Adv Ther (2009) 26(3):346-368. DOI 10.1007/s12325-009-0013-x ORIGINAL RESEARCH Cost-Effectiveness of Transcranial Magnetic Stimulation in the Treatment of Major Depression: a Health Economics Analysis Kit N. Simpson · Mary Jane Welch · F. Andrew Kozel · Mark A. Demitrack · Ziad Nahas Kit N. Simpson · Ziad Nahas (*) Medical University of South Carolina, 67 President Street, Room 502N, Charleston, SC 29403, USA. Email: nahasz@musc.edu Mary Jane Welch Rush University Medical Center, Chicago, Illinois, USA F. Andrew Kozel UT Southwestern, Dallas, Texas, USA Mark A. Demitrack Neuronetics, Inc., Malvern, Pennsylvania, USA Received: December 26, 2008 / Published online: / Printed: © Springer Healthcare Communications 2009 ABSTRACT Introduction: Transcranial magnetic stim- ulation (TMS) is a novel antidepressant therapy shown to be effective and safe in pharmacotherapy-resistant major depres- sion. The incremental cost-effectiveness and the direct cost burden compared with sham treatment were estimated, and com- pared with the current standard of care. Methods: Healthcare resource utilization data were collected during a multicenter study ( n =301) and a decision analysis was used to stratify the 9-week treatment outcomes. A Markov model with an acute-outcome severity-based risk of relapse was used to esti- mate the illness course over a full year of treatment follow-up. These model estimates were also compared to best estimates of out- comes and costs of pharmacotherapy treat- ment, using the published STAR*D outcomes. The cost-effectiveness of TMS was described using an incremental cost-effectiveness ratio (ICER) per quality-adjusted life year (QALY) gained and on a direct cost per patient basis across a varying range of assumptions. The model’s sensitivities to costs due to losses in work productivity and to caregiver time were also examined. Results: Compared with sham treatment and at a cost of US$300 per treatment session, TMS provides an ICER of US$34,999 per QALY, which is less than the “willingness-to-pay” standard of US$50,000 per QALY for a new treatment for major depression. When productivity gains due to clinical recovery were included, the ICER was reduced to US$6667 per QALY. In open-label conditions, TMS provided a net cost saving of US$1123 per QALY when compared with the current standard of care. In the open- label condition, cost savings increased fur- ther when the costs for productivity losses