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OBJECTIVE: To evaluate the impact and cost-effectiveness of needle-syringe programs (NSPs) with respect to HIV and hepatitis C virus (HCV) infections among Australian injecting drug users (IDUs). DESIGN/METHODS: A health economic analysis was conducted incorporating a mathematical model of HIV and HCV transmission among IDUs. An empirical relationship between syringe availability and receptive syringe sharing (RSS) was assessed. We compared the epidemiological outcomes and costs of NSP coverage (status quo RSS of 15-17%) with scenarios that had no NSPs (RSS of 25-50%). Outcomes included numbers of HIV and HCV infections averted, lifetime health sector costs, and cost per quality-adjusted life year (QALY) gained. Discounting was applied at 3% (sensitivity: 0%, 5%) per annum. RESULTS: We estimated that NSPs reduced incidence of HIV by 34-70% (192-873 cases) and HCV by 15-43% (19 000-77 000 cases) during 2000-2010, leading to 20 000-66 000 QALYs gained. Economic analysis showed that NSP coverage saved A$70-220 million in healthcare costs during 2000-2010 and will save an additional A$340-950 million in future healthcare costs. With NSPs costing A$245 million, the programs are very cost-effective at A$416-8750 per QALY gained. Financial investment in NSPs over 2000-2010 is estimated to be entirely recovered in healthcare cost savings by 2032 with a total future return on investment of $1.3-5.5 for every $1 invested. CONCLUSION: Australia’s early introduction and high coverage of NSPs has significantly reduced the prevalence of HIV and HCV among IDUs. NSPs are a cost-effective public health strategy and will result in substantial net cost savings in the future.