OBJECTIVES: Tapentadol ER is a new oral analgesic that has been shown to have a lower incidence of gastrointestinal adverse events (AEs) than oxycodone CR at equianalgesic doses. We estimated the annual budget impact of placing tapentadol ER on a health plan formulary of long-acting opioids (LAOs) used to treat moderate to severe chronic pain. METHODS: An Excel-based budget impact model was developed to estimate the annual direct healthcare costs associated with long-acting formulations of tapentadol, oxycodone, morphine, hydromorphone, oxymorphone, and fentanyl. Costs included medications, copayments, AE management and opioid switching/discontinuation. Incidence/prevalence estimates, AEs and pain management resources and costs (medications, physician phone calls, office visits, emergency room visits and hospitalizations) were based on published sources. Drug costs were based on wholesale acquisition cost. All costs were in 2010 US dollars. Weighted-average daily drug consumption (DACON) and formulary share were obtained from IMS Health. Base case analysis assumed a 10% formulary share of tapentadol ER with a 10% decrease of oxycodone CR. Results are presented as the per-member per-month (PMPM) cost difference after adding tapentadol ER to the formulary. RESULTS: In a health plan of 500,000 members, 2,600 (0.52%) would be expected to experience chronic pain annually and be treated with an LAO for an average of 180 days. Adding tapentadol ER to the formulary (10% share) decreased both pharmacy (-$0.0136 PMPM) and medical (‑$0.0008 PMPM) costs as well as total costs (-$0.0144 PMPM), with annual budget savings of $85,992. This was driven by lower DACON and lower incidence of AEs with tapentadol ER versus oxycodone CR, leading to reduced resource use and costs. In sensitivity analysis, results were most sensitive to drug acquisition costs. CONCLUSIONS: Results suggest that increasing market share of tapentadol ER while reducing oxycodone CR would decrease a health plan’s budget by decreasing both pharmacy and medical costs.