OBJECTIVES: To perform a cost analysis of using allopurinol or febuxostat (Uloric®) as a first-line agent for the prophylaxis of gout. METHODS: The study was carried out from the public payer perspective. Data was extracted from three published Phase III clinical trials and other published data for input into a Markov model developed using TreeAge Pro 2011©. Patient inclusion criteria were consistent with the trials, including patients with baseline serum uric acid (sUA) concentration greater than 9 mg/dL requiring prophylaxis therapy for gout. Direct medical costs were assessed for patients starting either allopurinol 300mg/100mg, febuxostat 80mg, or febuxostat 120mg per day as first-line therapy. Cycle length of 1 month was used for a 5 year time horizon. The model was designed so that patients who did not achieve therapeutic goals after 1 month of initial therapy can switch to other therapeutic groups. Incidence of drugs achieving sUA goals < 6mg/dL, costs of gout flares, and costs of drugs themselves were included. Costs associated with adverse events were not included in the model as adverse events were not significantly different between therapeutic groups in published trials. All costs were converted to 2009 USD. Univariate sensitivity analyses were performed on all input variables. RESULTS: Using allopurinol 300mg/100mg as first-line therapy showed a cost of $9,242.22 per patient for five years. Conversely, strating febuxostat 80 mg or 120 mg showed higher costs per patient at $11,616.79 and $14,499.79 over 5 years, respectively. Sensitivity analyses show that the modeling results were robust. CONCLUSIONS: Over a 5 year span of time, using allopurinol as the first-line therapy for prophylaxis of gouty flares compared to febuxostat incur lower direct medical costs. This model, however, did not consider allopurinol dose escalation up to 900mg/day, which may have underestimated cost savings for using allopurinol as the first-line therapy.