This highly successful textbook is now available in its third edition. Over the years it has become the standard textbook in the field world-wide. It mirrors the huge expansion of the field of economic evaluation in health care, since the last edition was published in 1997. This new edition builds on the strengths of previous editions, being clearly written in a style accessible to a wide readership. Key methodological principles are outlined using a critical appraisal checklist that can be applied to any published study. The methodological features of the basic forms of analysis are then explained in more detail with special emphasis of the latest views on productivity costs, the characterisation of uncertainty and the concept of net benefit. The book has been greatly revised and expanded especially concerning analysing patient-level data and decision-analytic modelling. There is discussion of new methodological approaches, including cost effectiveness acceptability curves, net benefit regression, probalistic sensitivity analysis and value of information analysis. There is an expanded chapter on the use of economic evaluation, including discussion of the use of cost-effectiveness thresholds, equity considerations and the transferability of economic data. This new edition is required reading for anyone commissioning, undertaking or using economic evaluations in health care, and will be popular with health service professionals, health economists, pharmacand health care decision makers. It is especially relevant for those taking pharmacoeconomics courses.