OBJECTIVES: Sacubitril/valsartan (SAC/VAL), an angiotensin receptor-neprilysin inhibitor, has been shown to reduce the risk of cardiovascular death and hospitalization in patients with heart failure with reduced ejection fraction (HFrEF) compared with ACE inhibitors (ACEi), but at a substantially higher cost. This study evaluates the incremental cost-utility of SAC/VAL versus ACEi in patients with HFrEF from the US payer perspective. METHODS: A cohort-based Markov model was developed to compare costs and quality-adjusted life years (QALY) between SAC/VAL and ACEi in patients with HFrEF, using a base case time horizon of 5 years, and a 1 month cycle length. Markov states included New York Heart Association [NYHA] Class (II-IV) and death, with disease progression modeled as the probability of increasing a single NYHA Class during one cycle. Treatment discontinuation and HF-related hospitalizations were modeled as transition states. Transition probabilities for SAC/VAL and ACEi were derived from the PARADIGM trial. Other probabilities, costs, and utilities were obtained from the published literature and public databases. Univariate and probabilistic sensitivity analyses (PSA) were conducted to evaluate parameter uncertainty. RESULTS: In base case analysis, SAC/VAL cost more than ACEi ($72, 390 vs. $59,693, respectively), but was more effective (2.53 QALYs vs. 2.43 QALYs).  SAC/VAL was associated with an incremental cost-effectiveness ratio of $131,579/QALY versus ACEi. At a willingness to pay (WTP) of $100,000/QALY, SAC/VAL was found to be cost-effective up to a cost of $297/month. Results were most sensitive to SAC/VAL cost, time horizon and NYHA progression probability. In PSA, SAC/VAL was found to have an 18% probability of being cost-effective assuming a WTP of $100,000/QALY. CONCLUSIONS: SAC/VAL is associated with clinical benefit, but may not be a cost-effective option compared to other available therapies. Results of this analysis can be used to inform discussion on the value and position of SAC/VAL in the current market.