OBJECTIVES: The German HTA agency IQWiG published new guidelines on health-economic evaluations for the statutory health care system. The goals of this pilot study commissioned by IQWiG were: 1) to apply the efficiency frontier (EF) approach to evaluate the cost-effectiveness of combination therapy with peginterferon plus ribavirin (PegIFN+RBV) in patients with chronic hepatitis C (CHC); and 2) to assess the feasibility of the EF approach in this case example. METHODS: IQWiG's EF approach assesses the cost-effectiveness of the new treatment (i.e., PegIFN+RBV) within the specific disease area (i.e., CHC) by comparing the new treatment's incremental cost-effectiveness ratio (ICER) to ICERs of established treatments. We used a lifetime Markov model to determine health outcomes and costs of all treatment options. Health outcomes included sustained virological response (SVR), lifetime risk of decompensated cirrhosis and quality-adjusted life years (QALY). Model parameters were derived from the published literature and German databases. We adopted the perspective of citizens insured through the statutory health insurance. We performed a budget impact analysis reporting annual incremental costs. RESULTS: The ICERs of PegIFN+RBV compared to interferon plus ribavirin (IFN+RBV) were EUR 15,000 EUR/SVR avoided, EUR 42,000/decompensated cirrhosis avoided, and EUR 4,000/QALY. These ICERs are substantially lower than those of the last segments of the respective EFs (i.e., ICER of IFN+RBV vs. IFN monotherapy) indicating cost-effectiveness of PegIFN+RBV. The expected incremental annual budget ranged between 15 and 134 million EUR. The introduction of new genotype-specific treatment guidelines led to cost-savings when compared to IFN+RBV. CONCLUSIONS: PegIFN+RBV should be cost-effective compared to other established treatments in CHC. The EF approach should be feasible for HTAs in the CHC area. However, several issues remain to be solved and the conclusions derived from HTAs based on IQWiG's framework may substantially differ from HTAs assuming uniform willingness-to-pay thresholds across the entire health care system.