Objective: To assess the budgetary impact of adding the fixed-dose pioglitazone plus glimepiride to a managed care formulary plan over a three-year period (2006-2008). Methods: This model is an Excel-based spreadsheet which assumes a hypothetical scenario wherein a plan comprising one million covered lives assesses the financial impact of pioglitazone plus glimepiride to formulary. The prevalence of type 2 diabetes is assumed to be 4.64% or approximately 46,400 members. Existing oral anti-diabetic (OAD) agents on the formulary include TZDs (pioglitazone, rosiglitazone, TZD combinations with metformin, & rosiglitazone plus glimepiride), sulfonylureas (glipizide, glyburide, glimeperide), metformin, & a DPP4 inhibitor (sitagliptin). Costs for these agents were based on WAC (2006). Market shares were based on internal market research and IMS data. Metrics of budgetary impact are reported in terms of annual treatment costs & per member per month (PMPM) costs. These metrics were adjusted for patient compliance with OADs as reported in the literature. These metrics are reported as adjusted and unadjusted estimates for patient compliance over a three-year time frame. Results: In this scenario, market share for pioglitazone plus glimepiride was assumed to increase from 0.04% (2006) to 0.36% (2007) to 0.50% (2008). Projected annual treatment costs adjusted for compliance ranged from $22,240 (2006) to $200,164 (2007) to $278,006 (2008). Unadjusted estimates range from $35,295 (2006) to $317,652 (2007) to $441,183 (2008). Projected PMPM costs adjusted for compliance ranged from $0.002 (2006) to $0.017 (2007) to $0.023 (2008). Unadjusted PMPM estimates range from $0.003 (2006) to $0.026 (2007) to $0.037 (2008). Conclusion: The budget impact of adding pioglitazone plus glimepiride on formulary was minimal over a three-year time frame in both scenarios. This is driven by anticipated market projections estimating the utilization of pioglitazone plus metformin among the class of OAD agents.