OBJECTIVES: Rituximab (RTX), is a novel anti-CD20 monoclonal antibody that selectively depletes CD20+ B cells, and provides a new therapeutic option for patients with rheumatoid arthritis (RA) who have had an inadequate response to anti-tumour necrosis factor (TNF) inhibitor therapies. This analysis was conducted to determine the cost-effectiveness of introducing RTX as an RA therapy option, from the Canadian Ministry of Health perspective. METHODS: A cost-utility model was developed to evaluate the direct costs and clinical outcomes of a standard Canadian treatment sequence in the absence and presence or RTX + methotrexate (MTX). The model simulated 10,000 RA patients over a life time who have had an inadequate response to one anti-TNF therapy. Standard Canadian treatment sequence after failure of the first biologic (etanercept) was adalimumab + MTX, infliximab + MTX, leflunomide, gold, cyclosporine and palliative care. Baseline characteristics from REFLEX (Randomized Evaluation of Long-term Efficacy of Rituximab in RA) clinical trial were: 81% female; mean age, 52.2 years; mean HAQ score, 1.88. ACR response rates from RCTs were placebo-adjusted to minimize bias from cross-trial comparisons. All relevant direct costs were included in the model including drug costs, administration and monitoring, and adverse events. Observational data were used to estimate long-term HAQ progression and average time on treatment for patients responding to therapy. Costs and benefits were discounted at 5% per annum. RESULTS: The introduction of RTX (to the treatment sequence) following failure of one biologic resulted in a gain of 0.443 QALYs at an additional total cost of $8161 over the lifetime of each patient. The incremental cost-effectiveness ratio (ICER) of RTX was $18,434 per QALY gained. CONCLUSIONS: Adding RTX to the pool of available treatment options for Canadian patients with RA who fail to respond to anti-TNF therapy results in an acceptable incremental cost per QALY gained.