OBJECTIVES:   The present model was aimed to demonstrate the annual cost of the smoking-related diseases in patients with Type 2 diabetes mellitus (DM) and chronic obstructive pulmonary disease (COPD), and to establish the budget that would be saved with varenicline (nicotinic receptor partial agonist) reimbursement by the government. METHODS:   The model was carried out in two contexts; the costs of the smoking-related diseases and exacerbations in patients with Type 2 DM and COPD were estimated in smoking conditions, and varenicline use. The model was constructed on a total of 900,000 Type 2 DM patients and 106,410 COPD patients by assuming approximately 3.8 million Type 2 DM patients and 2.0 million COPD patients in Turkey of which 23% and 48% were considered to be smokers, respectively. RESULTS:   According to the model, the ratio of patients willing to quit smoking was estimated as 35% in Type 2 DM group and 54% in COPD group. Of those, 20% (n=63,000) Type 2 DM patients and 30% (n=17,238) COPD patients were assessed to use varenicline. The annual cost of the smoking-related diseases and exacerbations was calculated as 72.40 million USD according to the 43,341 events; the unit direct costs for myocardial infarcts, stroke and congestive heart failure were calculated as US$2,523.55, US$1,930.70 and US$1,412.33, respectively, in Type 2 DM patients, whereas it was US$1,567.55 in COPD patients. After varenicline use the government would save US$9.47 million per year by 5608 preventable events. Moreover, the annual cost of varenicline was estimated to be US$23.46 million for 80,238 patients. Accordingly, the total cost of the smoking-related diseases and exacerbations would be US$13.99 million for the first year. CONCLUSIONS: Varenicline reimbursement decreases the annual cost of the smoking-related diseases and exacerbations in patients with Type 2 DM and COPD.