OBJECTIVES: In Canada, the most commonly utilized oral third-line agent for patients with T2DM inadequately controlled on metformin (MET) and a sulfonylurea (SU) is sitagliptin (SITA).  Canagliflozin (CANA), a novel agent that inhibits sodium glucose co-transporter 2 (SGLT2), has demonstrated HbA1c lowering, as well as improvements in weight and systolic blood pressure (SBP).  The objective of this analysis was to evaluate the cost-effectiveness of CANA 100 and 300 mg versus SITA 100 mg in patients inadequately controlled on MET + SU in the Canadian setting. METHODS: In accordance with the CADTH guidelines for economic evaluations, cost-utility analysis using ECHO-T2DM, a validated economic model, was done to simulate lifetime outcomes and costs of using CANA versus SITA in the third-line setting.  Patient characteristics and treatment effects were sourced from a head-to-head study for the comparison of CANA 300 mg to SITA 100 mg.  In the absence of a direct comparison of CANA 100 mg versus SITA 100 mg, relative treatment effects for this simulation were obtained from an indirect comparison via Bayesian network meta-analysis (NMA), with baseline patient characteristics sourced from a pooled analysis of two CANA trials (patients on background therapy of MET + SU) that contributed to the NMA.  ECHO-T2DM was populated with Canadian costs and utility estimates relevant to the Canadian population. RESULTS: Using CANA 300 and 100 mg resulted in mean quality-adjusted life year (QALY) gains of 0.08 and 0.04, respectively, and lower costs of $2,035 and $981, respectively, compared to SITA over 40 years in patients failing to meet glycemic control on MET + SU.  Therefore, CANA “dominated” SITA. CONCLUSIONS: CANA used as a third-line agent added on to MET + SU background therapy may result in better quality of life outcomes and lower costs when compared to SITA (the most common third-line agent in Canada).