OBJECTIVES: To estimate the cost-effectiveness of bisphosphonates (Alendronate, Risedronate and cyclical Etidronate) or Raloxifene versus no therapy over a two-year treatment period in patients with osteoporosis and in those with previous fragility fracture. METHODS: A decision analytic model using local cost data and clinical data from meta-analysis or randomised controlled trial was developed to evaluate cost-effectiveness of the various interventions. The main perspective of the economic evaluation was that of health care purchaser. Therefore, only direct health care costs were considered in the evaluation. A two-year time horizon was chosen as clinical data about the efficacy of the various interventions considered are available. RESULTS: The results of the evaluation showed that it is not cost-effective to treat all patients. However, the analysis performed did not consider indirect and intangible cost due to the perspective used in the evaluation. Alendronate and cyclical etidronate appeared to be the most cost-effective agents to prevent hip fracture and vertebra fracture respectively. The ranking and magnitude of the incremental cost-effectiveness ratio of the various treatments did not change by the sensitivity analyses using the 95% CI of the efficacy data. C0NCLUSION: If treatment is indicated, it would be prudent to consider cyclical etidronate if the risk of hip fracture is low. Raloxifene can be considered if patient will benefit from other non-osteoporosis indication in this group of patients. However, in patients who have high risk of hip fracture, alendronate or risedronate will be more cost-effective.