OBJECTIVES: To evaluate long-term cost-effectiveness of the treatment of CHB HBeAg-positive and -negative patients with telbivudine compared with lamivudine. METHODS:  The study was conducted from China’s social health insurance perspective over a lifetime horizon using a Markov model. Individual patient data (age, gender, virological, serological and biochemical response and resistance to telbivudine versus lamivudine) after 104 weeks from the multinational GLOBE registration trial were applied. Disease progression from CHB to other health states was derived from literature. Economic outcomes, including China-specific data for life expectancy, utility and drug costs were applied. The annual medical expenditure was calculated with 599 community patients with CHB-related diseases in Beijing and Guangzhou cities of China and data were also retrieved from literature. Drug treatment of telbivudine or lamivudine treatment is ceased upon achieving chronic hepatitis HBeAg-, HBsAg-. All costs were valued in Chinese-yuan, year 2007 values. Costs and outcomes were discounted at 3% per annum. Sensitivity analysis was conducted to evaluate uncertainty in study results. RESULTS: Compared with lamivudine, the incremental cost for 1 additional QALY gained with telbivudine in treating HBeAg-positive and -negative CHB were 13,361 yuan (US$1,965) and 62,999 yuan (US$9,265) in Beijing, as well 12,078 yuan (US$1,776) and 65,864 yuan (US$9,686) in Guangzhou, respectively. According to national economic burden of CHB-related diseases retrieved from literature, the ICER with telbivudine vs lamivudine were 3,170 yuan (US$466) and 70,420 yuan (US$10,356) for HBeAg-positive and -negative CHB, respectively. CONCLUSIONS: Among CHB patients, treatment with telbivudine is cost effective as compared to lamivudine, based on the World Health Organization's recommended maximum willingness to pay threshold.