OBJECTIVE: Combination therapy with angiotensin-converting enzyme inhibitors (ACE-I)/calcium channel blocker (CCB) has been recommended for hypertensive diabetics. This study assessed the cost-effectiveness of an ACE-I/non-dihydropyridine CCB (ACE-I/NDCCB: Trandolapril/Verapamil or T/V) relative to an ACE-I/dihydropyridine CCB (ACE-I/DCCB: Benazepril/Amlodipine or B/A) for the treatment of patients with diabetes, who frequently also have hypertension. METHODS: We have adapted a previously published Markov model that simulated the disease progression of a hypothetical cohort newly-diagnosed diabetes patients towards end-stage renal disease (ESRD). The model was developed from a payer perspective and estimated the discounted drug and ESRD costs and quality adjusted life years (QALYs) over a 3-year, 5-year and lifetime time horizon. The baseline analysis conservatively assumed that all patients, regardless of treatment received, progressed from normoalbuminuria to microalbuminuria (progression rate=0.011), to gross proteinuria (progression rate=0.026), and to ESRD (progression rate=0.034). Given clinical evidence demonstrating greater reductions in baseline proteinuria with T/V than with B/A (urinary albumin excretion -65% versus -25%, respectively), the least conservative scenario assumed that patients receiving T/V would progress less rapidly than patients receiving B/A. RESULTS: In the baseline analysis, T/V resulted in lower net costs than B/A. The cost advantage per hypertensive diabetic is $92, $141 and $743 in favor of T/V over a three-year, five-year and lifetime time frame respectively. When the most extreme clinical difference is assumed, T/V treatment results in $168, $313 and $2,293 in net savings per diabetic over the respective time periods while also providing a small net benefit in QALYs (.000632, .0018, .063 QALYs per patient). CONCLUSIONS: From a payer perspective, T/V is cost-saving relative to B/A for the management of hypertensives with diabetes under both scenarios. These savings are driven by the lower cost of drug and the reduced resources required for ESRD treatment.