OBJECTIVES: To evaluate the economic consequences of saxagliptin (SAXA) versus sulfonylurea (SU) administration in combination with metformin (MET) after failure of MET monotherapy treatment, in patients with type 2 diabetes (T2DM). METHODS: A discrete event simulation model (Cardiff Long term cost-utility model) based on UKPDS 68 with a fixed time increase was used to simulate disease progression and to obtain an estimate of the treatment’s economic and health consequences in patients with T2DM from Argentina, Chile and Peru. The clinical efficacy parameters for SAXA were obtained from the literature; drug acquisition costs, adverse effects (AEs) and microvascular and macrovascular complications were obtained from local studies. Costs were expressed in US dollars (2009), with an annual 3.5% discount. The time horizon was 20 years. RESULTS: In all countries, the number of non-fatal events was lower in the SAXA+MET group than in the SULF+MET group. The model also predicted a lower number of fatal macrovascular and microvascular events for the SAXA+MET-treated group. In Argentina and Perú, the total cost of the SAXA+MET cohort was higher than that of the SULF+MET cohort (14% and 3%, respectively), while in Chile the total cost of the SAXA+MET cohort was 3% lower than that of the SULF+MET. Treatment with SAXA+MET resulted in a higher number of QALYs (Argentina: 9,392 vs. 9,172; Chile: 9,794 vs. 9,594; Peru: 9,796 vs. 9,597) and LYGs (Argentina: 20,898 vs. 20,797; Chile: 23,068 vs. 23,019; Peru: 23,079 vs. 23,028) as compared with SULF+MET. The additional cost per QALY was U$S6,691, U$S2,446 and -U$S2,243 for Argentina, Peru and Chile, respectively. CONCLUSIONS: Considering the GDP per capita in Argentina and Peru, the addition of SAXA instead of SU to MET therapy would result in acceptable cost-effectiveness ratios in T2DM patients, being this combination cost-saving (dominant cost-effectiveness ratio) in Chile.