OBJECTIVES: To determine the cost-effectiveness ratio of adding saxagliptin to metformin therapy (SAXA+MET) compared to adding sulfonylureas (SULF+MET), in patients with type 2 diabetes mellitus (DM2) who have failed to achieve adequate glycemic control with metformin. METHODS: A discrete event simulation model (Cardiff Long term cost-utility model) based on UKPDS 68 with a fixed time increase was used to simulate disease progression and to obtain an estimate of the treatment’s economic and health consequences in DM2 patients. The clinical efficacy parameters for saxagliptin were obtained from the literature; drug acquisition costs, adverse effects (AEs) and microvascular and macrovascular complications were taken into account. Costs were expressed in United States dollars (2009), with an annual 3.5% discount. The time horizon was 20 years. RESULTS: A lower number of non-fatal events was found for the SAXA+MET-treated group versus the SULF+MET-treated group. Additionally, the model predicted a lower number of fatal events due to macrovascular (146 vs. 151) and microvascular (17.7 vs. 17.9) events for the SAXA+MET-treated group vs. the SULF+MET-treated group. The total cost of the SAXA+MET cohort was 14% higher than that of the SULF+MET cohort. Treatment with SAXA+MET resulted in a higher number of QALYs (9,392 vs. 9,172) and LYGs (20,898 vs. 20,797) than treatment with SULF+MET; the additional cost per QALY and LY gained was US$6,691 and US$ 14,656 respectively. CONCLUSIONS: Considering the GDP per capita in Argentina, results suggest that the addition of saxagliptin to metformin therapy compared to the addition of sulfonylureas would yield acceptable cost-effectiveness ratios in DM2 patients in Argentina.