Background: Psoriasis is difficult at times to treat and treatment failures are not uncommon regardless of approach. With the advent of expensive biologic therapies for psoriasis there is increasing discussion on the cost efficacy of a given systemic or biologic agent. An alternative and overlooked aspect of cost efficacy is the cost that accrues from treatment failures. Methods: We review the literature and develop a model to analyze the cost-effectiveness and the cost of treatment failures per success for various systemic psoriasis agents using a 12-week treatment period. Results: For continuous-dose agents, the cost-effectiveness results are: methotrexate $623, acitretin $2729, cyclosporine $2969, nUVB $3692, PUVA $4668, etanercept $16 312, and efalizumab $17 196. The cost of expected treatment failures to achieve one success for the same agents were: methotrexate $187, cyclosporine $505, PUVA $767, nUVB $1034, acitretin $1310, etanercept $8319, and efalizumab $12 897. Conclusions: Methotrexate appears to be the most cost-effective agent for the treatment of severe psoriasis. However, greater efficacy can be achieved with cyclosporine and PUVA, albeit at a greater cost. Because of the high cost of treatment failures, access to a wide array of therapies and combination regimens should not be discouraged by physicians or insurers.