OBJECTIVES: The Diabetes Decision Analysis of Cost - Type 2 (DiDACT) model is an established long-term model of disease progression and healthcare resource utilisation for people with Type 2 diabetes mellitus (T2DM).  The objective of this project was to adapt the DiDACT model to the Czech Republic healthcare system taking the perspective of the payer, and to employ the model to carry out comparative health economic evaluation of Avandia (Rosiglitazone) in various therapeutic contexts.  The analyses focus on overweight and obese patients. METHODS: The DiDACT economic model requires epidemiological, medical resource use and medical cost data.  These were updated to reflect the Czech Republic setting where possible, such as for outpatient costs, inpatient costs, cardio-vascular disease data and prevalence of complications at diagnosis.  However, due to data availability constraints, some costs, resource use and epidemiology data were drawn from previous analyses, undertaken in Germany and the UK.  The threshold for switching therapies was 7% HbA1c. In order to test the robustness of our results, uni-variate sensitivity analyses were performed. RESULTS: The resulting model allows assessment of the impact of new treatment strategies or programmes in modifying risk factors for diabetic complications and performing comparative cost-effectiveness and cost-utility analysis.  The model predicts that adding Rosiglitazone to Metformin delays the onset of insulin and produces better glycaemic control (HbA1c).  The undiscounted (discounted) lifetime incremental cost-effectiveness ratios per QALY gained were 156,512 CZK (152,811 CZK) for overweight patients, and 177,346 CZK (175,445 CZK) for obese patients. CONCLUSIONS: The analyses yield incremental cost-effectiveness ratios which fall below commonly accepted willingness to pay thresholds.  Rosiglitazone in combination with Metformin is therefore a cost-effective option for the treatment of T2DM when compared with conventional care of Metformin in combination with sulphonylurea (SU) in overweight and obese patients in the Czech Republic.