OBJECTIVES: Obstructive jaundice frequently complicates pancreatic carcinoma and is associated with complications such as malabsorption, coagulopathy, progressive hepatocellular dysfunction, and cholangitis in addition to disabling pruritus, which greatly interferes with terminal patients' quality of life. Endoscopic placement of biliary stents decreases the risk of these complications and is considered the procedure of choice for palliation for patients with unresectable tumors. We used decision analysis with Markov modeling to compare the cost-effectivenesses of plastic stents and metal stents in patients with unresectable pancreatic carcinoma. METHODS: A model of the natural history of unresectable pancreatic carcinoma was constructed using probabilities derived from the literature. Cost estimates were obtained from Medicare reimbursement rates and supplemented by the literature. Two strategies were evaluated: 1) initial endoscopic plastic stent placement and 2) initial endoscopic metal stent placement. We compared total costs and performed cost-effectiveness analysis in these strategies. The outcome measures were quality-adjusted life months. Sensitivity analyses were performed on selected variables. RESULTS: Our baseline analysis showed that initial plastic stent placement was associated with a total cost of $13,879/patient and 1.799 quality-adjusted life months. Initial placement of a metal stent cost $13,466/patient and conferred 1.832 quality-adjusted life months. Among the variables examined, expected patient survival was demonstrated by sensitivity analyses to have the most influence on the results of the model. CONCLUSION: Initial endoscopic placement of a metal stent is a cost-saving strategy compared to initial plastic stent placement, particularly in patients expected to survive longer than 6 months. © 2002 by Am. Coll. of Gastroenterology.