OBJECTIVES: Cost-effectiveness analysis (CEA) is explicitly used for informing drug coverage decisions in many countries but not in the United States. Evidence suggests that failure to incorporate value considerations in coverage decisions may lead to reduced economic efficiency in the form of increased costs or worsened health outcomes.  Yet the use of CEA in the context of binary coverage decisions (yes or no) may not be politically or socially feasible in the US. In 2010, Premera Blue Cross implemented a value-based formulary (VBF) that uses CEA to determine the copayment level-not binary coverage-for each drug in the formulary; drugs with lower incremental cost-effectiveness ratios (ICERs) are assigned lower copayments, drugs with higher ICERs are assigned higher copayments. The objective of this study is to assess the impact of Premera’s VBF on healthcare costs and outcomes. METHODS: We utilize an interrupted time series design with concurrent control group in order to examine the  impact of the VBF on both pharmacy and medical costs for enrollees and the health plan separately and to examine the impact of the VBF on both emergency department visits and acute hospitalizations.  In order to accomplish these aims, we utilize segmented regression models with two-part generalized estimating equations for analysis.  RESULTS: Preliminary descriptive analysis suggests that over the 4 years of observation, comparing the period before VBF implementation to the period after VBF implementation, both medical and pharmacy costs increased more in the control group ($38.37 and $4.79 per member per month (PMPM)) than in the VBF group ($3.16 and -$0.54 PMPM). The number of emergency department visits and acute hospitalizations did not change in either group. CONCLUSIONS: Preliminary analyses suggest that the use of cost-effectiveness principles in the US context may lead to greater economic efficiency. Subsequent analyses utilizing greater control for confounding will establish more valid estimates of outcomes and costs.