OBJECTIVES: Both bicalutamide and flutamide are commonly used in combined androgen blockade (CAB) for prostate cancer. Although bicalutamide is more costly than flutamide, it is important that efficacy and quality of life outcomes as well as compliance, and side effects are also taken into consideration when determining whether CAB with bicalutamide is a cost-effective option as compared to CAB with flutamide. Unfortunately, there have been no well-designed cost-effectiveness analyses comparing bicalutamide vs. flutamide as part of CAB. The goal of this study was to determine the cost-effectiveness of CAB with bicalutamide vs. CAB with flutamide in men with stage D2 prostate cancer. METHODS: A decision model was created to compare treatment strategies. Survival and side effect information was based on a randomized trial directly comparing bicalutamide and flutamide. Costs and quality of life effects related to therapy were based on published sources. Cost-effectiveness was calculated for 60 and 120 months from start of therapy. RESULTS: The incremental cost per quality adjusted life year (QALY) gained for bicalutamide vs. flutamide was $22,000 and $16,000 per QALY at five and ten years, respectively. If quality adjustment was not included, the incremental cost-effectiveness ratio (ICER) for CAB with bicalutamide over CAB with flutamide was even more favorable ($20,000/LY gained at five years). These ICER estimates are well within the commonly accepted cost-effectiveness threshold. One way sensitivity analysis demonstrated that the cost-effectiveness estimates were most sensitive to drug costs and survival (baseline survival was not significantly different between therapies). Multi-way uncertainty analysis revealed that the median value of the ICER at five years was $13,637/QALY when all the parameters were varied over a clinically reasonable range. CONCLUSION: Bicalutamide is cost-effective compared with flutamide when used for androgen blockade as part of combined androgen blockade for men with advanced prostate cancer.