OBJECTIVES Sorafenib, a multikinase inhibitor, received Food and Drug Administration (FDA)-approval in 2013 for treatment of patients with locally recurrent or metastatic, progressive, radioactive iodine-refractory (RAI-r) differentiated thyroid carcinoma (DTC). A budget impact model (BIM) was developed from a United States (US) payer perspective to estimate the costs of adding sorafenib to the set of available treatments in a hypothetical health plan in the RAI-r DTC population. METHODS An Excel-based BIM evaluated costs of RAI-r DTC with other FDA-approved and compendia-recommended treatments using baseline and projected market shares. Clinical inputs included the prevalence of RAI-r, average monthly dosage, and average duration of sorafenib and other FDA-approved and compendia-recommended treatments. Economic inputs for each treatment included the wholesale acquisition cost (WAC) per dose and hospital administration costs per month. A net per-month cost to the payer for sorafenib was $6,872. Laboratory testing costs were derived from product-specific package inserts and the Centers for Medicare & Medicaid Services (CMS) Physician Fee Schedule. Sorafenib market share was assumed to increase from 35% at baseline to 54% at 1 year, with shift from other treatments coming mostly (12%) from clinical trial/no treatment. The duration of sorafenib treatment was 11 months based the DECISION trial. RESULTS An estimated 25 patients with RAI-r DTC were eligible for treatment with sorafenib. Costs increased 25% ($282,467) or $0.02 per member per month (PMPM) from baseline to 1 year post baseline. Sensitivity analyses, varying default inputs for duration of treatment (±2 months) and estimated market share for sorafenib (±10%), showed greatest sensitivity to sorafenib market share (incremental total costs: $180,812–$384,122). CONCLUSIONS Our findings indicate that adding sorafenib to a hypothetical health plan’s formulary has a manageable budget impact of $282,467, or a PMPM increase of $0.02, given the small RAI-r DTC population.