OBJECTIVES: The co-epidemics of obesity and type II diabetes and associated complications result in an increasing population with high risk of serious morbidity, mortality and reduced quality of life. This analysis has been specifically developed to estimate the cost per quality adjusted life year (QALY) gained with orlistat compared to standard clinical practice (SCP) in a particularly high-risk diabetic population with morbid obesity (BMI > 35 kg/m2 and at least one additional CVD risk). In Norway this is a population with clearly unmet needs for preventive medical interventions. METHODS: The incremental cost-utility is calculated in an Excel-model comparing 1 year of orlistat treatment followed by 9 years of SCP with 10 years of SCP. The baseline risk is based on the findings of the United Kingdom Preventive Diabetes Study (UKPDS), adjusted for differences in BMI. The effects of orlistat and SCP (conservatively assumed equal to placebo + SCP) on risk factors (BMI, HbA1c, LDL-cholesterol, SBP), are based on results from the relevant randomized clinical trials. 3 years catch-up of risks after termination of orlistat is assumed. UKPDS and the Heart Protection Study provide assessments of the change in risk associated with change in HbA1c and the other relevant risk factors. Effects on utility are based on the results from CODE-2. Direct costs related to the treatment alternatives and their associated complications are included from a Norwegian societal perspective. RESULTS: The expected incremental cost of treating high-risk Norwegian diabetic morbid obese patients with orlistat is approximately €3125/QALY. Extensive one- and multiway sensitivity analyses using Monte Carlo simulation indicate robustness of the results. CONCLUSIONS: The results of this model indicate that one year treatment with orlistat is a highly cost-effective alternative to SCP for diabetic patients with morbid obesity and additional CVD risk in Norway.