Background: Dose-escalated external beam radiation therapy (EBRT) provides better tumor control for prostate cancer patients, however even with modern radiation delivery techniques, there is a risk for patients to develop gastrointestinal and genitourinary toxicities and erectile dysfunction (ED). Hydrogel rectal spacer SpaceOAR® is a medical device that might prevent developing adverse effects that occurred as a result of radiation therapy of prostate. Research objective: The main objective of this thesis was to determine the cost-effectiveness of treating prostate cancer patients with SpaceOAR® in conjunction with the EBRT compared to the EBRT alone based on the potential of SpaceOAR® to reduce radiation-induced gastrointestinal and genitourinary toxicities. Methods: A decision tree and a state-transition Markov model were constructed to compare the costs and health effects from the provider’s perspective of SpaceOAR® in adjunct to standard care and standard care alone with a lifetime horizon. The subgroup analysis was conducted for three different proportions of patients suffering from ED (with ED prevalence of 62%, 100% and 0%) before the radiotherapy. Transition probabilities and relative risks were collected from the randomized clinical trial on SpaceOAR®. Costs and health utilities were obtained from the literature. A willingness to pay (WTP) threshold was estimated using absolute shortfall approach. To decrease the decision uncertainty value of information analysis assessed the expected value of additional evidence. The budget impact analysis was performed to estimate the financial consequences of implementing the device in healthcare practice. Results: Given the lifetime horizon the incremental costs for SpaceOAR® were 13 813 NOK and the incremental effectiveness was 0,01 QALYs. This resulted in an incremental cost-effectiveness ratio of 1 382 413 NOK per QALY gained. If all patients had good erectile function prior to the EBRT, the incremental cost-effectiveness ratio was 238 990 NOK per QALY gained. Conclusions: The results of this analysis suggests that the application of SpaceOAR® is not cost-effective considering its potential to reduce radiation-induced toxicities. Investigation of structural uncertainty performed by subgroup analysis concluded that HRS can be cost-effective if offered to the patients with good erectile function prior to radiation therapy. However, prioritizing a particular patient group with regards to health state may raise ethical considerations.