OBJECTIVES: Results from the ATAC trial indicated that anastrozole was superior to tamoxifen in terms of disease free survival in the adjuvant treatment of postmenopausal women with hormone receptor-positive (HR+) EBC. Using updated 47-month data (Cancer 2003; 98:1802-10), we calculated the direct medical costs and incremental cost effectiveness ratio (ICER) per life year gained (LYG) for managing this group for anastrozole compared with tamoxifen within the UK NHS setting. METHODS: Using the updated ATAC data, we developed a probabilistic Markov model, which projected outcomes for both anastrozole and tamoxifen to 25 years (lifetime horizon) by extrapolating pooled Kaplan-Meier curves. General mortality data were obtained from UK national statistics. It was assumed that anastrozole and tamoxifen would be given for five years maximum and that recurrence rates after this treatment period would be equivalent in the two groups - a conservative approach. Resource utilization data associated with treating adverse events were obtained from published literature. Other resource utilization data were estimated from interviews with six UK physicians. Unit costs in GBP were obtained from 2002 NHS reference costs and 2003 drug costs (BNF). Costs and benefits were discounted at 6% and 1.5%, respectively. RESULTS: Considering a cohort of 1000 patients modeled for 25 years, anastrozole was estimated to lead to 184 discounted LYG at an additional cost of £2.1 million. Consequently, the discounted ICER of anastrozole compared with tamoxifen was estimated to be £11,747/LYG (95% CI £1,946 - £21,984). Furthermore, acceptability curves showed that the estimated cost/LYG at 25 years was < £20,000 with a probability > 90%. The result compared favorably with commonly accepted thresholds for cost-effectiveness of other cancer drugs and was robust to all parameters (including adverse events) tested in sensitivity analyses. CONCLUSIONS: Based on these findings, anastrozole should be a cost-effective alternative to tamoxifen for the adjuvant treatment of postmenopausal women with HR+ early breast cancer.