OBJECTIVES: Evidence from the landmark trials FIELD and ACCORD demonstrated that fenofibrate significantly reduces rates of diabetic retinopathy (DR) progression in type 2 diabetes patients (T2DM).  This study evaluates the long-term cost-effectiveness of fenofibrate mono- and combination therapy for DR in Australia. METHODS: A seven-state Markov model simulated progression of DR based on data from the Blue Mountain Eye Study.  Risk reductions for retinopathy progression were derived from FIELD for fenofibrate monotherapy (versus placebo) and ACCORD for fenofibrate+statin (versus statin alone).  No additional benefits were assumed beyond 5 years (DR progression was the same with/without fenofibrate after year 5).  Quality-adjusted life expectancy, direct costs and incremental cost-effectiveness ratios (ICERs) were reported over 10 years.  Unit costs (2012 Australian dollars, AUD), resource use and utilities were taken from country-specific sources/expert opinion.  Future costs and clinical benefits were discounted at 5% annually.  Sensitivity analyses were performed.   RESULTS: Fenofibrate monotherapy improved mean quality-adjusted life expectancy by 0.09 QALYs versus placebo due to fenofibrate patients spending more time in mild DR states.  Direct medical costs were AUD 898 higher for fenofibrate monotherapy, with additional treatment costs partially offset by reduced cost associated with advanced DR (e.g. ophthalmologist time and laser treatment), leading to an ICER of AUD 10,221 per QALY gained.  Similarly, fenofibrate+statin led to an improvement of 0.05 QALYs versus statin alone with an incremental direct cost of AUD 1,707.  The ICER for fenofibrate+statin was AUD 33,350 per QALY gained versus statin alone.  Sensitivity analysis showed that results were relatively insensitive to changes in a range of assumptions. CONCLUSIONS: The reduced risk of DR progression associated with fenofibrate treatment was projected to improve quality-adjusted life expectancy, with treatment costs partially offset by reduced costs of retinopathy care.  ICERs indicated that fenofibrate therapy was in the range likely to be considered cost-effective in Australia.