OBJECTIVES: Evaluate the annual cost of Dry Eye Diseases (DED) care in the United States from both a societal and a payer’s perspective METHODS: A decision-tree model was developed to estimate the annual cost for managing a cohort of DED patients with differing severity of symptoms and treatments utilizing data collected from survey and the literature. The direct costs included over the counter (OTC) medications, cyclosporine, punctal plugs, physician visits, and nutrition complements. The indirect costs were computed based on the self-reported productivity loss including absenteeism and presenteeism. Multiple-one way sensitivity analysis was employed to evaluate the impact of changes in parameters within their 95% confidence intervals on the cost estimate. RESULTS: In the base-case analysis, the total mean annual direct cost of managing a dry eye patient was $783 in the US from the payers’ perspective, with $678, $771, and $1267 for mild, moderate, and severe patients separately. The overall direct costs of DED for the health care system was $3.84 billion based on the prevalence of DED. The average annual direct cost for self-treated patients using OTC treatment or nutritional supplements was estimated as $126 per patient. The annual productivity loss per full-time worker with DED ranges from $12, 569 to $18,168 depending on the severity of symptoms. The sensitivity analysis suggested that the estimated mean direct cost per DED patient seeking professional medical care ranges from $757 to $809 approximately. Multiple one-way sensitivity analysis suggested the cost estimate was most sensitive to the variation in the distribution of severity of symptoms, the frequency of ophthalmologist visits, prevalence of the combined use of punctal plugs and cyclosporine, the frequency of optometrist, and compliance with cyclosporine by severe patients. CONCLUSIONS: DED poses a substantial amount of economic burden for the payer and the society with the indirect costs substantially outweighing the direct costs.