OBJECTIVES:    Poor adherence is a serious issue in the management of patients with chronic hepatitis C (CHC) owing to the difficulty of treatment with pegylated interferon/ribavirin (Peg-IFN/RBV). Future small molecule treatments may obviate difficulties of Peg-IFN/RBV therapy.  We analyzed cohorts of CHC patients treated with Peg-IFN/RBV to quantify the impact of medication adherence on healthcare costs over 4 years follow-up. METHODS:    A retrospective claims analysis was performed from January 1, 2001 through December 31, 2007 using the Medstat MarketScan database. Inclusion criteria: 1) CHC patients greater than 18 years; 2) who initiated Peg-IFN/RBV treatment in 2002 (index); and 3) continued for greater than 24 weeks from index. Continuous enrollment from 6 months prior to index (baseline) to 48 weeks after index (follow-up) was required. Patients were excluded if they had a diagnosis of HIV or HBV. Adherence was defined by medication possession ratio (MPR), days with Peg-IFN/RBV divided by 336 days or 48 weeks. Overall Medical and Pharmacy costs were compared between adherent (MPR ≥ 80%) versus non-adherent patients (MPR < 80%), controlling for age, gender and baseline costs. RESULTS:   A total of 1173 patients met study inclusion criteria (adherent, n=319; non-adherent, n=854). The majority of patients were male (64.5%); the mean age was 47 years. Univariate analysis revealed that Overall Medical, ER, Inpatient and Outpatient Hospitalizations, and Pharmacy costs were significantly greater (P≤0.05) in non-adherent compared to adherent patients.  Multivariate analysis confirmed these results (difference in mean; 95% CI) for Overall Medical ($10,006; 1530-18,482) and Outpatient Hospitalization ($3,024; 553-5,494) costs. CONCLUSIONS:   Medication non-adherence to Peg-IFN/RBV treatment was associated with greater health care costs.  These results may be due to decreased Sustained Viral Response associated with low adherence. Treatment with future small molecules may potentially improve adherence and reduce costs.