OBJECTIVE: To assess the cost-effectiveness of pioglitazone (Actos ?) in combination therapy for patients with type 2 diabetes in Finland. METHODS: A published, validated model for type1 diabetes mellitus developed by the Institute of Medical Informatics and Biostatistics (Palmer et al, 2000) was adapted to simulate long-term (80 years or until death) management, health outcomes, resource utilisation and treatment costs of patients with type2 diabetes. The model accounts for most complications occurring in diabetes patients: nephropathy, retinopathy, acute myocardial infarction, angina pectoris, stroke and amputation. The analysis was done from third-party-payer perspective and costs figured relative to the year 2000. A 5% discount rate was applied to costs and outcomes and sensitivity analysis was performed to test the results. RESULTS: Pioglitazone (PIO) 30 mg and metformin (MF) were associated with longer life expectancy (15.16 years) than sulphonylureas (SU)/MF (14.47) or rosiglitazone (RSG) 8 mg/MF (15.06). PIO 30 mg/SU and PIO 15 mg/SU are associated with the lowest number of serious complications per 100 patients treated. For every 21 patients treated with PIO 30 mg/MF rather than SU/MF or every 41 patients, respectively, for PIO15 mg/SU rather MF/SU one complication is avoided. Combinations of PIO 30 mg/SU, PIO 30 mg/MF and PIO 15 mg/SU are associated with lower mortality than the other treatment combinations available. Thus, for every 35 patients treated with PIO 30 mg/MF rather than SU/MF one death will be avoided after 15 years of treatment. CONCLUSION: This model suggests that combined treatments with pioglitazone (Actos?) improve survival and reduce complications in patients with type 2 diabetes and may represent a cost-effective use of scarce resources. It is necessary to confirm the results of this theoretical model once long-term effectiveness data with the compared alternatives are available.