OBJECTIVES: Recent clinical trials have confirmed that hepatitis C patients who failed to attain a sustained virologic response (SVR) on interferon-based therapy (pegylated or non-pegylated) may still attain SVR if they are re-treated with pegylated interferon alfa 2b therapy in combination with ribavirin. On the basis of the international EPIC trial, a license has been granted for pegylated interferon alfa 2b and ribavirin to be used in this type of re-treatment. We developed a cost-effectiveness for this retreatment paradigm in Scotland, as part of our manufacturer submission to the Scottish Medicines Consortium. METHODS: Local costs were sourced and outcomes data from the EPIC trial were applied. Utilities and disease progression parameters were sourced from widely published and well-established sources including the British HTA report on hepatitis C. Our base case cost-effectiveness model compared the retreatment with no retreatment - this comparison reflects the current available treatment options in Scotland. RESULTS: Our base case model found retreatment with pegylated interferon alfa 2b plus ribavirin to be a cost-effective therapy compared with no retreatment. The ICER was £11,389/QALY in the base case, however this cost-effectiveness measure varied strongly by the genotype of the virus patients are carrying as well as by the patient's prior experience on therapy (i.e. why they originally failed to attain SVR). Patients with less virulent strains of hepatitis C and whose prior treatment failed due to relapse or non-compliance represent the most cost-effective subgroup with ICERs below £9000/QALY.CONCLUSIONS: Aside from the differences in ICERs associated with the different sub-groups identified, ICERs remained below the cost-effectiveness threshold in the most typical treatment scenarios suggesting that the therapy will be a cost-effective addition to the Scottish treatment system.