OBJECTIVES: Saxagliptin (Onglyza®) and sitagliptin (Januvia®) are DPP-4 inhibitors licensed for the treatment of T2DM. The two treatments have been investigated as an add-on to metformin in an 18-week, non-inferiority, RCT in 801 patients with T2DM who failed to achieve adequate glycaemic control on metformin alone. Results showed that the newer treatment, saxagliptin, was noninferior to sitagliptin, with a similar tolerability profile. Saxagliptin has a lower acquisition price, hence this analysis sought to assess cost effectiveness of saxagliptin+metformin versus sitagliptin+metformin using a cost utility analysis (CUA) framework from a UK healthcare perspective. METHODS: The CUA utilised a validated model using UKPDS risk equations to estimate long run micro/macro-vascular complications and mortality over a 40 year time horizon. Clinical parameters in the model included HbA1c levels for treatment effect, weight gain and incidence of hypoglycaemic adverse events. Parameter estimates were obtained from a mixed treatment comparison (MTC) of saxagliptin and sitagliptin, which included the head-to-head study. Treatment costs were based upon UK published list prices. Established costs and disutilities associated with long-term diabetic outcomes were used, based upon a UKPDS sub study. Univariate/probabalistic sensitivity analysis was conducted. RESULTS: The annual drug cost per patient for saxagliptin was £411.93 versus £433.57 for sitagliptin. In the base case, total discounted healthcare costs over the 40 year time horizon were £9,907 with saxagliptin and £10,035 with sitagliptin, with the same discounted QALY outcomes (10.49).  Saxagliptin was therefore cost saving in the base case analysis. This finding was consistent across a range of sensitivity analyses, with the exception of lower 95% credible intervals for saxagliptin efficacy which resulted in a small incremental cost for saxagliptin (£29). CONCLUSIONS: Saxagliptin and sitagliptin have been shown to have comparable therapeutic profiles in a head-to-head study and MTC, but lower healthcare costs driven by a 5% lower drug acquisition cost.