OBJECTIVES: The health service impact of obesity is growing relentlessly. There exist a small number of medical treatments for obesity. Obesity results in an increased risk of a plethora of diseases. The purpose of this study was to evaluate the cost-utility of orlistat (Xenical) in the UK. METHODS: A stochastic simulation model was constructed using clinical trial and real-life data comparing orlistat with no treatment and placebo under various scenarios. The time duration was 2-years, 2003 prices (UK£), costs discounted at 6%, benefits 1½% and evaluated from an NHS perspective. Events were determined for only cardiovascular (CV) disease end points, and determined by various risk functions. Utility was gained by a direct reduction in obesity, survival and progression to CV events, including microvascular events for diabetes. Costs were summed for events and maintenance therapies. Extensive statistical economic analysis and sensitivity analysis was undertaken. RESULTS: The cost per quality adjusted life year (QALY) for orlistat versus no treatment evaluating National Institute for Clinical Ecxellence (NICE) guidelines was £12,814. The cost per QALY for orlistat versus no treatment evaluating the product license was £13,045. The cost per QALY for orlistat versus placebo evaluating NICE guidelines was £19,128. The cost per QALY for orlistat versus no treatment evaluating the product license was £17,386. These findings were fairly insensitive to variation in the main parameters. CONCLUSIONS: These data, from a conservative evaluation of the cost-utility of orlistat, showed that the treatment is well within the cost-effectiveness threshold set by NICE (£20,000/QALY and £30,000/QALY). This analysis continues to support the positive guidance made by NICE in 2001 on orlistat.