OBJECTIVES: To assess the cost-effectiveness of Ivacaftor/lumacaftor combination for the treatment of cystic fibrosis (CF) homozygous for Phe508del CFTR mutation. METHODS: A Markov state-transition model was developed using TreeAge Pro 2016. The model follows a hypothetical cohort of 12-year olds homozygous for Phe508del CFTR mutation in the US over ten years from a payer perspective. Markov states included: mild (FEV1>70%), moderate (FEV1 40-70%), and severe (FEV1< 40%) disease; post-transplant; and death. Pulmonary exacerbation and lung transplant were included as transition states. Transition probabilities, costs and health-state utilities were estimated from the literature. A 1-year cycle length and 5% discount rate were applied. Two scenarios were modeled to assess uncertainty in long-term treatment effects: initial improvement in FEV1 during the first year followed by either same decline in FEV1 as no treatment (worst case), or improvement followed by no change in FEV1 throughout subsequent 9 cycles (best case). Outcomes included total costs (2015 USD), life-years (LY), quality-adjusted life years (QALYs), and incremental cost-utility ratio (ICUR). One-way sensitivity analyses were performed to determine critical variables. RESULTS: The total costs, LYs and QALYs with Ivacaftor/lumacaftor treatment were $1,915,411.24, 7.87, and 6.43 for the best case and $1,936,452.90, 7.84, and 6.34 for the worst case compared to no treatment ($370,876.42, 7.72, 5.97), resulting in ICURs of $3,357,84.39 and $4,231,287.78/QALY-gained respectively. Outcomes were robust in one-way sensitivity analysis over a wide range of input parameters. Ivacaftor/lumacaftor was cost-effective at a threshold of $200,000/ QALY-gained when the annual cost of the intervention was reduced below $22,286.98 for the best case and $16,494.78 for the worst case respectively. CONCLUSIONS: The intervention produces significant gains in QALYs but at an extremely high cost, resulting in an ICUR that would not typically be covered by any insurer. Ivacaftor/lumacaftor’s status as an orphan drug complicates coverage decisions.