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OBJECTIVE: The objective of this study was to evaluate the cost-effectiveness of insulin glargine compared with NPH insulin in patients with type 2 diabetes and in whom OAD (oral anti-diabetics) had failed in Switzerland. METHODS: Long-term diabetes outcomes were simulated with the Diabetes Mellitus Model (DMM) over a period of 10 years. The incidences of long-term complications (micro- and macrovascular events) were simulated for 10,000 patients over 10 years for six different scenarios. The scenarios were based on HbA1c reductions observed in clinical trials. For insulin glargine, HbA1c reductions of 0.96% (pessimistic case) and 1.24% (optimistic case) were simulated for three different HbA1c baseline values (10, 9 and 8%). For NPH insulin the HbA1c reduction was assumed to be 0.84%. A cost model and a utility model were developed in order to use the cumulated incidences of the simulations for the calculation of cost and QALYs (quality-adjusted life years). The unit costs of micro- and macrovascular events were assessed on the basis of published literature and guideline-projected resource-use estimations for Switzerland. Disutility values of diabetes-related long-term complications were derived from the literature. Total direct medical costs or QALYs were assessed by a combination of cumulated incidences of each event up to 10 years with the corresponding unit cost per event (in addition to the acquisition cost) or with disutility values per event, respectively. Events, total cost, and QALYs were discounted at 3%. In scenarios where no savings could be shown for insulin glargine, incremental cost-effectiveness ratios were calculated as the incremental cost per event prevented and the cost per QALY gained. RESULTS: Cost comparison demonstrated that insulin glargine is the dominant strategy for the optimistic case scenario starting at a baseline HbA1c value of 10% as savings in the management of complications exceeded the difference in acquisition costs after 8 years of treatment. Optimistic case scenarios for baseline HbA1c values of 9 and 8% achieved costs per QALY gained amounting to CHF 2,853 and CHF 5,711 and costs per event prevented amounting to CHF 2,054 and CHF 4,899, respectively. Pessimistic case scenarios for baseline HbA1c values of 10, 9 and 8% resulted in costs per QALY gained amounting to CHF 40,441, CHF 45,701 and CHF 49,468 and costs per event prevented amounting to CHF 27,742, CHF 32,451 and CHF 41,620, respectively. CONCLUSIONS: This study investigated the long-term health-economic implications of treating type 2 diabetes patients, in whom OAD had failed, with insulin glargine versus NPH insulin in Switzerland. The 10-year simulations demonstrated that the deltaHbA1c reductions of 0.4 and 0.12% achieved with insulin glargine led to a reduction of long-term complications, mortality and associated costs as well as to an improved quality of life. Insulin glargine proved to be cost-effective and represents good to excellent value for money compared to NPH insulin.