OBJECTIVES: This study estimated the incremental cost per quality adjusted life year (QALY) gained for anastrozole compared with tamoxifen from the UK NHS perspective, based upon ATAC trial data (Cancer 2003;98:1802–10). In this trial, anastrozole demonstrated superior efficacy and tolerability versus tamoxifen. Cost-effectiveness analysis found that over 25 years anastrozole had an incremental cost-effectiveness ratio (ICER) of GBP11,747 per life-year gained (LYG) among the clinically relevant population of patients with hormone receptor-positive (HR+) EBC. The model was expanded to include patient utilities to meet NICE and Scottish Medicines Committee preferences for cost-utility analysis and to facilitate comparisons across disease areas. METHODS: Patient utilities were elicited from 23 EBC patients on adjuvant hormonal therapy. Using the standard gamble technique, health states relating to adverse events reported in ATAC and breast cancer disease states were compiled and reviewed by clinicians. Utility values were incorporated into the cost-effectiveness model projecting outcomes for anastrozole and tamoxifen to 25 years, based on probability of side effects (ATAC safety data) and time in a particular health state. All parameters (including utilities) were varied in sensitivity analyses. QALYs and unadjusted LYG were compared with cost outcomes. RESULTS: Patients’ valuation of the different health states ranged from 0.71 to 0.99. Differences between incremental LYG and QALYs for anastrozole and tamoxifen were similar (0.3). The discounted ICER of anastrozole compared with tamoxifen was GBP11,506 per QALY gained (95% CI: GBP1,771–GBP22,491). CONCLUSIONS: The incorporation of mean-adjusted utility values resulted in only minor improvement in the ICER in favour of anastrozole. Furthermore, sensitivity analysis showed that the ICER was robust to changes in utility scores and that the greatest impact on the ICER remains the improved disease-free survival with anastrozole. Anastrozole provides QALY gains at acceptable costs compared with tamoxifen in the adjuvant treatment of postmenopausal women with HR+ EBC.