case CE of ETA and INF. The ICER for ETA vs. LEF was $47,213 [ACR 20] and $55,544 [HAQ DI]. Both LEF and ETA dominated INF. CONCLUSION: Evidence from the economic analysis demonstrates that LEF is a cost-effective alternative among novel DMARDs for RA patients in a managed care setting.