OBJECTIVES: The Study TO Prevent Non-Insulin-Dependent Diabetes Mellitus (STOP-NIDDM) trial, a longitudinal, multicenter, double-blind, placebo-controlled trial (mean follow-up 3.3 years) was conducted to evaluate the effect of acarbose on the conversion to type 2 diabetes in 1,429 subjects with Impaired Glucose Tolerance (IGT). The findings of the STOP-NIDDM trial showed that acarbose treatment was associated with a delay in the progression to type 2 diabetes, whereby the risk of progression was reduced by 25% over 3.3 years. The aim of this health economic study was to assess the cost-effectiveness of acarbose versus placebo in patients with IGT, based on the findings of the STOP-NIDDM trial, in the South Korean setting. METHODS: A simulation model was used to project long-term clinical and cost outcomes in type 2 diabetes patients receiving acarbose or placebo. Transition probabilities, risk adjustments, treatment effects and baseline cohort characteristics were based on the STOP-NIDDM trial. Direct costs were retrieved from an independent costing study conducted by IMS Health from a third party health care payer perspective in South Korea. Costs and clinical benefits were discounted at 5% per annum. Sensitivity analyses were performed. RESULTS: The results indicated that acarbose treatment was associated with improvements in discounted life expectancy (0.03 years) and decreased lifetime costs (€182 per patient) compared to placebo. Thus, acarbose was dominant (life and cost saving) to placebo. Furthermore, the proportion of patients that developed diabetes was 45.6% for acarbose and 53.8% for placebo and diabetes free survival was 4.31 and 4.12 years for acarbose and placebo, respectively. CONCLUSIONS: This study demonstrated that acarbose versus placebo was associated with improvements in life expectancy and a reduction in diabetes related costs, and is likely to represent excellent value for money in patients with IGT in the South Korean setting.