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Psoriasis and atopic dermatitis are chronic inflammatory skin conditions, each affecting about 2–3% of the United States adult population. Phototherapy, such as narrowband ultraviolet‐B (NB‐UVB) therapy have been employed for the treatment of both psoriasis and atopic dermatitis for decades. More recently, systemic biologics have been approved by the Food and Drug Administration (FDA), representing a great advancement in dermatology. No comprehensive study to date has compared the cost efficacy of phototherapy compared to FDA‐approved biologics for the treatment of psoriasis and atopic dermatitis. We pursued a systematic review of the literature for studies assessing efficacy of NB‐UVB or biologics with endpoints including the Psoriasis Area and Severity Index (PASI) and the Eczema Area and Severity Index (EASI). Thirty‐four studies including 55 treatment regimens and 5,123 patients were included in the analysis. Phototherapy costs were estimated with Medicare fee schedules for phototherapy‐related current procedural terminology code (CPT), and biologic costs were estimated with wholesale acquisition cost (WAC). Total costs to achieve PASI 75 or EASI 75 in each study were standardized to a single month, the "adjusted cost," and exploited to a year, the "effective yearly cost," allowing direct cost‐efficacy comparison despite different durations of treatment described in studies. The psoriasis analysis found NB‐UVB to be the most cost‐effective therapy, with an adjusted monthly cost of $1714.00 per PASI 75. Infliximab was the least expensive biologic, with an adjusted monthly cost of $2076.00 to $2502.00 per PASI 75. For atopic dermatitis, no NB‐UVB studies utilized EASI 75 as their outcome measure, hindering the ability to directly compare cost effectiveness for the treatment of atopic dermatitis. However, all NB‐UVB studies depicted a reduced treatment cost per treatment period compared to studies assessing biologics, although this comparison does not account for efficacy. The results depict NB‐UVB to be the most cost effective for the treatment of psoriasis and the least expensive per treatment period for the treatment of atopic dermatitis. However, certain factors need to be taken into account. Biologics may be more effective for more severe disease, do not require multiple weekly clinic visits, and the ease for patient compliance may lead some to favor biologic therapy. This study is necessary to allow physicians, patients, and health systems to make informed decisions regarding cost‐efficacy for a variety of treatment options. [ABSTRACT FROM AUTHOR]