OBJECTIVES: To estimate the incremental costs and incremental health effects of replacing methotrexate (MTX) by alefacept (Amevive) in patients with moderate to severe psoriasis (PASI-score 10+). METHODS: A total of 36 patients with moderate to severe psoriasis were interviewed about quality of life and treatment costs. Disease severity was measured by PASI-score (Psoriasis Area and Severity Index) while quality of life was measured by a multiattribute utility instrument (15D) and a disease specific instrument (DLQI-N). Cost of psoriasis therapy during the past 3 months was estimated on the basis of patients' utilization reports and unit costs. A Markov model with 4 health states based on PASI-score (0, 1-9, 10-19, 20+), 12 weeks cycles and 2 years time horizon was developed. Transition probabilities were derived from published clinical trials (MTX and alefacept) and websites (alefacept), but no head-to-head trials were available. The benefit from psoriasis therapy was expressed in terms of QALYs, and sensitivity analyses were used to explore the robustness of the results. RESULTS: Quality of life was estimated at 0.94, 0.91, 0.88, and 0.77 in the four PASI-groups. Average 3 months psoriasis treatment costs were $384, $509, and $960 for patients with PASI-score 1-9, 10-19, 20+ respectively. In the base case, alefacept has higher costs and lower health benefit, and this result was fairly robust to a wide range of changes in the model parameters. Only when all parameters values were assumed as favourable as conceivable for alefacept and as unfavourable as conceivable for MTX, the cost per QALY came down to $76,400. CONCLUSION: Alefacept seems to represent greater costs and smaller health benefits than MTX in patients with moderate to severe psoriasis. There is an urgent need to confirm these results in head-to-head trials of MTX and alefacept.