OBJECTIVES: Personalized medicine has become standard of care in directing treatment with tyrosine kinase inhibitors in locally advanced or metastatic NSCLC patients, but various testing methods for identifying EGFR mutations exist.  We compared the clinical outcomes and budget impact of using the FDA-approved cobas^® EGFR Mutation Test versus Sanger sequencing for identifying EGFR mutations in locally advanced or metastatic NSCLC patients from a US payer perspective. METHODS: A decision-tree model was developed to compare testing methodologies and resulting treatment pathways in a hypothetical NSCLC US population health plan with 5 million covered lives and a baseline EGFR mutation prevalence of 16.6%. Model inputs included parameters describing mutation testing accuracy treatment response (EGFR inhibitor, standard chemo therapy or best supportive care). Inputs were based on published literature and Medicare fee schedule reimbursement. Outcomes of the model included patients with test failures (based on detection limits of testing), average patient survival time and budget impact. RESULTS: Patients whose samples were tested with the cobas® EGFR Mutation Test were less likely to experience test failures due to unusable tissue samples compared to Sanger sequencing (6 test failures versus 57, respectively). Patients using the cobas® EGFR mutations testing received more appropriate care compared to Sanger sequencing (90% vs 82%, respectively), resulting in an average total survival increase  of 0.6 months. Costs associated with diagnostic testing were $24,562 less than testing with Sanger sequencing, resulting in similar overall costs per member per month ($0.56). CONCLUSIONS: Performing EGFR mutation testing with the cobas® EGFR Mutation Test has advantages from both patient outcomes and payer budget impact perspectives.  By correctly identifying more patients for proper treatment with less test failures, the cobas® EGFR Mutation Test is a cost-effective strategy for identification of EGFR mutations in locally advanced or metastatic NSCLC patients from a US payer perspective.