OBJECTIVE: To assess the cost-utility of fulvestrant (Faslodex) as a replacement for exemestane (Aromasin) in the second line treatment of postmenopausal women with advanced breast cancer (ABC) in England. METHODS: A Markov model was developed allowing up to three separate lines of treatment. In the scenario studied, patients received fulvestrant or exemestane, followed by megestrol acetate and then a final palliative care package. The clinical pathways and resource use assumptions were based on a survey of UK oncologists. The analysis was from the perspective of the UK National Health Service (NHS) and estimated the total cost and benefits, including quality adjusted life years (QALYs), of two patient cohorts. Clinical evidence was taken from published clinical trials. Unit costs were taken from nationally published sources and reported in year 2003 prices. Treatment each month comprised of drug therapy plus other care, including treatment of adverse events and health care professional visits. Costs varied depending on the health state the patients were in during any month. The time horizon of the model was 11 years. All costs and QALYs within the model were discounted at 3.5%. RESULTS: The model was run with a cohort of 100 patients. When compared against exemestane in second line treatment, the 100 patients on fulvestrant gained an extra 8.1 QALYs for an additional cost of £240,705 giving an incremental cost-effectiveness ratio (ICER) of £29,641 per QALY. CONCLUSIONS: Fulvestrant is likely to produce additional benefits compared with exemestane at an acceptable additional cost, illustrated by the ICER of £29,641 per QALY. The health benefit gain from fulvestrant was driven primarily by both a higher proportion of responders and longer time on second line treatment. The findings suggest that fulvestrant is a cost-effective second line option to the NHS in the UK.