In Hong Kong, the government subsidizes over 90% of the medical costs of a patient admitted to a public hospital. Economic information of new drugs is required for formulary consideration. Ceftazidime is reserved for the treatment of severe nosocomial infection. Trovafloxacin, a new antibiotic introduced to Hong Kong, is a potential alternative of ceftazidime. OBJECTIVE: To compare the cost-effectiveness of trovafloxacin with ceftazidime in nosocomial pneumonia (NP) from a hospital perspective. METHODS: A decision-analytic modeling method was employed. Clinical data used were adopted from a randomized clinical trial conducted overseas comparing the two antibiotics in the treatment of NP together with consultation of a local expert panel. Patients either received IV alatrofloxacin (injectable form of trovafloxacin) 300mg every 24 hrs or IV ceftazidime 1 g q8h. The success rate of alatrofloxacin was 74% and 70% for ceftazidime. Median duration of IV therapy was 6 and 7 days respectively. Alatrofloxacin and ceftazidime were converted to trovafloxacin PO 300mg qd and ciprofloxacin PO 750mg bid, respectively, to complete a 14-day treatment. In the event of treatment failure, IV gentamicin 80mg q8h would be added. Economic data were obtained from the finance office of the authority concerned. Only direct medical costs were included in the analysis. Sensitivity analysis was performed to check the robustness of the results. RESULTS: The direct cost per patient treated was HK$28,332 in the trovafloxacin group compared with HK$31,389 for ceftazidime. CONCLUSION: Alatrofloxacin/ trovafloxacin therapy appears to be slightly more cost-effective than ceftazidime in the treatment of NP.