OBJECTIVES: The purpose of this study was to evaluate the cost-effectiveness of capecitabine (Xeloda®) for the treatment of advanced gastric cancer (aGC). This followed EMEA approval in March 2007 and was intended initially to inform an appraisal by the Scottish Medicines Consortium (SMC). METHODS: Based on clinical effectiveness evidence demonstrating that oral capecitabine is at least as good as IV 5-FU, a cost-minimisation analysis was performed. The replacement of continuous infusion IV 5-FU within a standard chemotherapy regimen including cisplatin and epirubicin (ECF) by oral capecitabine (ECX) was assessed. This analysis investigated the comparative drug acquisition costs of ECX versus ECF regimens, plus the incremental drug administration costs associated with providing continuous infusion IV 5-FU. The administration costs included hospital visits, transport, staff time and disposables. This healthcare resource utilisation (HCRU) was associated with insertion and management of central venous access lines, drug preparation, and use of infusional drug pumps. HCRU and unit costing evidence sources included clinical trials, published literature and an expert panel of specialists (oncology doctors, nurses and pharmacists) with experience of aGC management. Extensive sensitivity analysis assessed areas of potential uncertainty. The primary perspective was from the NHS, but a societal analysis was also undertaken. RESULTS: Additional drug acquisition costs of £634 per patient course for capecitabine are offset by drug administration savings of £1773. The net cost saving is £1139 per patient. Sensitivity analysis demonstrates that capecitabine remains cost saving across a range of uncertain parameters and under a number of realistic scenarios. Also, oral dosing confers significant benefits to patients in terms of personal time and cost savings. CONCLUSION: Capecitabine is cost saving in aGC and clearly offers good value-for-money for both the NHS and patients. Oral administration of chemotherapy in this therapy area may also help address capacity limitations within the cancer service.