OBJECTIVES: To estimate the average annual cost of treating patients with type 2 diabetes mellitus with insulin including: the cost of insulin, test strips for self-monitoring of blood glucose levels, and additional healthcare professional (HCP) time spent with patients following insulin initiation. The secondary objective was to describe insulin prescribing patterns in the UK. METHODS: For insulin and test strip costs a retrospective analysis of 2009/10 UK patient-level data was undertaken using Cegedim Strategic Data. Costs were applied using the BNF and MIMS. To estimate HCP resource use, 100 HCPs were surveyed on the number of contacts with insulin patients in the 3 years prior to and the 3 years post insulin initiation. Costs were applied using PSSRU 2010. RESULTS: A projected 24.5 million insulin items were prescribed to 400,000 patients, generating an estimated average annual insulin cost of £393 per patient. Long-acting and biphasic insulins together accounted for more than 75% of the total volume and costs of insulin prescribed; intermediate acting insulins accounted for 6% and 4% of the volume and costs respectively. A projected 4.5 million packs of test strips were prescribed to 360,000 patients, generating an estimated average annual cost of test strips of £180 per patient. Contact time across all HCPs peaked in the year following insulin initiation. There was an absolute increase of 8 contacts per patient in the 3 years post insulin initiation, representing an additional cost of £103 per patient. CONCLUSIONS: Insulin initiation increases the cost of care not only because of the insulin costs, but because of the package of resources that insulin requires. The estimated cost of insulin, insulin pens, needles and test strips is £609 per patient. The analysis suggests divergence from the NICE Clinical Guidelines 87 recommendation that first-line insulin therapy should be intermediate NPH insulin.