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Background: Cirrhosis is associated with significant morbidity and mortality. Recent studies have highlighted the potential role of allopurinol in reducing the incidence of hepatic decompensation among individuals with cirrhosis. This study aimed to evaluate the association of allopurinol use with the incidence of hepatic decompensation and overall mortality in patients with cirrhosis in a large, propensity-matched cohort. Methods: A retrospective cohort study of adults with cirrhosis was conducted using the national TriNetX database, with 1:1 propensity score matching. Allopurinol exposure was assessed in three categories compared to individuals with no allopurinol use: 100 mg, 300 mg, and exposure at any dose. The primary outcome was the incidence of overall hepatic decompensation. Secondary outcomes included the incidence of ascites, esophageal variceal bleeding, hepatic encephalopathy (HE), hepatorenal syndrome, spontaneous bacterial peritonitis (SBP), hepatocellular carcinoma, and overall mortality. The outcomes were assessed at 6, 12, and 18 months. Odds ratios (ORs) with 95% confidence intervals (CIs) were calculated. Results: After propensity score matching, 5,358 patients who received allopurinol were compared with 5,358 controls. Dose-specific analyses included two additional matched cohorts: 2,124 patients receiving 100 mg of allopurinol and their matched controls, and 1,020 patients receiving 300 mg of allopurinol and their matched controls. At 18 months, a statistically significantly lower incidence of hepatic decompensation was seen in the overall allopurinol exposure cohort (OR: 0.77; 95% CI: 0.70–0.84), the 100 mg cohort (OR: 0.66; 95% CI: 0.57 to 0.76), and 300 mg cohort (OR: 0.76; 95% CI: 0.62 to 0.94). Allopurinol exposure was associated with a decreased incidence of esophageal variceal bleeding (OR: 0.71; 95% CI: 0.55 to 0.92), ascites (OR: 0.77; 95% CI: 0.69 to 0.84), HE (OR: 0.76; 95% CI: 0.63 to 0.92), SBP (OR: 0.61; 95% CI: 0.46 to 0.80), and overall death (OR: 0.86; 95% CI: 0.77 to 0.96) compared to the control group. Conclusion: In a propensity score-matched analysis of a large national database, individuals with cirrhosis and allopurinol use had significantly lower risk of hepatic decompensation and overall mortality. These findings suggest that allopurinol may play a potential role in managing cirrhosis, and randomized clinical trials are needed to confirm these findings.