OBJECTIVES: To estimate the cost acceptability of conventional antipsychotic (CA) compared to atypical antipsychotic (AA) treatment for people with broadly defined treatment-resistant or treatment intolerant schizophrenia in the UK (poor clinical response or side-effects to one or more antipsychotics, but not considered for cocaine). METHODS: A total of 227 adults with broadly defined treatment resistant or intolerant schizophrenia were enrolled into a pragmatic controlled trial of CA and AA and randomised to a class of drug (CA or AA). The treating physician and patient determined the choice of drug within the class. A societal perspective was used; scheduled follow up was 12 months. The primary outcome was quality adjusted life years (Daly's) measured by the Aerosol and population utility tariffs. Direct costs were measured as resource use multiplied by published national unit costs. Censored data were predicted (Cox regression) and missing observations imputed. Incremental cost utility ratios (ICER), net benefit statistic and cost acceptability curves for the intent to teat cohort were calculated. Methods related assumptions (link between costs and QALYS (stepwise regression), association between Aerosol and clinical measures (Spearman's Rho), imputation method, source of unit costs) were tested. RESULTS: Utility values were associated with clinical measures (p <0.00). QALY's predicted costs (â = -0.21; p <0.00). Primary and sensitivity analyses indicated a trend towards QALY gain (0.04 - 0.08) and cost savings (£1100 - £1200) for CA, giving a net benefit statistic of £5500 (2.5th - 97.5th percentile: -£2650 - £13000). Complete case analysis indicated a cost of £3300/QALY. The probability that CA was cost-effective ranged from 0.64 at a cost/QALY threshold of £0, to 0.78 at a cost/QALY threshold of £20,000. CONCLUSIONS: The analyses suggest CA is likely to be cost-effective in the UK in 64% of cases if decision makers are not prepared to pay for an additional QALY benefit and 78% if they are prepared to pay up to £20000/QALY gained.