Background: Pembrolizumab has been approved by the FDA for the treatment of recurrent and refractory squamous cell cancer of the Head and Neck. This approval was based on the favorable results noted in the pembrolizumab arm of the KEYNOTE-040 clinical trial which compared pembrolizumab with the standard of care (methotrexate/cetuximab/docetaxel). This study aims to compare the financial aspects of these treatment arms in the setting of their relative clinical advantages in terms of increased overall survival by applying current pricing of the drugs and treatment for side effects. Methods: Data published from the KEYNOTE-040 study was used to generate a model incorporating the cost of each drug in both arms. The incidence of side effects was also extracted from the published data. The cost of treatment of side effects was extracted from previously published data and used for cost estimation in the model. The number of years added in terms of overall survival was calculated for the entire experimental arm and the cost of each such year was calculated. This model assumes that all drugs were supplied at the cost indicated at the retail price advertised by their producers. The cost was adjusted for inflation to the current year. Results: Based on current pricing, 248 patients in the control arm which involved methotrexate /cetuximab /docetaxel incurred an estimated total cost of $2,918,185 over 24 months. The total cost for the pembrolizumab arm based on current pricing was $36,744,819 for 247 patients over 24 months. The cost of management of adverse effects was $383,910 vs. $18,728 (Std. of care vs. Pembrolizumab). The total cost averaged over all patients in both arms was $13,314 vs. $ 148,840. There is an inverse relationship between drug cost and management of adverse side effects in both arms. Conclusions: Treatment with pembrolizumab confers an increase in overall survival but the cost of the incremental gain appears to be high. The model makes several assumptions including the distribution of cost over the patient population in both arms and extrapolates it to the cost in US dollars. It is very likely that the quality of life was superior in the pembrolizumab arm but it was not incorporated into our model. Justification of the continued use of pembrolizumab must be weighed against the long term survival benefits accrued by its usage in the context of a different and possibly better quality of life.