OBJECTIVES: To perform a cost-minimisation and budget impact analysis of erlotinib versus docetaxel or pemetrexed for the treatment of patients with advanced NSCLC who have failed previous chemotherapy. METHODS: In the absence of head-to-head clinical trial data for erlotinib versus docetaxel or pemetrexed, equivalent efficacy was assumed for the three interventions; indirect comparisons of phase III trial results suggest that this was a conservative assumption. We developed a cost-minimisation and budget impact model for cost comparison of these three treatments based on the results of the BR.21 study of erlotinib, and pivotal trials for docetaxel and pemetrexed, adopting a Brazilian private payer perspective. A 126-day timeframe was used for the comparison, based on the progression-free survival observed in the BR.21 study. A Delphi panel was conducted to identify local practices and their associated costs in Brazil. Other costs such as medical payment, pre- and post-medication, and administration were also included. One-way and multi-way sensitivity analyses were performed to assess the robustness of the outcomes. Discounting was not included due to the short-term perspective of the analysis. RESULTS: Total costs were R$ 26,825 for erlotinib, R$ 42,284 for docetaxel and R$ 79,841 for pemetrexed. The cost-savings observed for erlotinib were due to lower acquisition costs (R$ 26,795 versus R$ 40,217 for docetaxel and R$ 78,911 for pemetrexed) and its more favourable tolerability profile. Sensitivity analyses confirmed the robustness of the results obtained. The budget impact analysis showed savings in the first year after incorporation of erlotinib starting from R$ 3,576,931 in a conservative scenario, and reaching R$ 32,192,379 at the upper limit. CONCLUSION: The findings of this cost-minimisation analysis suggest that erlotinib is a cost-saving alternative under the private healthcare system perspective in Brazil.