OBJECTIVES: To evaluate the cost effectiveness of a Measurement Guided Medication Management (MGMM) adherence intervention program intended to prolong persistence of type 2 diabetic patients with metformin as monotherapy. METHODS: This analysis used a stochastic simulation model wherein each year a proportion of patients treated with metformin as monotherapy develop a need for additional therapy (insulin, sulfonylurea, or glitazone) to control their glycemic level. In the absence of any adherence intervention, the first year's proportion of patients escalating out of monotherapy was estimated using the persistence estimate of 863 patients with oral antidiabetic therapy from the Pharmionic Knowledge Center database. The subsequent years' proportions were derived from the UK Prospective Diabetes Study. The impact of intervention was modeled on the basis of a) published evidence of the statistically significant effectiveness of MGMM in extending persistence; b) the consequences of beta cell deterioration; and c) the side-effects of metformin. Direct medical costs and health utility values were derived from published sources. RESULTS: The estimated proportion of patients escalating out of monotherapy by the end of the first year is 44% and 11%/year for the second and subsequent years. MGMM-based intervention decreases this proportion by at least 17% for the first year and 5%/yr for subsequent years. When all newly diagnosed patients receive the MGMM-based intervention, it is cost effective up to a cost of US$1/day per patient (US$18243/QALY gained). When screening is feasible for non-response based on glycemic level evolution, MGMM is cost effective up to US$6/day per patient (US$18506/QALY gained). CONCLUSION: An MGMM-based intervention program to lengthen persistence with metformin as monotherapy in Type 2 Diabetes is projected to be cost effective. This intervention is projected not only to optimize metformin exposure, but also to improve clinical outcomes, while guiding the allocation of limited resources, for greatest effectiveness.