OBJECTIVES: Diabetes mellitus represents a significant challenge to healthcare providers in Spain, with a national prevalence of over 8% and approximately 20,000 diabetes-related deaths annually.  Treatment with GLP-1 receptor agonists and DPP-4 inhibitors, which target the incretin axis, has the potential to improve glycemic control without the weight gain associated with traditional therapies.  To evaluate the relative cost-effectiveness of incretin therapies, the present study compared the long-term clinical and cost implications associated with liraglutide and sitagliptin in type 2 diabetes patients in Spain. METHODS: Data were taken from a randomized, controlled trial (NCT00700817) in which adults with type 2 diabetes (mean age 55 years, HbA1c 8.4%, BMI 33kg/m2) failing metformin monotherapy were randomly allocated to receive either 1.2mg liraglutide or 100mg sitagliptin daily in addition to metformin.  Liraglutide was associated with greater improvements from baseline HbA1c (–1.24% versus –0.9%) and BMI (–0.99kg/m2 versus –0.33kg/m2).  Long-term projections of clinical outcomes and direct costs (2012 EUR) were made using a published and validated model of type 2 diabetes and assumed patients switched to insulin after five years. RESULTS: Liraglutide was associated with improved life expectancy (14.05 years versus 13.91 years) and quality-adjusted life expectancy (9.04 quality-adjusted life years [QALYs] versus 8.87 QALYs) compared to sitagliptin. Improved clinical outcomes were driven by improved glycemic control, leading to a reduced incidence of diabetes-related complications, including renal disease, cardiovascular disease, ophthalmic and diabetic foot complications.  Mean cost savings as a result of avoided complications were EUR 1,827 per patient. Overall, liraglutide was associated with increased direct costs of EUR 2,297, yielding an incremental cost-effectiveness ratio of EUR 13,266 per QALY gained versus sitagliptin. CONCLUSIONS: Liraglutide was projected to improve life expectancy, quality-adjusted life expectancy and reduce incidence of diabetes-related complication. Liraglutide is likely to be cost-effective from a healthcare payer perspective in Spain.