OBJECTIVES: To estimate the cost-effectiveness of pegaptanib versus best supportive care for age-related macular degeneration (ARMD) in the UK and to evaluate the impact of patient characteristics. METHODS: A 10-year Markov model was constructed composed of 13 health states, 12 visual acuity (VA) states defined by individual Snellen lines and death. Time-dependent transition probabilities for the loss and gain of Snellen lines were derived from parametric survival models fitted to patient-level data from the VISION trial. Survival models were fitted with treatment group and baseline Snellen score as covariates, and other models were fitted with the addition of age, gender, and lesion type or lesion size. Mortality rates were adjusted for the age and gender of the model population. Utility weights elicited using a choice-based method were derived from the published literature. Resource use estimates were developed by structured interview of three consultant ophthalmologists. Other model parameters were obtained from the published literature; unit costs were obtained from national sources (cost year 2005). Uncertainty was explored by probabilistic and univariate sensitivity analysis. RESULTS: In the base-case analysis, treatment was targeted to patients with VA of 20/40 to 20/320 and was discontinued if VA fell below 20/320 or by 6 or more lines. The incremental cost per quality adjusted life year gained (IC/QALY) was estimated as £8,023 [upper 95% CI: £20,641]. Age had the greatest impact [age <75: £2,033/QALY; age ≥75: £11,657/QALY]. Pre-treatment VA was also important [20/40 to 20/320: £8,023/QALY; 20/40 to 20/200: £6,664/QALY]. Gender, lesion type, and lesion size had little effect on the IC/QALY [all estimates were between £7,000 and £9,000/QALY]. CONCLUSIONS: Pegaptanib treatment is expected to be cost-effective across all groups studied, and marginally more cost-effective in younger patients and those with better pre-treatment VA.