OBJECTIVES: Telaprevir introduced recently as a new protease inhibitor for chronic HCV infection showed promising results used in conjunction with peginterferon and ribavirin (triple therapy: TT). We assess the cost-effectiveness of TT compared to peginterferon-ribavirin dual therapy in the treatment of previously untreated Japanese patients with genotype1 chronic hepatitis. METHODS: We created a Markov decision model of HCV natural history and progression toward advanced liver disease to evaluate the cost-effectiveness of alternative treatment strategies, in a previously untreated Japanese cohort consisted of patients aged 50 years with genotype 1 chronic hepatitis for a time horizon of lifetime. We compared 3 strategies; no treatment, standard 48 weeks of dual therapy with further 24 weeks of extended treatment for late viral responders (DT+; total 72 weeks) and 24 weeks of TT. The data sources of natural history model were mainly derived from Japanese epidemiological studies. Due to lack of the evidence of the direct comparative effectiveness between TT and DT+ in Japanese HCV patients, the results of a randomized control trial compared TT with standard dual therapy was combined with those of an observational study which compared effectiveness between standard dual therapy and those with extended treatment. RESULTS: Our model estimated TT and DT+ strategies could yield 0.67 and 0.48 of the sustained viral response, respectively. In the base case analysis, TT was most effective in comparison with those treated by DT+ and no treatment strategies and could increase by 0.92 and 2.83 the quality-adjusted life years and reduce the lifetime cost by 1.3 and 0.7 million yen, respectively. This dominance of TT over DT+ was robust to sensitivity analysis. CONCLUSIONS: TT would be more effective and cost-saving strategy compared with DT+ for untreated patients chronically infected with HCV of genotype 1 in Japan.