OBJECTIVES: To assess the balance between costs and upper GI side effects of treatment with celecoxib (a COX-2 specific inhibitor) compared with nonspecific NSAIDs alone, nonspecific NSAIDs plus misoprostol, nonspecific NSAIDs plus histamine-2 receptor antagonists (H2RA), nonspecific NSAIDs plus proton pump inhibitors (PPI), and Arthrotec, in The Netherlands. METHODS: A model was used to convene data from various sources. The probabilities of GI side effects for celecoxib and nonspecific NSAIDs alone were derived from trial data, while all other probabilities were derived from published sources. Resource use was derived from databases and an expert panel. Calculations were based on 6 months of treatment, and were from a societal perspective but were limited to direct medical costs (2004 Euros; €). Distinction was made between risk groups based on risk factors such as older age, use of corticosteroids and history of GI events. RESULTS: Treatment with celecoxib was associated with the lowest number of GI side effects and related deaths. Assuming an average patient, the total costs per 6 months of therapy were: celecoxib €212, nonspecific NSAIDs alone €151, NSAIDs plus misoprostol €227, NSAIDs plus H2RAs €268, NSAIDs plus PPIs €269, and Arthrotec €171. Incremental costs per life-year saved for celecoxib compared with nonspecific NSAIDs alone were €12,417 for all patients, and –€760 for high-risk patients. Comparing celecoxib and Arthrotec, the incremental costs per life-year saved were €32,757 for all patients and €7759 for those at high-risk of GI events. CONCLUSION: Celecoxib is a more effective and less costly treatment than nonspecific NSAIDs plus misoprostol, NSAIDs plus H2RAs, and NSAIDs plus PPIs. It is cost-effective compared with nonspecific NSAIDs alone for patients at medium- to high-risk of GI events, and also for high-risk patients. Compared with Arthrotec, celecoxib showed an improving cost-effectiveness profile with increasing GI risk.