Background: In recent years, metastatic breast cancer treatment has been revolutionized by new therapies that improve overall survival in phase three randomized clinical trials. These drugs are often more expensive than traditional cytotoxics. In 2022, the Destiny-Breast04 trial results showed that trastuzumab deruxtecan (T-DXd) improved survival in HER2 low metastatic breast cancer patients; FDA approval shortly thereafter greatly expanded the potential market capitalization of T-DXd. While the trial demonstrated T-DXd’s clinical efficacy, its cost-effectiveness remains unknown. Methods: We developed a decision-analytic state transition Markov model to simulate a hypothetical cohort of HER2 low metastatic breast cancer patients to assess the cost-effectiveness of T-DXd compared to a physician's choice chemotherapy from a US healthcare payer perspective over a lifetime horizon. Each month, simulated patients could remain progression-free, progress, have a non-interstitial lung disease (ILD) treatment-related adverse event leading to drug discontinuation (TRAE), have ILD leading to drug discontinuation, progress after either a TRAE or ILD, or die. Patients with either a TRAE or ILD were presumed to be progression free directly after discontinuation of the offending agent, and hence eligible for a different therapy. We calibrated the model to outcome data from the Destiny-Breast04 trial, supplemented with data from other relevant metastatic breast cancer clinical trials. Health-related quality-of-life weights were derived from studies of metastatic breast cancer patients. Drug prices (2020 USD) were extracted from the Federal Supply Schedule. Outcomes included discounted (3% annual) quality-adjusted life years (QALYs), life years, lifetime costs, and incremental cost-effectiveness ratios (ICER). We varied T-DXd price and efficacy in a two-way sensitivity analysis to assess our findings’ robustness. Results: Modeled life expectancies with T-DXd and chemotherapy were 26.5 and 21.5 months, respectively (T-DXd: 1.19 QALYs; chemotherapy: 0.93 QALYs). Discounted lifetime costs were 315,000 for T-DXd and 203,000 for chemotherapy; T-DXd cost 431,000 per QALY gained, surpassing a cost effectiveness threshold of 150,000 per QALY gained. The two-way sensitivity analysis showed that, across a range of plausible efficacies, T-DXd would need a price reduction of approximately 50% to be cost-effective at the $150,000 threshold. Conclusions: While providing clinical benefits, our model-based analysis finds that at current prices, T-DXd for HER2 low metastatic breast cancer is not cost-effective at traditional thresholds. Substantial price reduction for T-DXd to a level much closer to prices of comparator cytotoxics could greatly increase the value for money T-DXd provides patients.