OBJECTIVES: The aim of this study was to evaluate the cost-effectiveness of entecavir and telbivudine in HBeAg-positive/-negative chronic hepatitis B (CHB) patients based on the ability of each drug to suppress viral replication. METHODS: A cost-effectiveness analysis was performed to evaluate the impact of treatment on disease morbidity and costs over the lifetime and the short term (10 years) for a patient based on a societal perspective. A decision tree was developed to assess the drug abilities to suppress HBV DNA replication. To obtain probability estimates with HBV DNA levels and resistance rates of entecavir and telbivudine, recent entecavir-lamivudine BEHoLD studies and telbivudine-lamivudine GLOBE studies were indirectly compared. The risks of progression to compensated cirrhosis (CC), decompensated cirrhosis (DC), or HCC were derived from the REVEAL-HBV study, which was to evaluate the relationship between hepatitis B viremia and progression to cirrhosis and HCC. For the life expectancy of DC and HCC, the declining exponential approximation of life (DEALE) method was applied based on the published annual mortality rates of DC and HCC. Both direct and indirect medical costs were included and univariate sensitivity analyses were performed on parameters in the model to evaluate the impact of parameter uncertainty. RESULTS: On a per-person basis, the ICERs of entecavir compared to telbivudine for lifetime therapy were $13,649 and $52,776 in HBeAg-positive and HBeAg-negative CHB, respectively. In the 10-year model, the ICERs were $US 39,089 and $US 365,100 in HBeAg-positive and HBeAg-negative CHB, respectively. One-way sensitivity analyses showed that the model was robust to most parameters. However, parameters such as drug costs, discount rate and average time to events from study entry were sensitive. CONCLUSIONS: For lifetime therapy and for HBeAg-positive patients, entecavir was cost effective compared to telbivudine. However, in the short-term treatment model for HBeAg-negative CHB, entecavir was not cost-effective