OBJECTIVES: To estimate the cost-effectiveness of a new treatment (natalizumab) for multiple sclerosis (MS) compared to current standard therapy with disease-modifying drugs (DMDs) in Sweden. METHODS: A Markov model was constructed to illustrate disease progression based on functional disability (EDSS). Disease progression while on treatment with natalizumab was based on a two-year placebo-controlled clinical trial in 942 patients (AFFIRM). Progression while on treatment with current DMDs was estimated from a matched sample of 512 patients in the Swedish MS registry for the Stockholm County. Patients withdrawing from treatment in both arms were assumed to follow the disease course of 824 patients with relapsing-remitting disease at onset in the natural history cohort in Ontario, Canada. Costs and utilities by level of disease severity are based on a recent observational study in 1339 Swedish patients. All data sets were available at patient-level. Main results are presented for the societal perspective, over a 20-year time frame, in 2005 Euro (1€=9.25SEK) discounted at 3%. RESULTS: In the base case, treatment with natalizumab was less expensive and more effective than treatment with current DMDs in Sweden, i.e. it dominated standard therapy. When only health care costs were considered, the cost per QALY gained with natalizumab was € 38,145. Health effects are sensitive only to the time horizon of the analysis, and assumptions about effectiveness of natalizumab beyond the trial. CONCLUSION: This cost-effectiveness analysis used registry data, cohort and observational studies to extrapolate the efficacy findings of natalizumab from the AFFIRM clinical trial to measure effectiveness in clinical practice. The analysis results suggest that for the population considered, natalizumab provides an additional health benefit at a similar cost to current DMDs from a societal perspective.