OBJECTIVES: Ankylosing spondylitis (AS) is a chronic, progressive inflammatory form of arthritis with annual estimated costs of US $6,720 per patient. Given the chronic nature of AS and the high costs of the newer treatments such as tumor necrosis factor (TNF) inhibitors, the goal of this study is to conduct an incremental cost-effectiveness analysis of TNF inhibitors compared with a standard treatment option in patients with AS. METHODS: A Markov simulation model (one-year) was used to evaluate the incremental cost-effectiveness of three treatments in patients with AS: 1) etanercept, 2) infliximab, and 3) standard treatment (NSAIDs). The decision model assumed a base-case population of 40 year-old men and the efficacy and withdrawal data were based on clinical trials of respective drugs. The effectiveness measure was Assessments in Ankylosing Spondylitis 20% Response data (ASAS 20) and the incremental cost-effectiveness ratio (ICER) was calculated as additional cost per ASAS 20, compared with the next most expensive option. The study was conducted from a payer's perspective and the cost of treatment with each agent included medication costs, monitoring costs, infusion administration costs, and physician visit costs. One-way sensitivity analyses were conducted to test the robustness of study results. RESULTS: The annual costs for standard treatment, etanercept, and infliximab were $3000, $12,000 and $13000, respectively. The ICER of etanercept compared with standard treatment was $10,860.96/ASAS 20, while the ICER of infliximab compared with standard treatment was $26,314.59/ASAS 20. One-way sensitivity analyses indicated that the conclusions were relatively stable to variations in model assumptions. CONCLUSION: The introduction of TNF inhibitors has represented a significant advance in the available treatments for patients with AS. Thus, demonstrating the cost-effectiveness of these new treatments can be a critical factor in determining the acceptability of these new therapies especially since these agents may offer improved function and significant downstream economic savings.