OBJECTIVES: To evaluate cost-effectiveness and budget impact of short and long-term lamivudine antiviral treatment for chronic hepatitis type B (CHB) in Taiwan. METHODS: A Markov model was constructed to analyse CHB patients' life expectancy (LE) of no antiviral treatment versus 18-month, 36-month, and unrestricted duration of lamivudine treatment, and their associated reimbursement cost from Taiwan National Health Insurance (TNHI) perspective. Disease progression, clinical effectiveness and patient population information were obtained from systematic review of published studies. Costs of medication, diagnostics, physician's fees, and hospitalization were included. Incremental cost-effectiveness ratios (ICERs) compared to disease progression without antiviral treatment were derived. The annual cost of lamivudine treatment was based on a 10% recruitment rate from 120,000 eligible 30-year-old CHB patients. All costs and health outcomes were discounted at 3%. RESULTS: CHB without antiviral treatment results in LE loss of 21.7 years for 30-year-old CHB patients. Lamivudine used for 18-months, 36-months, and unrestricted treatment duration could increase LE by 2.5, 4.0, and 5.1 years respectively; continuing treatment in patients with cirrhosis could increase LE by 10.2 years. Expected lifetime costs to the TNHI for no antiviral treatment were US$12,854 per patient. Incremental costs of using lamivudine for 18-month, 36-month, and unrestricted duration were US$697, US$1031 and US$1278 respectively. ICERs for 18-month, 36-month, and unrestricted were US$575.7, US$542.5, and US$530.3; and US$1820.4 for treating cirrhotic patients. Expected maximal annual budget for lamivudine was US$13.0m, US$15.3m, and US$15.3m for 18-month, 36-month, and unrestricted respectively; and US$32.3m for continuing treatment in cirrhotic patients. CONCLUSIONS: CHB results in marked LE loss to patients. Lamivudine treatment notably improves LE. The effectiveness of lamivudine increased with increased treatment duration and when continued in cirrhotic patients. Long-term antiviral treatment of CHB with lamivudine is a cost effective strategy in Taiwan with a manageable impact on budgets.