Objective: To evaluate the cost-effectiveness of exenatide twice daily (BID) vs bolus insulin lispro three times daily (TID) as add-on therapy when glycemic control is sub-optimal with titrated basal insulin glargine and metformin. Methods: The analysis was based on the recent 4B Study, which compared exenatide BID and lispro TID as add-on therapies in subjects with type 2 diabetes insufficiently controlled, despite titrated insulin glargine. The Cardiff Diabetes Model was used to simulate patient costs and health benefits beyond the 4B Study. The Swedish healthcare perspective was adopted for this analysis; costs are reported in €EUR to aid interpretation. The main outcome measure was the cost per quality-adjusted life-year (QALY) gained with exenatide BID compared to lispro TID. Results: Exenatide BID was associated with an incremental cost of €1,270 and a QALY increase of +0.64 compared with lispro TID over 40 years. The cost per QALY gained with exenatide BID compared with lispro TID was €1,971, which is within conventional limits of cost-effectiveness. Cost-effectiveness results were generally robust to alternative assumptions and values for key model parameters. Limitations: Extrapolation of trial data over the longer term can be influenced by modeling and parameter uncertainty. Cost-effectiveness results were generally insensitive to alternative values of key model input parameters and across scenarios. Conclusions: The addition of exenatide BID rather than insulin lispro to basal insulin is associated with similar or better clinical outcomes. Illustrated from the Swedish healthcare perspective, analysis with the Cardiff Diabetes Model demonstrated that exenatide BID represents a cost-effective treatment alternative to lispro TID as add-on therapy in type 2 diabetes patients insufficiently controlled on basal insulin.