Abstract The introduction of a new antidepressant, venlafaxine, a serotonin norepinephrine reuptake inhibitor (SNRI), has provided researchers with the opportunity to take a closer look at the issues involved in selecting a product for a formulary. To aid decision makers in considering the adoption of this new therapy, a pharmacoeconomic simulation model was developed to evaluate the cost-effectiveness of SNRIs versus traditional oral therapies in the management of patients with major depressive disorders (MDDs) from a cost-based payer perspective. Four treatment regimens for MDD were compared: tricyclic antidepressants, selective serotonin reuptake inhibitors, heterocyclic antidepressants, and SNRIs. The principles of decision analysis were used to calculate outcome probabilities based on data from a meta-analysis. The expected cost of each regimen was calculated using cost data from a survey of three health maintenance organizations located in Missouri, Massachusetts, and California. The model suggests that SNRI therapy demonstrates the highest level of cost-effectiveness in an inpatient setting when using both brand and generic acquisition costs of the drugs. When comparing treatment regimens for outpatients, the generic heterocyclic antidepressants demonstrate the highest level of cost-effectiveness; when using brand acquisition costs, the SNRIs demonstrate the highest level of cost-effectiveness. Sensitivity analysis calculated the robustness of the conclusions to all major parameters.