INTRODUCTION: To evaluate the average cost of therapeutic strategies for the management of lung cancer in relation to histological type and diagnostic staging and of the individual components of the management strategy. METHODS: Samples were taken between 1 September 1998 and 30 June 1999 from centres with sufficient numbers of lung cancer (LC) cases. All events over an 18 Month period were collected from a retrospective analysis of the records. A Markov model was constructed based on decision branches for localised and diffuse small cell lung cancer (SCLC) and non-small cell lung cancer (NSCLC). Several components of management were identified: first line treatment, second line treatment, observation, terminal care and death. RESULTS: The average cost of LC was 22,006 Euro (10,631-36,296) for one year and 25,643 Euro (10,631-46,191) for two years. For SCLC the average annual costs were 22,420 Euro for diffuse disease and 27,098 for localised disease. For NSCLC the totals ranged from 19,543 Euro for inoperable stage I and II tumours to 39,424 for operable tumours. The cost for stage IV tumours was 24,383 Euro. The cost components over two Years varied according to the tumour type. The cost of diagnosis ranged from 6-14%, the cost of management and of terminal care from 33-45% of the total. Analyses of sensitivity confirmed that whatever the histological type or diagnostic staging the percentage of patients initially treated actively (that is to say not by palliative care) had the greatest effect on the total cost, greater than the costs of terminal care and of two courses of chemotherapy. CONCLUSIONS: This model has allowed for the first time the calculation of the contributions of the different therapeutic components to the total cost of the management of lung cancer in France. In the future it will allow analysis of the economic impact of new methods of treatment.