Antiresoprtive therapies are used to prevent further fracture in men and women with osteoporosis. However, patients with severe osteoporosis may continue to fracture despite this therapy. New trials have shown that teriparatide (Forteo) is efficacious in preventing new vertebral and non-vertebral fractures in patients who have already experienced a vertebral fracture. OBJECTIVES: This study aimed to assess the cost-effectiveness of teriparatide in preventing osteoporotic fractures in this population. METHODS: A cost-utility model was developed to compare teriparatide with no therapy (placebo) in a population of osteoporotic patients with prior fracture. This model is a Markov process estimated using Monte Carlo simulation. Relative efficacy assumptions in the model are based solely on the results of randomised controlled trials (Neer et al 2001), while the baseline probability of fracture is derived from Australian epidemiological data (Sanders et al., 1999). The cost-effectiveness of teriparatide was assessed in terms of its impact in preventing new vertebral and non-vertebral fractures in a cohort with at least one prior radiologically confirmed vertebral fracture and an average age of 70 years. The model was designed so that the risk of further vertebral fracture rises with each fracture. The model ran for a ten-year period. Teriparatide is provided for 18 months, after which patients have the choice of receiving a bisphosphonate or no additional therapy for a further 42 months. RESULTS: Over the 10-year period, teriparatide is associated with an increased cost of AUD$7337 ($US5503) and a gain of 0.4168 QALYs per patient compared with no treatment. Hence, the incremental cost per QALY gained with teriparatide compared with no treatment in this population was AUD$17,603 (US$13,202). Extensive sensitivity analyses indicated these results were robust. CONCLUSIONS: Teriparatide is a cost-effective therapy to reduce the risk of future fractures in men and women with prior osteoporotic vertebral fracture.