Osteoporosis is a large and growing disease with significant health consequences. Based on an evaluation of clinical evidence, the German osteology umbrella organization DVO (Dachverband Osteologie deutschsprachiger wissenschaftlicher Fachgesellschaften) published guidelines in March 2003 for the diagnosis and treatment of osteoporosis. For prevention of fractures in women with postmenopausal and senile osteoporosis, these guidelines recommend three treatment options as first-line therapy: risedronate, alendronate and raloxifene. No evidence is currently available for the reduction of hip fractures by raloxifene. Only risedronate and alendronate, therefore, are recommended for prevention of hip fractures. Information on the cost-effectiveness of preventing and treating osteoporosis may support decision makers in more efficient allocation of resources. Accordingly, the objective of this study is the comparative assessment of the cost-effectiveness of risedronate, alendronate and raloxifene for patient populations in Germany at high risk of osteoporotic fracture due to low bone mineral density (BMD) (i.e., T-score < -2.5) and resulting from a history of at least one previous vertebral fracture, as compared to osteoporotic patients with no treatment. Target variables for the economic comparison are costs per hip fracture avoided and costs per quality-adjusted life year (QALY) gained. Hip fractures are the most costly and best-documented complication of osteoporosis. A cost-effectiveness analysis was therefore conducted, using as criteria for evaluating intervention the incremental cost per hip fracture avoided and the cost per QALY gained. We used a fracture-incidence-based Markov model of osteoporosis, with analysis of patients' transition across outcome states over time (e.g., fracture, healthy, dead). Base-case analysis was conducted on a cohort of 1,000 women aged 70 with low spine BMD and prevalent vertebral fracture, over 3 years of treatment with risedronate, alendronate or raloxifene, and with application of a 10-year analytic time horizon. Model inputs included hip and vertebral fracture incidence rates; relative risk of fracture given low BMD and prevalent vertebral fracture, fracture cost, treatment prices/day (risedronate: 35 mg, 1.76 euro; alendronate: 70 mg, 1.82 euro; raloxifene: 60 mg, 1.82 euro); health utility; and efficacy in terms of relative-risk reduction of fracture of the hip (60% risedronate; 51% alendronate; not significant raloxifene) and vertebrae (49% risedronate; 47% alendronate; 30% raloxifene). A 5% discount rate was applied to cost and outcomes. In the base case, treatment with risedronate reduces costs from the social insurance perspective with respect to both endpoints: i.e., costs per averted hip fracture and QALY. Over the 3-year treatment period and 10-year observation, furthermore, risedronate proved superior to alendronate and raloxifene (i.e., risedronate was less expensive and more effective). From the perspective of statutory health insurance, the cost per averted hip fracture is 37,348 euro for risedronate and 48,349 euro for alendronate (costs for raloxifene were not calculated due to a nonsignificant effect on prevention of hip fractures); and cost per QALY gained is 32,092 euro for risedronate, in comparison to patients in Germany with no therapy (alendronate 41,302 euro; raloxifene 1,247,119 euro). This cost-effectiveness analysis gives evidence that bisphosphonates are cost effective. Under consideration of current prices and the published clinical evidence, risedronate dominates the comparison of DVO-recommended drugs.