The purpose of this study was to estimate the costs and benefits of the use of recombinant human erythropoietin (epoetin) in the treatment of anaemia arising from chronic renal failure. A 5-nation study, using an identical research protocol, was carried out by groups in France, Germany, Italy, Spain and the UK to identify the costs of the use of epoetin, the resource savings generated by such treatment and the effects of this treatment on the quality of life of patients. The latter was measured using the Rosser matrix of disability-distress states. The results show that the use of epoetin can produce a competitive cost per quality-adjusted life-year (QALY) only in patients with serious incapacity. Use of epoetin in patients who are not transfusion dependent would be an expensive way of gaining health benefits, which would be achieved at considerable opportunity cost.