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Objective To investigate cost changes for health systems and participants, resulting from switching to short treatment regimens for multidrug-resistant (MDR) tuberculosis. Methods We compared the costs to health systems and participants of long (20 to 22 months) and short (9 to 11 months) MDR tuberculosis regimens in Ethiopia and South Africa. Cost data were collected from participants in the STREAM phase-III randomized controlled trial and we estimated health-system costs using bottom-up and top-down approaches. A cost--effectiveness analysis was performed by calculating the incremental cost per unfavourable outcome avoided. Findings Health-care costs per participant in South Africa were 8340.7 United States dollars (US$) with the long and US$ 6618.0 with the short regimen; in Ethiopia, they were US$ 6096.6 and US$ 4552.3, respectively. The largest component of the saving was medication costs in South Africa (67%; US$ 1157.0 of total US$ 1722.8) and social support costs in Ethiopia (35%, US$ 545.2 of total US$ 1544.3). In Ethiopia, trial participants on the short regimen reported lower expenditure for supplementary food (mean reduction per participant: US$ 225.5) and increased working hours (i.e. 667 additional hours over 132 weeks). The probability that the short regimen was cost--effective was greater than 95% when the value placed on avoiding an unfavourable outcome was less than US$ 19 000 in Ethiopia and less than US$ 14 500 in South Africa. Conclusion The short MDR tuberculosis treatment regimen was associated with a substantial reduction in health-system costs and a lower financial burden for participants. [ABSTRACT FROM AUTHOR]