OBJECTIVES: To estimate the costs and long-term health effects of using galantamine in Dutch patients with mild to moderate Alzheimer’s disease (AD). METHODS: A pharmacoeconomic model was developed. It consists of two components: an initial module based on two galantamine clinical trials and a subsequent module that uses trial results and equations derived from recently published data to forecast the time until patients require full time care (FTC) or die. The analyses compare treatment with galantamine 24 mg to no pharmacologic treatment. Cost estimates were based on resource use profiles of patients with AD in the Netherlands and are reported in 1998 guilders (?) determined from the perspective of a comprehensive care payer. Future costs are discounted at a 5% annual rate. Extensive sensitivity analyses were conducted. RESULTS: Over the decade of analysis, a net saving of ? 3,050 was estimated. The cost of galantamine makes up 5.0% of the total. The model predicts that patients treated with galantamine are expected to spend 10.0% less time receiving home-based FTC and 9.9% less time in a nursing home compared to untreated patients. For every hundred patients starting treatment on galantamine 17.8 person-years of FTC are avoided (14.3 discounted). Secondary analyses of the effect of galantamine on behavioral symptoms estimated an increment in total savings of ?4,903. Sensitivity analyses run on key model parameters showed results to be robust. CONCLUSION: On average, treatment with galantamine not only provides a considerable health benefit but is also expected to yield savings in the costs associated with mild to moderate AD in the Netherlands.