OBJECTIVES: Many patients with type 2 diabetes are not achieving recommended HbA1c targets. Barriers preventing the initiation of more efficacious therapies include economic restrictions. The present analysis aimed to evaluate potential clinical and economic outcomes of initiating insulin detemir among type 2 diabetes patients previously on oral medication alone. METHODS: Data were analyzed from 1321 patients who participated in a 12-week prospective observational trial (50.6% male; mean age 62.2 years; diabetes duration 6.5 years; HbA1c 8.49%; BMI 29.5 kg/m2). A published and validated simulation model of diabetes projected total treatment costs (annual drug plus complications), life years gained (LYG), quality-adjusted life expectancy (QALE), and complication incidences for patients commencing detemir versus those modelled to remain insulin naïve (10 year horizon). The model structure combines 15 interdependent Markov sub-models, simulating the progression of diabetes-related complications and utilizing second order Monte Carlo simulation to account statistical uncertainty at the patient and parameter levels. Outcomes were discounted at 3% per annum (US Medicare perspective). Sensitivity analyses were performed. RESULTS: Initiation of detemir generated a 1.29% mean reduction in HbA1c over 3 months, with improved fasting blood glucose (FBG; total (SD): -58 mg/dL (-8.2 mg/dL)), and no significant increase in the occurrence of hypoglycaemia. At follow-up, 16% of patients discontinued or reduced oral medications. Pharmacoeconomic modelling demonstrated detemir treatment to improve LYG (0.156 years) and QALE (0.173 years). Reduced major complication incidences were also estimated, including vascular, ocular, and renal events. An incremental cost-effectiveness ratio (ICER) of $657 per QALY gained was generated. An acceptability curve (willingness-to-pay of $50,000 / QALY) revealed detemir to have a 95.5% chance of being cost-effective. CONCLUSION: Considerable short-term clinical benefits were observed among insulin-naïve type 2 patients initiating detemir. Long-term treatment with detemir was predicted to increase quality-adjusted outcomes and reduce diabetic complications in a cost-effective manner.