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To determine the incremental cost-effectiveness of linezolid compared with vancomycin for treatment of ventilator-associated pneumonia due to Staphylococcus aureus.Decision model analysis of the cost and efficacy of linezolid vs. vancomycin for treatment of ventilator-associated pneumonia. The primary outcome was the incremental cost-effectiveness of linezolid in terms of cost per added quality-adjusted life-year gained. Other outcomes were the marginal costs per hospital survivor and per year of life saved generated by using linezolid. Model estimates were derived from prospective trials of linezolid for ventilator-associated pneumonia and from other studies describing the costs and outcomes for ventilator-associated pneumonia.Hypothetical cohort of 1,000 patients diagnosed with ventilator-associated pneumonia.In the model, patients received either linezolid or vancomycin.The incremental cost-effectiveness of linezolid was calculated as the additional quality-adjusted life-years resulting from therapy with linezolid divided by the sum of the incremental costs arising because of use of linezolid (e.g., higher direct costs for linezolid, costs per in-hospital care of survivors, and posthospitalization costs). Despite its higher cost, linezolid was cost-effective for treatment of ventilator-associated pneumonia. The cost per quality-adjusted life-year equals approximately $30,000. The model was moderately sensitive to the estimated efficacy of linezolid over vancomycin. Nonetheless, even with all inputs simultaneously skewed against, linezolid remains a cost-effective option (cost per quality-adjusted life-year approximately $100,000). Based on Monte Carlo simulation, the results of our analysis are robust across a range of model inputs and assumptions (95% confidence interval for cost per quality-adjusted life-year ranges from $23,637 to $42,785).Linezolid is a cost-effective alternative to vancomycin for the treatment of ventilator-associated pneumonia.