OBJECTIVES: Melanoma is one of the fastest growing cancers worldwide and prognosis is poor with metastases. In about 50% of melanoma patients the BRAF^V600 protein kinase mutation is present. Two BRAF^V600 targeted therapies dabrafenib (Tafinlar®) and vemurafenib (Zelboraf®), have recently received U.S. approval to treat metastatic melanoma in BRAF^V600patients. This study evaluated the cost-effectiveness of BRAF inhibitors compared to traditional chemotherapy (dacarbazine). METHODS: A Markov model was developed with three health states: stable disease, progression, and death and taking  a lifetime societal perspective. Transition probabilities and clinical outcomes were derived from Phase III trials. Costs were in 2013 USD and derived from literature, national databases, and Medicare fees. Utilities for melanoma and other health states were obtained from studies conducted on the general public. Deterministic and probabilistic sensitivity analyses were run to test the impact of uncertainties. RESULTS: Cumulative cost of dacarbazine, dabrafenib and vemurafenib respectively were $15,282, $43,895, and $59,768.  Monthly Drug costs were respectively $537, $7,570, and $10,807. Effectiveness of dacarbazine, vemurafenib and dabrafenib were 0.37, 0.5 and 0.52 LY, respectively and quality adjusted were 0.22, 0.35 and 0.39 QALY. The incremental cost-effectiveness ratio was $14,569 per QALY for dabrafenib compared to dacarbazine. Dabrafenib dominated vemurafenib. For sensitivity analysis, 95% of the variance was accounted for by health state utilities and cost of dabrafenib. CONCLUSIONS: Dabrafenib is the most cost-effective treatment for metastatic melanoma in patients with BRAF^V600 mutation given our assumptions. Given the similar QALYs and side effects profile of dabrafenib and vemurafenib, but higher drug cost of vemurafenib, a 25% price reduction for vemurafenib could bring this drug into the cost-effective range. A specific decrease of 63% in utility of progression on dabrafenib or a minimum decrease of 28% for utility of stable disease on dabrafenib is needed to make vemurafenib the most cost-effective option.