OBJECTIVES: Insulin degludec (IDeg) is a basal insulin with an ultra-long duration of action for management of patients with type 1 (T1DM) and patients with type 2 (T2DM) diabetes. IDeg has demonstrated effective blood glucose control with less hypoglycaemic events and an option for flexibility in dose time compared to insulin glargine (IGlar). The aim of this analysis was to evaluate the cost-effectiveness of IDeg versus IGlar in adults with T2DM initiating insulin therapy in the UK. METHODS: Meta-analysis data from three clinical studies were used to populate a 1-year cost-utility model. The analysis was conducted from the UK National Health Service perspective. Sensitivity analyses were conducted to assess the robustness of results. Two versions of the model were tested, one applied disutilities derived from the SF-36 questionnaire used in the clinical trials, the other applied disutilities associated with the occurrence of hypoglycaemic events. In both approaches an additional utility gain was attributed to the benefit of dosing flexibility. Baseline incidence of hypoglycaemia was derived from a UK real-life study. Resource use associated with hypoglycaemia was documented in the clinical studies. Official tariffs were used as unit costs.  RESULTS: Base-case ICERs were £15,705/QALY and £13,003/QALY in the two modelling approaches. Results were robust, with baseline rate of hypoglycaemia a key driver of results. Using hypoglycaemia rates from a subgroup of patients who experienced ≥1 hypoglycaemic event per year IDeg was highly cost-effective versus IGlar; with estimated ICERS of £4,706/QALY and £2,528/QALY. CONCLUSIONS: This short-term modelling approach allows the economic evaluation of newer insulin analogues when advanced long-term modelling based on HbA1c differences is inappropriate due to treat-to-target trial design. For patients with T2DM on a basal-only insulin regimen, IDeg is cost-effective compared with IGlar and offers additional benefits to subgroups of patients, such as those suffering from recurrent hypoglycaemia.