Background Islet cell transplantation is a method to stabilize type 1 diabetes patients with hypoglycemia unawareness and unstable blood glucose levels by reducing insulin dependency and protecting against severe hypoglycemia through restoring endogenous insulin secretion. This study analyses the current cost-effectiveness of this technology and estimates the value of further research to reduce uncertainty around cost-effectiveness. Methods We performed a cost-utility analysis using a Markov cohort model with a mean patient age of 49 to simulate costs and health outcomes over a life-time horizon. Our analysis used intensive insulin therapy (IIT) as comparator and took the provincial healthcare provider perspective. Cost and effectiveness data for up to four transplantations per patient came from the University of Alberta hospital. Costs are expressed in 2012 Canadian dollars and effectiveness in quality-adjusted life-years (QALYs) and life years. To characterize the uncertainty around expected outcomes, we carried out a probabilistic sensitivity analysis within the Bayesian decision-analytic framework. We performed a value-of-information analysis to identify priority areas for future research under various scenarios. We applied a structural sensitivity analysis to assess the dependence of outcomes on model characteristics. Results Compared to IIT, islet cell transplantation using non-generic (generic) immunosuppression had additional costs of $150,006 ($112,023) per additional QALY, an average gain of 3.3 life years, and a probability of being cost-effective of 0.5 % (28.3 %) at a willingness-to-pay threshold of $100,000 per QALY. At this threshold the non-generic technology has an expected value of perfect information (EVPI) of $260,744 for Alberta. This increases substantially in cost-reduction scenarios. The research areas with the highest partial EVPI are costs, followed by natural history, and effectiveness and safety. Conclusions Current transplantation technology provides substantial improvements in health outcomes over conventional therapy for highly selected patients with ‘unstable’ type 1 diabetes. However, it is much more costly and so is not cost-effective. The value of further research into the cost-effectiveness is dependent upon treatment costs. Further, we suggest the value of information should not only be derived from current data alone when knowing that this data will most likely change in the future. Electronic supplementary material The online version of this article (doi:10.1186/s12902-016-0097-7) contains supplementary material, which is available to authorized users.
