OBJECTIVES: Gout is a chronic condition caused by hyperuricemia, a metabolism and excretion disorder characterized by intense pain “flares” in affected joints. The objective was to estimate budgetary impact of adding febuxostat to a US health plan formulary for gout treatment. METHODS: An interactive model was developed using decision analysis methods comparing expected annual number of gout flares and associated costs among members treated with febuxostat 40 mg/80 mg vs allopurinol 300 mg for 1 year. Underlying model data and default inputs were obtained from clinical trials, retrospective studies, and published literature. Gout prevalence was 1%, among which 34% were estimated to be treated. Average febuxostat 1-year market share was assumed to be 3.9%. Model outputs included total per-member per-month (PMPM) cost; gout-, tophi-, and flare-related medical costs and total pharmacy costs, and number needed to treat (NNT). Costs were adjusted to 2008 $US. User-modified sensitivity analysis on gout prevalence, ULT market share, and pharmacy cost was conducted.  RESULTS: In a hypothetical 1-million-member health plan, adding febuxostat 40 mg/80 mg to the formulary is expected to increase total annual cost by $0.008 PMPM, reduce gout-related costs by $26,010, and increase pharmacy costs by $124,494. Model data projected a reduction of 22 flares when adding febuxostat to the formulary and NNT of 6.25 patients on febuxostat to prevent 1 gout flare. Sensitivity analyses indicate a positive relationship between febuxostat market share and gout flares avoided and gout-related medical costs.  CONCLUSIONS: This robust model evaluates the 1-year pharmacy and medical cost offsets on total payer budget. Adding a new ULT to a US health plan formulary minimally impacts total payer budget as shown by the marginal PMPM cost increase and significant gout-related medical savings.