OBJECTIVES: To compare the cost-effectiveness of saxagliptin versus NPH insulin as second-line therapy in combination with either metformin (MET) or sulphonylurea (SU) after failure of monotherapy with MET or SU in a Polish setting. METHODS: The perspective was the Polish National Health Fund using a published fixed time increment, stochastic simulation model set to a 40-year time horizon. Disease progression was taken from the UKPDS 68 outcomes study. Relative effectiveness for change in Hba1c, weight, and hypoglycaemia was determined from published trials. Costs were from published estimates and local data. Utilities were derived from UKPDS outcomes supplemented with information from published sources for hypoglycaemia-, weight-, and injection-associated disutility. Costs and health-related effects were discounted annually at 5% and 3.5%, respectively. RESULTS: When compared with insulin + MET, saxagliptin + MET was associated with reduced severe hypoglycaemia and less weight gain, resulting in an incremental benefit of 0.13 quality-adjusted life-years (QALYs) and an incremental cost-effectiveness ratio (ICER) of 27,454 zloty (PLN) per QALY. Treatment with saxagliptin + SU was associated with a reduction in symptomatic and severe hypoglycaemia when compared with insulin + SU, leading to an incremental benefit of 0.14 QALYs and an ICER of 24,663 PLN per QALY gained. Key model drivers were: baseline HbA1c, treatment-associated weight gain, thresholds for switching treatment, age, and disutility associated with weight gain, injection fear and hypoglycaemia. The results were robust to various assumptions concerning inputs and modeling parameters, with all ICERs < 50,000 PLN per QALY gained (GDP per capita for 2009 was 30,000 PLN or €7,300, based on 1 PLN = EUROS 0.243, June 2010). CONCLUSIONS: Saxagliptin is cost-effective as a second-line therapy in combination with MET or SU in T2DM in the Polish setting. The availability of saxagliptin will provide T2DM patients with an additional treatment option to insulin.