OBJECTIVES: Current treatment options for managing type 2 diabetes (T2D) have significant and varied effects upon patient weight and the incidence of hypoglycaemia. In the short term, and from the patient’s perspective, the absolute clinical effects of therapies are usually observed in the year succeeding therapy initiation. Consequently there has been a growing interest among payers and providers to understand the influence of weight and hypoglycaemia on the cost-effectiveness of T2D treatments. METHODS: With this in mind we developed an economic model that quantified the quality of life and cost consequences associated with different oral treatment strategies over a 1-year time horizon, focusing on the effect of weight change and incidence of hypoglycaemia. We illustrate these issues in patients adding dapagliflozin (DAPA) or DPP-4 inhibitors (DPP-4i) to metformin mono-therapy (MET). Data describing costs, utilities and absenteeism were sourced from the published literature. The model adopts a US societal perspective by including direct and indirect costs and benefits and US specific data where possible. RESULTS: The mean (95% CI) quality adjusted life year (QALY) difference in the DAPA vs. DPP-4i comparison (0.02: 0.75 vs. 0.73) was driven by the weight advantage of DAPA with no appreciable difference in expected costs ($34: $8,426 vs. $8,392): DAPA was cost-effective with a cost per-QALY gained estimate of $2,090. CONCLUSIONS: In the context of this evaluation the driver of economic value over the 1-year period following therapy initiation was weight reduction mediated through quality of life gains; whilst a lower incidence of hypoglycaemia was associated with cost offsets in medical expenditure and quality of life gains, there was no appreciable difference in rates of hypoglycaemia, and hence hypoglycaemia did not drive cost-effectiveness, between the two groups.