Abstract Background This analysis evaluates the cost-effectiveness of insulin degludec (degludec) versus biosimilar insulin glargine U100 (glargine U100) in patients with type 1 (T1DM) and type 2 diabetes mellitus (T2DM) in Bulgaria. Methods A simple, short-term model was used to compare the treatment costs and outcomes associated with hypoglycaemic events with degludec versus glargine U100 in patients with T1DM and T2DM from the perspective of the Bulgarian National Health Insurance Fund. Cost-effectiveness was analysed over a 1-year time horizon using data from clinical trials. The incremental cost-effectiveness ratio (ICER) was the main outcome measure. Results In Bulgaria, degludec was highly cost-effective versus glargine U100 in people with T1DM and T2DM. The ICERs were estimated to be 4493.68 BGN/quality-adjusted life year (QALY) in T1DM, 399.11 BGN/QALY in T2DM on basal oral therapy (T2DMBOT) and 7365.22 BGN/QALY in T2DM on basal bolus therapy (T2DMB/B), which are below the cost-effectiveness threshold of 39,619 BGN in Bulgaria. Degludec was associated with higher insulin costs in all three patient groups; however, savings from a reduction in hypoglycaemic events with degludec versus glargine U100 partially offset these costs. Sensitivity analysis demonstrated that the results were robust and largely insensitive to variations in input parameters. At a willingness-to-pay threshold of 39,619 BGN/QALY, the probability of degludec being cost-effective versus glargine U100 was 60.0% in T1DM, 99.4% in T2DMBOT and 91.3% in T2DMB/B. Conclusion Degludec is a cost-effective alternative to biosimilar glargine U100 for patients with T1DM and T2DM in Bulgaria. Degludec could be of particular benefit to those patients suffering recurrent hypoglycaemia and those who require additional flexibility in the dosing of insulin.