OBJECTIVES: Telaprevir and Boceprevir were approved in May 2011 for the treatment of chronic hepatitis C in combination with the standard therapy of peginterferon-ribavirin. The objective of this study was to compare the cost-effectiveness of the addition of Telaprevir or Boceprevir to the standard therapy versus the standard therapy alone for the treatment of previously untreated chronic hepatitis C genotype 1 virus infection. METHODS: A Markov model was constructed using TreeAge Pro version 2011. Six Markov states were identified based on the clinical progression of chronic hepatitis C. The model was run over a 28 year time horizon with 1 year cycle lengths. Clinical inputs (treatment response rates and probabilities of adverse drug reactions) were obtained from two published phase III clinical trials comparing the combination of Telaprevir or Boceprevir with the standard therapy versus treating patients with standard therapy alone. Treatment costs, transition probabilities, and health state utilities were obtained from the Medical Expenditure Panel Survey data and other published literature. The primary outcome measure used was quality adjusted life years (QALYs).  Future costs and outcomes were discounted at 5%. The analysis was conducted from the payer’s perspective. Multiple one-way sensitivity analyses were conducted by varying drug costs, treatment response rates and the discount rate. RESULTS: The incremental cost effectiveness ratio (ICER) for adding Telaprevir to the standard therapy versus the standard therapy alone was $17,974.93/QALY gained while the ICER for adding Boceprevir to the standard therapy versus the standard therapy alone was $9,476.61/QALY gained. CONCLUSIONS:  Based on the results, adding Boceprevir or Telaprevir to the standard therapy was found to be cost-effective as compared to treating patients with standard therapy alone. Furthermore, adding Boceprevir to the standard therapy was found to be more cost-effective as compared to adding Telaprevir.