OBJECTIVE: The aim of this study was to evaluate the cost-effectiveness of insulin degludec (IDeg) vs insulin glargine (IGlar) as part of a basal-bolus treatment regimen in adults with T1DM, using a short-term economic model. METHODS: Data from two phase III clinical studies were used to populate a simple and transparent short-term model. The costs and effects of treatment with IDeg vs IGlar were calculated over a 12-month period. The analysis was conducted from the perspective of the UK National Health Service. Sensitivity analyses were conducted to assess the degree of uncertainty surrounding the results. The main outcome measure, the incremental cost-effectiveness ratio (ICER), was the cost per quality-adjusted life-year (QALY). RESULTS: IDeg is a cost-effective treatment option vs IGlar in patients with T1DM on a basal-bolus regimen. The base case ICER was estimated at £16,895/QALY, which is below commonly accepted thresholds for cost-effectiveness in the UK. Sensitivity analyses demonstrated that the ICER was stable to variations in the majority of input parameters. The parameters that exerted the most influence on the ICER were hypoglycemia event rates, daily insulin dose, and disutility associated with non-severe nocturnal hypoglycemic events. However, even under extreme assumptions in the majority of analyses the ICERs remained below the commonly accepted threshold of £20,000-£30,000 per QALY gained. CONCLUSIONS: This short-term modeling approach accommodates the treat-to-target trial design required by regulatory bodies, and focuses on the impact of important aspects of insulin therapy such as hypoglycemia and dosing. For patients with T1DM who are treated with a basal-bolus insulin regimen, IDeg is a cost-effective treatment option compared with IGlar. IDeg may be particularly cost-effective for sub-groups of patients, such as those suffering from recurrent nocturnal hypoglycemia and those with impaired awareness of hypoglycemia.