OBJECTIVES: The therapy-switching threshold is the blood glucose level at which a treatment is failing to maintain glycaemic control. We assess the impact of a change in therapy-switching threshold on lifetime cost-effectiveness of treatment for Type-2 Diabetes in Germany. METHODS: DiDACT is an established model of Type-2 diabetes, which includes all relevant costs in taking a sickness funds perspective. German guidelines recommend a therapy-switching threshold of HbA1c<7.0%. We assess an increase to 7.5%, because some patients cannot achieve a lower threshold in clinical practice. We simulated treatment histories for cohorts of 1000 obese patients (mean BMI=34). Following Metformin monotherapy failure, combination therapy adding Rosiglitazone (8mg/d) was compared to adding Glibenclamide. Costs were discounted at 5% pa. We present both within-group “absolute” and between-group “incremental” comparisons. RESULTS: A higher therapy-switching threshold simultaneously leads to inferior glycaemic control and extended oral anti-diabetic viability. Deteriorating glycaemic control increases morbidity and mortality. The absolute effect of weaker control is smaller in the Rosiglitazone cohort (104 fewer Life-Years compared to 185 with Glibenclamide). Extending oral therapy before requiring insulin improves quality-of-life (QOL). The absolute effect of weaker control is smaller in the Rosiglitazone cohort (115 more QALYs compared to 266 with Glibenclamide). Superior glycaemic control in the Rosiglitazone cohort yields incremental Life-Years/QALYs of 188/295 (HbA1c 7.0%) and 270/143 (HbA1c 7.5%). The higher threshold leads to cost increases in both cohorts, but reduces incremental costs. The higher threshold reduces the discounted incremental cost-effectiveness ratio (ICER) per Life-Year from 27,516€ to 18,345€ and increases the ICER per QALY from 17,523€ to 34,471€. CONCLUSIONS: When selecting the therapy-switching threshold there is a trade-off between glycaemic control and QOL. ICERs for proposed care adding Rosiglitazone to Metformin remain robust to changes in therapy-switching threshold. It is important to consider both absolute and incremental effects when changing key model parameters.