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Treatment of chronic hepatitis C with Interferon (IFN)␣2b monotherapy results in 10% to 15% sustained virological response (SVR). Combining IFN with ribavirin increases this response. In this analysis, using the Markov model, 6 treatment strategies for chronic hepatitis C (previously untreated) were compared on the basis of incremental cost per additional quality-adjusted life years ($/QALY). Our results showed that the no treatment strategy was associated with a cost of $38,747 and 13.10 QALYs. The strategy using IFN alone for 48 weeks was associated with a cost of $35,642 and 14.05 QALYs. The strategy using IFN monotherapy followed by combination therapy for nonresponders and relapsers was associated with a cost of $34,561 and 15.53 QALYs. A similar strategy, but limiting combination to relapsers only, was associated with a cost of $34,758 and 14.40 QALYs. The strategy using IFN with ribavirin as the initial therapy for all patients was associated with a cost of $34,792 and 15.31 QALYs. Finally, the strategy using viral genotyping first and then adjusting the duration of combination therapy based on genotype was associated with a cost of $37,263 and 15.89 QALYs. The strategy using genotyping to guide duration of combination therapy was the most cost-effective approach with an incremental cost-effectiveness ratio of $7,500 per QALY. Sensitivity analyses confirmed the robustness of these results. We conclude that combination of IFN and ribavirin with duration of therapy based on the viral genotype, is a cost-effective approach in treating patients with chronic hepatitis C. (HEPATOLOGY 1999;30:1318-1324.)Hepatitis C virus (HCV) is an important cause of chronic liver disease worldwide. In the United States alone, nearly 4 million individuals are infected with this virus. The highest prevalence of HCV occurs in the third and fourth decade of life; the most productive years. Approximately 25% to 30% of patients with chronic hepatitis C will progress to end-stage liver disease requiring orthotopic liver transplantation or will die from complications of cirrhosis. HCV is the most common indication for orthotopic liver transplantation in most centers in the United States and HCV-related deaths are predicted to triple in the next 2 decades. Interferon (IFN) alone or in combination (CMB) with ribavirin has been approved for treatment of chronic hepatitis C. After 48 weeks of therapy, IFN monotherapy results in approximately 15% sustained virological response (SVR). [10][11][12] Although a favorable response depends on a variety of viral and host characteristics, early virological clearance (undetectable HCV-RNA level by polymerase chain reaction [PCR] in serum after 12 weeks of therapy) is the most consistent predictor of SVR. Once SVR is achieved, relapses are uncommon and the long-term outcome is good. [13][14][15]30,31 The cost effectiveness of IFN monotherpay over no treatment has been shown in previous studies. 23,26 More recently, combining IFN ␣2b with ribavirin (CMB) has been shown to double the rates of SVR. 1...