OBJECTIVES: To evaluate the cost effectiveness of febuoxstat compared with allopurinol for the management of chronic gout in the United States. METHODS: Using the FACT trial that compared febuoxstat with allopurinol in managing chronic gout, a “backward induction model” was designed using a hypothetical cohort of male patients in the US aged 40 to 80 years. Model estimates were taken from the trial and existing literature. The trial demonstrated equivalent efficacy for these drugs but the probability of a patient attaining Allopurinol Hypersensitvity Syndrome (AHS) was inputted and evaluated. AHS probability and total costs were obtained from literature, and utility value was obtained from expert opinion. These values were used for the base case analysis. Using a societal perspective, QALYs and costs were calculated using backward induction to generate lifetime incremental cost effectiveness. All costs were reported as 2009 US dollars, after being inflated using the medical component of the CPI. Life expectancy, QALYs, and costs were discounted at a rate of 3%. RESULTS: Using a societal cost effectiveness threshold of US $150,000/QALY, managing chronic gout using febuoxstat daily is cost effective for males aged 55 to 75 years. It becomes cost ineffective for males aged 40 to 50 years. Febuoxstat contributed to greater QALYs for all patients with AHS at 2%. A one way sensitivity analysis was performed using the 55 year old male patient as a base case comparison with an ICER of US $110,701/QALY to test uncertainties. If AHS is not considered in this model, then febuoxstat will be to cost ineffective throughout this analysis. CONCLUSIONS: Currently, febuoxstat is more expensive, and since they are both equally efficacious, allopurinol should be recommended as first line therapy. Febuoxstat can be used as a cost effective alternative in certain age groups, if AHS occurs.