BackgroundThe costs of drug-induced hypoglycemia are a critical but often neglected component of value-based arguments to reduce tight glycemic control in older adults with type 2 diabetes.MethodsAn economic (decision-tree) analysis compared rates, costs, quality-adjusted life-years, and incremental costs per quality-adjusted life-year gained associated with mild, moderate and severe hypoglycemic events for 6 glucose-lowering medication classes in type 2 diabetic adults aged 65–79 versus those 80 years and older. The national U.S. (Center for Medicare Services) and Canadian public health payer perspectives were adopted.FindingsIncidence rates of drug-induced hypoglycemia were the highest for basal insulin and sulfonylureas: 8.64 and 4.32 events per person-year in 65–79 year olds, and 12.06 and 6.03 events per person-year for 80 years and older. In both the U.S. and Canada, metformin dominated sulfonylureas, basal insulin and glucagon-like peptide1 receptor agonists. Relative to sulfonylureas, thiazolidinediones had the lowest incremental cost-effectiveness ratios in the U.S. and dominated sulfonylureas in Canada for adults 80 years and older. Relative to sulfonylureas, dipeptidyl peptidase4 inhibitors were cost-effective for adults 80 years and older in both countries, and for 65–79 year olds in Canada. Annual costs of hypoglycemia for older adults attaining very tight glycemic control with the use of insulin or sulfonylureas were estimated at U.S.$509,214,473 in the U.S. and CAN$65,497,849 in Canada.ConclusionsOptimizing drug therapy for older type 2 diabetic adults through the avoidance of drug-induced hypoglycemia will dramatically improve patient health while also generating millions of dollars by saving unnecessary medical costs.