Objectives: A probabilistic model was developed to determine the cost-effectiveness of three biologics, etanercept, infliximab and adalimumab, compared with palliative care for the treatment of active and progressive PsA in patients who have an inadequate response to standard treatment (including DMARDs). Methods: A previous model was revised to evaluate the impact of biologics on both skin and joint disease and to include new evidence from the clinical review and evidence synthesis. Initial response to biologics was determined using the PsA response criteria. The impact of biologics on the arthritis component of the disease is then modelled via a change in the HAQ and the impact of the psoriasis component measured using the Psoriasis Area and Severity Index. Results: For PsA patients with mild to moderate skin disease, the incremental cost-effectiveness ratio (ICER) for etanercept vs palliative care is around £18 000, and the ICER for infliximab vs etanercept is around £44 000 per quality-adjusted life year (QALY). Adalimumab is extendedly dominated. The probability that etanercept is cost effective is 0.436 at a threshold of £20 000 per QALY. Etanercept is also likely to be cost effective for patients with moderate to severe psoriasis or negligible skin involvement. Conclusions: Further investigation is required to reduce uncertainties around a number of model parameters, in particular the length of time over which biologics are assumed to be effective and the progression of HAQ on and off treatment. © The Author 2011. Published by Oxford University Press on behalf of the British Society for Rheumatology. All rights reserved.