OBJECTIVES: The purpose of this study was to evaluate the cost effectiveness (cost utility) of insulin glargine in the UK for people with Type 1 diabetes mellitus (T1DM) using observational data in patients continuing on NPH versus those switching from NPH to insulin glargine. METHODS: A discrete event simulation model was developed with a time horizon of 40 years. Transition probabilities for progression to microvascular complications were derived from the DCCT (Diabetes Control and Complications Trial) with cardiovascular events modelled via the Framingham equations. Direct costs and quality of life (EQ5D) were derived from published sources and the HODaR database respectively; costs and benefits were discounted annually at 3.5%. The model was adapted to the profile of T1DM patients switched from NPH to glargine identified via the THIN database (The Health Improvement Network), a UK primary care database including 2,335,667 active patients recorded over 15 years. Analysis was conducted on a total of 466 patients with data for the 12 month period prior to, and post switch; the primary outcome measure of Hba1c change. RESULTS: The median age of patients switched from NPH to glargine was 33 years with mean duration of T1DM of 8.1 years. Baseline HbA1c was 8.71% and patients switching to glargine showed a reduction in HbA1c of 0.27% between switch and 12-months post initiation. Over 40 years, in a simulated cohort of 10,000 there were 523 fewer fatal microvascular complications and, on average, 1 less microvascular complication per patient in those receiving glargine compared to NPH. The discounted incremental cost effectiveness ratio (ICER) was £6,527 per quality adjusted life year (QALY) gained. CONCLUSION: Based on UK real life observational data, switching to basal insulin in type 1 DM patients from NPH to glargine is cost-effective; with a corresponding ICER well within accepted thresholds for cost-effective treatments.