Anaemia is a common complication of renal failure. Anaemia can be treated with erythropoietin (EPO) administration, RBC transfusion, or a combination of both. EPO has been registered for treatment of renal anaemia in Sweden since the beginning of the 1990s, and is the primary treatment regimen for anaemia related to renal failure. OBJECTIVE: The objective of this study was to carry out a cost-effectiveness analysis of treatment with epoietin alpha compared to treatment with RBC transfusion for patients with anaemia associated with renal failure in Sweden. METHOD: Incremental costs associated with EPO treatment compared with the traditional treatment therapy of blood transfusion (costs of EPO, iron supplementation, administration and surveillance, EPO complications and costs of blood transfusion) are estimated. Swedish treatment guidelines, patient characteristics and unit costs (provider perspective) are used throughout the study. Information about QALY gains is collected from the literature. RESULTS: The estimated cost per QALY gained from administration of EPO to renal patients in Sweden was found to be SEK 403,921 (EUR 43,201) on average. The cost of treatment with EPO differs widely between haemodialysis (HD) and peritonealdialysis (PD) patients due to different dosages of EPO and iron supplementation. The results were found to be sensitive regarding assumptions on QALY gains but not regarding the cost of blood transfusion. CONCLUSION: The estimated cost per QALY falls within the range acceptable of the value of a QALY in Sweden for both HD and PD patients. EPO administration to renal patients is much more costly in Sweden than in the UK, primarily due to higher dosage of EPO and iron supplementation in Sweden. Swedish patients, on the other hand reach higher Hb-levels than patients in the UK.