OBJECTIVES: The purpose of this study is to assess the cost-effectiveness of escitalopram, a new selective serotonin reuptake inhibitor (SSRI), versus citalopram, fluoxetine, and venlafaxine in Sweden. METHODS: Cost-effective analysis is performed using a two-path decision analytic model with a 6-month horizon. Patients start at the primary path, and are referred to specialist care in the secondary care path. This is typical of a GP/Psychiatrist setting. Model inputs include drug-specific probabilities from comparative trial data, published literature, and a clinical experts' panel. The primary outcome measure is 'success', defined as patients in remission 6 months after the start of treatment. The model combines success rates and expected costs to calculate the cost-effectiveness ratios. The estimated number of patient episodes during each drug treatment (using IMS volume sales) are combined with the average 6-month per-patient expected costs of treatment (total and drug costs) to estimate the effect of the introduction of escitalopram on the health care budget. RESULTS: Treatment of Major Depressive Disorder with escitalopram yielded a lower expected cost and greater effectiveness compared to other SSRIs and SNRIs. The expected success rate (remission) was 63.5% for escitalopram, compared to 57.2%, 57.0%, and 61.1% for citalopram, fluoxetine, and venlafaxine, respectively. Average expected total medical costs per patient are similar for escitalopram (SEK 15,670) and venlafaxine (SEK 16,580), and somewhat higher for citalopram and fluoxetine (SEK 18,860 and 19,050 respectively). Budgetary impact shows that the increase in drug costs (increase in Drug Budget estimated at SEK 44 million) is more than offset by the decrease in other health care costs (decrease in total Health Care Budget estimated at SEK 543 million). CONCLUSIONS: Escitalopram is a cost-effective treatment alternative to citalopram, fluoxetine, and venlafaxine. The results of this study indicate that increased utilisation of escitalopram might reduce health care costs in Sweden.