Purpose of the study: To perform a cost-effectiveness analysis of the three tumor necrosis factor (TNF) inhibitors: adalimumab, etanercept, and infliximab, for patients with rheumatoid arthritis (RA) that inadequately respond to methotrexate (MTX) alone. Methods: A Markov model was developed to estimate the health effects and costs associated with five treatment strategies for patients with RA that inadequately respond to MTX alone: (1) adalimumab plus MTX, (2) etanercept plus MTX, (3) infliximab plus MTX, (4) leflunomide plus MTX, and (5) standard therapy of MTX. A hypothetical cohort of 10,000 55-year old women was evaluated using Monte Carlo simulation. Efficacy data and treatment withdrawal rates were based on randomized controlled trials of the various treatments conducted in patients with inadequate responses to MTX. Costs associated with joint replacement surgery were modeled in patients who did not respond to the treatments. The study was conducted from a societal perspective and the total cost of therapy for each agent included direct costs associated with treating MTX-resistant RA combined with indirect costs incurred by the patients as a result of the disease. The main outcome measures were net gains in quality adjusted life expectancy and incremental cost-effectiveness ratios, (ICERs) in dollars per quality adjusted life year (QALY) gained. Costs and effects were discounted at 3%. To test the robustness of the model extensive sensitivity analyses were conducted, including a probabilistic sensitivity analysis. Results: The combination of etanercept and MTX was the most cost-effective treatment with an ICER of $49,724/QALY when compared against traditional disease modifying anti-rheumatic drugs (leflunomide plus MTX and standard MTX treatment) and the combination of the other two TNF inhibitors with MTX (adalimumab and infliximab) in patients with RA that inadequately respond to MTX alone. The combination of leflunomide and MTX was the second most cost-effective option in these patients with an ICER of $52,833/QALY. One-way and probabilistic sensitivity analyses indicated that the conclusions were relatively stable to variations in model assumptions. Conclusions: Of the three TNF inhibitors, etanercept is the most cost-effective from a societal perspective. The ICERs for both etanercept and leflunomide remained within the acceptable range of $50,000/QALY and $100,000/QALY in the simulated population under a wide range of assumptions, as compared to the other comparators.