OBJECTIVE To determine the most cost-effective drug in the treatment of bleeding esophageal varices within the formulary available in the Mexican Institute of Social Security. METHODS Economic evaluation that used costs and quality of life information from a multicentric clinical study in Mexican population and an expert panel. Efficacy data were obtained from a meta-analysis. The alternatives included were terlipressin and octreotide. The study perspective was institutional, 5 years time horizon, 3% real discount rate for both effectiveness and costs. Costs were estimated from financial information from IMSS, and are reported in US 2006 dollars. A decision tree with a Bayesian approach, as well as a Markov model with four health states describing the natural disease course and correction in the middle of the cycle, were used in the analysis. Mean cost-utility rates, net economic benefits and net health benefits were calculated. The sensitivity analysis included threshold, one-way, scenarios and probabilistic Monte Carlo simulation. RESULTS Terlipressin had the lowest cost per QALY, \$119,321 compared with octreotide, \$179,984. The number of QALYs was similar for both alternatives, with a lower cost per QALY for terlipressin; therefore, due its being the cheaper one, terlipressin was the dominant alternative. The expected mean cost per patient in five years of octreotide was \$83,650, and $66,385 for terlipressin. Acceptability curves showed that independently of WTP, terlipressin had a larger proportion of cost-utility cases in more than 70% and larger net economic and health benefits compared with octreotide. CONCLUSION Terlipressin was the option with the lower cost per QALY in the pharmacological treatment of bleeding esophageal varices. Sensitivity analysis showed that the conclusions of the base study were robust.