OBJECTIVES: Diabetic nephropathy is the leading cause of end-stage renal disease (ESRD), which is related to substantial clinical and economic burden. The purpose of this study was to compare the efficacy and costs of angiotensin converting enzyme inhibitors (ACEi) and angiotensin receptor blockers (ARBs) in patients with diabetic nephropathy. METHODS: We performed a cost-effectiveness analysis based on numbers needed to treat (NNT). Clinical inputs were derived from a meta-analysis of randomized controlled trials investigating the effect of ACEi and ARBs on the incidence of ESRD in patients with diabetic nephropathy. Analysis was by a random-effects model, and results were expressed as relative risks (RR) and NNT. All costs were calculated from a public insurance system perspective, in 2006 Euros. Future costs and clinical benefits were discounted at 3%. RESULTS: Compared with placebo or no treatment, ARBs significantly reduced the incidence of ESRD (RR 0.78; 95% CI 0.67 to 0.91; P=0.001) but not ACEi (RR 0.70; 95% CI 0.47 to 1.06; P=0.09). The weighted mean lifetime direct cost of ESRD from the perspective of the insurance system was estimated at 146,039 Euros in Greece for a 65 year-old diabetic patient (mean age of the studies' population). The cost to prevent one patient to develop ESRD was 23,678 Euros (95% CI 14,510 to 63,763 Euros; P<0.01) for patients receiving ARBs and 141,187 Euros (95% CI 29,412 Euros to infinity; P=0.13) for patients receiving ACE inhibitors. CONCLUSION: In diabetic nephropathy, ARBs is the most cost-effective drug class comparing with ACEi, placebo or no treatment. Treating patients with diabetic nephropathy using ARBs reduces the incidence of ESRD and can result in substantial cost savings for the public insurance system.