Context: Chronic hepatitis C (CHC) infection affects nearly 4 million people in the United States. Treatment with interferon alfa-2b has been limited by its cost and low likelihood of long-term response.

Objective: To examine the cost-effectiveness of alternative pretreatment management strategies for patients with CHC.

Design: Decision and cost-effectiveness analysis using a Markov model to examine prevalence of genotypes, viral load, and histological characteristics in relation to the sustained response rate with treatment. Data were based on a previously published decision model and a MEDLINE literature search for hepatitis C, biopsy, and liver from 1966 to 1996.

Patients: A hypothetical population of patients with CHC infection and elevated serum alanine aminotransferase level.

Interventions: Combinations of liver biopsy, genotyping, and quantitative viral load determination prior to a single 6-month course of interferon alfa-2b; empirical interferon treatment; and conservative management.

Main outcome measures: Proportion of sustained responders, lifetime costs, life expectancy, and quality-adjusted life expectancy.

Results: Strategies involving hepatitis C virus (HCV) RNA testing had marginal cost-effectiveness ratios up to $4400 per discounted quality-adjusted life-year gained but would miss up to 36% of sustained responders. Empirical interferon treatment had a marginal cost-effectiveness ratio of $12400 per discounted quality-adjusted life-year gained and reached all potential sustained responders. Strategies involving liver biopsy were more expensive and would miss 6% of sustained responders and yield slightly lower life expectancies.

Conclusions: Routine liver biopsy before treatment with interferon increases the cost of managing patients with CHC without improving health outcomes. Using quantitative HCV RNA testing to guide therapy misses some potential sustained responders. Empirical interferon treatment has a marginal cost-effectiveness ratio within the bounds of other commonly accepted therapies and misses none of the sustained responders.