OBJECTIVES: To compute the cost of medicines used in the treatment of T2DM and study the variation in the costs.   METHODS: Indian Council of Medical Research (ICMR) and International Diabetes Federation (IDF) guidelines were used to understand the treatment of T2DM. Current Index of Medical Specialities (CIMS) Apr-July2014 issue and Indian Drug Review (IDR) issue 2, Feb2014 were used to capture the prices of medicines available in the Indian market. The annual cost of treatment and variation in the annual cost of drugs was studied.  RESULTS: IDF recommends first line treatment with metformin 500mg twice a day. The annual cost of treatment with metformin was found to be Rs.467-2336. A variation of 400% is noted in the least-highest cost of metformin. Glimepiride 2mg OD is used as a second line treatment and its annual cost ranges between Rs.458-4851. It shows maximum variation of 960% in the least-highest cost. Likewise, third line treatment can be started either with α-Glucosidase inhibitor or DPP4 inhibitor or Thiazolidine group of drugs. Annual cost of treatment with Pioglitazone 15mg was found to be Rs.365-2555. Among the third line category of drugs, Pioglitazone 15mg shows maximum variation of 600% in the least-highest cost. Used as a fixed dose combination (FDC), Glimepiride+Metformin (1+500 mg) showed maximum price variation of 529%.   CONCLUSIONS: It was concluded that a maximum of 11 fold variation was observed in the least-highest costs of treatment with Glimepiride 2mg in the year 2014. Wide variation exists in the percentage price variation of same drug manufactured across the different brands.