OBJECTIVES: To assess the cost-effectiveness of switching to exemestane vs. continued tamoxifen therapy for early-stage breast cancer, a markov model was developed. Exemestane has become a widely used medication to treat women with breast cancer. Medical studies showed that switching to exemestane may be effective looking at overall survival. No cost-effectiveness study of exemestane has been conducted for the German health care context to date. METHODS: Different markov health states were based on clinical data from the Intergroup-Exemestane-Study (IES). Seven different health states were included from no recurrence over local and distant recurrences to death. In addition, several adverse events (osteoporosis, endometrial cancer, thromboembolism etc.) were factored in. The model population was set as postmenopausal women, who are in remission from early stage breast cancer receiving two to three years of adjuvant treatment with tamoxifen at the time of model entry. Upon model entry either a continuing daily therapy with 20 mg tamoxifen or a switch to 25 mg exemestane for the next two to three years takes place. The model takes a German health care perspective. The cycle length is set at six months, lasting for up to 38 years. Specific German mortality data was applied. Costs and benefits were discounted at 5 %. Results were thoroughly tested in deterministic and a probabilistic sensitivity-analysis. RESULTS: Total incremental costs of exemestane on a lifetime basis are EUR4,195.52, resulting in an incremental cost ratio of EUR17,632.82 per additional QALY, or EUR16,857.85 per life-year gained. Incremental costs per disease-free year of survival are EUR12,851.35. Sensitivity analyses showed the stability of these results. CONCLUSION: Compared to tamoxifen monotherapy the switch to exemestane after two to three years of tamoxifen therapy resulted to be a cost-effective strategy in adjuvant therapy for early-stage breast cancer in postmenopausal women within the German health care context.