From January 1994 through May 1995, Prudential HealthCare-North Texas prospectively studied 299 member patients diagnosed with hypercholesterolemia for whom pharmacotherapy with one of four 3-hydroxy-3-methylglutaryl coenzyme A reductase inhibitors, also known as statins, was prescribed. The purpose of this study was to measure the relative cost-effectiveness (CE) of these drugs in a real-world setting. This study provides information to assist decision makers in managed-care organizations (MCO) in making formulary selections. The study used a prospective, randomized, balanced cohort design, examining patients who had been prescribed initial therapy with a statin drug as monotherapy. Costs (direct medical and indirect costs) and effectiveness (percent reduction in low-density lipoprotein cholesterol levels) were based on approximately the first 6 months of initial therapy. Both the MCO and patient perspectives were considered. In the base case, mean CE ratios were significantly lower for fluvastatin compared with lovastatin, pravastatin, and simvastatin from both the managed-care perspective and the patient perspective. Sensitivity analysis did not alter the CE conclusions, even under conditions of varying cost structures. Although differences were found in the effectiveness of lovastatin, pravastatin, and simvastatin measured in this study versus efficacy measured for these drugs in controlled clinical trials, sensitivity analysis suggests that these differences alone do not determine the superior CE of fluvastatin. Finally, this study supports the idea that well-designed formularies should consider drug CE (based on safety, effectiveness, and cost) and that integration of the pharmacy benefit management with other medical management is essential. These results provide evidence that fluvastatin may represent a more cost-effective formulary choice among statin products used for initial monotherapy of hypercholesterolemia.