OBJECTIVES: Lung cancer is a leading cause of morbidity and mortality. Chemotherapy is one of the main treatment options but its availability in the UK is limited in comparison to other countries, is inconsistent across geographical regions, with many patients receiving only palliative care. The present study reports results of an economic evaluation of Gemzar (one of the newer agents available) and best supportive care (BSC) relative to BSC in the treatment of advanced NSCLC. BSC relates to all forms of care which are non-curative in intent excluding chemotherapy. METHODS: The study is undertaken from the perspective of the UK NHS. Data were extracted from a comparative trial undertaken in the UK (Anderson et al in 1997). Cost estimates are based on: chemotherapy and associated infusion, hospitalisations, health care professional visits, concomitant medications, radiotherapy and terminal palliative care. Resource utilisation data from the clinical trial were combined with unit-cost data from various UK sources. Costs are presented in 2000 price levels and the time horizon for their estimation is one year; hence discounting was unnecessary. Treatment effectiveness is measured by progression-free survival and tumour response. Extensive sensitivity analysis was also performed. RESULTS: Total treatment cost per patient in the Gemzar/BSC arm was estimated at £5,502 and at £3,861 for the BSC arm, the difference attributed mainly to the drug (Gemzar) and its administration costs. The intervention arm had lower radiotherapy/concomitant medication costs, but this did not offset the drug acquisition cost. Progression free life years and overall tumour response rates were 0.789 and 18.5% in the Gemzar/BSC arm and 0.474 and 0% in the BSC arm. The incremental cost-per-progression-free-life-year gained in Gemzar/BSC relative to BSC is £5,228 and the incremental cost-per-tumour-response £8,873. Changes in the key variables varied the above ratios between £3,000 and £23,000. CONCLUSIONS: The economic evaluation presented above shows that Gemzar/BSC is a cost-effective therapy for advanced NSCLC relative to BSC alone