Owing to induced dependent censoring, estimating mean costs and quality‐adjusted survival in a cost‐effectiveness comparison of two groups using standard life‐table methods leads to biased results. In this paper we propose methods for estimating the difference in mean costs and the difference in mean effectiveness, together with their respective variances and covariance in the presence of dependent censoring. We consider the situation in which the measure of effectiveness is either the probability of surviving a duration of interest or mean quality‐adjusted survival time over a duration of interest. The methods are illustrated in an example using an incremental net benefit analysis. Copyright © 2003 John Wiley & Sons, Ltd.