OBJECTIVES: Fulvestrant (Faslodex) is a well-tolerated estrogen receptor antagonist that is at least as effective as anastrozole in patients who have progressed or recurred on tamoxifen. A health economic model was developed to estimate the incremental cost per quality adjusted life year (QALY) gained when fulvestrant is included as an additional endocrine therapy step for postmenopausal women with hormone receptor positive (HR+) advanced breast cancer (ABC). METHODS: A seven-state Markov model was developed from a UK NHS perspective. This followed patients over their treatment for ABC, simulated over a 10-year time horizon. The model compared the costs and benefits of two cohorts of patients - one with and one without the addition of fulvestrant to the endocrine treatment sequence. Clinical data were collated from published trials. Resource utilization data were obtained from published literature and a survey of five UK physicians. Unit costs were taken from published sources. Each Markov cycle lasted 28 days. Major assumptions were validated via a survey of seven UK physicians. Costs and benefits were discounted at 3.5%. The robustness of results was tested using a probabilistic sensitivity analysis. RESULTS: In a cohort of 1000 postmenopausal women with HR+ ABC, the model suggested that a treatment sequence with fulvestrant as a third endocrine therapy step leads to a gain of 41 QALYs at an additional cost of £69,910, as compared to a sequence without fulvestrant. The estimated incremental cost-effectiveness ratio (ICER) of including fulvestrant in the endocrine treatment sequence was £1,705 per QALY. Cost-effectiveness acceptability curves indicated over a 70% probability that the cost per QALY gained would be lower than £20,000, a commonly accepted UK threshold for cost-effectiveness. CONCLUSIONS: Based on this economic model, the use of fulvestrant as an additional endocrine therapy step in the treatment of HR+ ABC is a cost-effective treatment strategy.