OBJECTIVES: The New Zealand (NZ) government drug purchasing agency PHARMAC assesses products being considered for reimbursement using criteria which include clinical need, cost-effectiveness and drug budget impact and availability. All major new pharmaceutical investments are evaluated by PHARMAC using cost-utility analysis. The objective of this study was to conduct a cost-utility analysis to examine the cost-effectiveness of risperidone long-acting injection in the treatment of non-compliant schizophrenia patients from a NZ health care system perspective, using methodology that would be acceptable to PHARMAC. METHODS: A 1-year, decision tree, cost-utility model was developed to compare risperidone long-acting injection with a mixed comparator (conventional depot antipsychotics, oral risperidone and oral olanzapine) in patients with a history of relapse due to medication non-compliance. The event probabilities (medication adherence, relapse, movement disorders [extrapyramidal symptoms] and survival) were obtained from comprehensive literature reviews. Local costs were obtained from the Pharmaceutical Schedule and the New Zealand Health Information Service (NZHIS). Utilities were modeled based on existing literature. Development of the model also involved a consultative process with PHARMAC staff. The analyses were performed versus the mixed comparator as well as each individual treatment option. Uncertainty was explored using sensitivity analyses. RESULTS: Risperidone long-acting injection was dominant compared with the mixed comparator, oral risperidone and oral olanzapine. Compared with conventional depots alone, the Incremental Cost Utility Ratio (ICUR) was NZ$47,711. CONCLUSIONS: Risperidone long-acting injection was considered a cost-effective treatment option in New Zealand using PHARMAC’s acceptability threshold for ICUR of less than NZ$20,000. Although the treatment was considered to have acceptable cost-effectiveness, funding is contingent upon budget being available in an environment in which pharmaceutical spending has been static over the last 10 years.