OBJECTIVES: Erlotinib, a new second-line therapy option in patients with NSCLC, leads to similar overall survival improvement but has a more favourable adverse events (AEs) profile compared to docetaxel and pemetrexed. The objective of the present study was to compare the costs per patient treated with erlotinib with those for docetaxel and pemetrexed for Germany taking the management of AEs into account. METHODS: Direct quarterly medical care costs per patient without considering AEs (“base costs”) and those including costs of treating AEs (“total costs”) were compared for the assessed therapy regimes. For calculating base costs, costs for physician visits, drugs and drug administration were considered. Total costs also included mean costs for treating drug-related AEs grade 3/4 according to the US National Cancer Institute classification per patient under the respective therapy. Resource utilisation data were obtained from two multinational, randomized phase III trials. Further required data was estimated based on national guidelines and prescribing information for the drugs considered. The analysis was conducted from the German payers' perspective. Cost data were derived from published sources for the year 2005. Due to the short time horizon of one quarter the outcomes were not discounted. One-way sensitivity analysis on cost data was performed. RESULTS: Quarterly base costs per patient for erlotinib are comparable to those for docetaxel (€8,172 vs. €8,055) and about €7,700 lower than those for pemetrexed (€8,172 vs. €15,870). Total quarterly costs per patient including costs of treating AEs for erlotinib are about €1,700 lower than for docetaxel and about €8,300 lower than for pemetrexed (€8,374 vs. €10,086 and €16,715, respectively). Sensitivity analyses confirmed the robustness of the results. CONCLUSIONS: Due to the favourable tolerability profile, the treatment with erlotinib is cost-saving for the German health care system compared to docetaxel and pemetrexed.