OBJECTIVES: A recent study has shown that 48 weeks treatment with peginterferon alfa-2a (40KD) (PEGASYS) compared with lamivudine leads to improved efficacy in patients with HBeAg-positive CHB. However, the cost effectiveness of peginterferon alfa-2a compared with lamivudine has not been assessed. The current analysis was designed to assess the net health consequences, costs and cost-effectiveness of 48 weeks of peginterferon alfa-2a for the treatment of patients with HBeAg-positive CHB, compared with shorter term (48 weeks) and longer term (4 years) lamivudine treatment. METHODS: A cost-utility analysis from a payer perspective using a state-transition Markov model simulating the natural history of CHB. Clinical inputs were taken from a randomized trial comparing peginterferon alfa-2a and lamivudine for the treatment of HBeAg-positive CHB. A reference cohort of patients with mean age of 32 years and HBeAg-positive disease was used. Life expectancy, quality-adjusted life years (QALY), lifetime direct healthcare costs, and incremental cost-effectiveness ratios (ICERs) were estimated. RESULTS: Treatment with peginterferon alfa-2a compared with lamivudine (for 48 weeks) resulted in higher total costs, but more QALYs gained, yielding an ICER of £8,820/QALY gained. The ICER comparing the two treatments does not exceed £15,400/QALY gained despite variation in each parameter used in the analysis. In the analysis comparing 48 weeks of treatment with peginterferon alfa-2a versus 4 years of treatment with lamivudine, the ICER was £10,100/QALY gained. CONCLUSIONS: Defined 48 weeks treatment with peginterferon alfa-2a (40KD) (PEGASYS) compared with either short-term or long-term lamivudine treatment in HBeAg-positive patients offers life expectancy benefits for cost effectiveness ratios that are well below the commonly accepted cost-effectiveness threshold in the UK.