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Objectives: To evaluate the cost-effectiveness of palivizumab as respiratory syncytial virus prophylaxis in premature infants without chronic lung disease and to evaluate the impact on cost-effectiveness of a potential reduction in risk of asthma following respiratory syncytial virus infection among infants receiving palivizumab. Design: Two decision analytic models were designed, one with and the other without accounting for increased risk of asthma following respiratory syncytial virus infection. Setting: A hypothetical community or university hospital. Participants: Hypothetical cohorts of infants without chronic lung disease born at 26 to 32 weeks' gestation. Interventions: Palivizumab prophylaxis vs no prophylaxis. Main Outcome Measures: Expected costs and incremental cost-effectiveness ratio expressed as cost per quality-adjusted life-year. Results: The expected costs were higher for palivizumab prophylaxis as compared with no prophylaxis. The incremental cost-effectiveness ratios were high for all gestations and are not considered cost-effective by today's standards (<$200 000 per quality-adjusted life-year). Both models were sensitive to variation in the cost of palivizumab. The model that included asthma was sensitive to variation in quality of life for children with asthma. In instances where asthma was considered severe with profound worsening in quality of life compared with life without asthma, some infants had an incremental cost per quality-adjusted life-year that was less than $200 000. Conclusions: Our model supports implementing more restrictive guidelines for palivizumab prophylaxis. Palivizumab was cost-effective for some infants in an analysis that accounted for increased risk of severe asthma following respiratory syncytial virus infection. [ABSTRACT FROM AUTHOR]