Effects of Aliskiren, Irbesartan, and the Combination in Hypertensive Patients With Type 2 Diabetes and Diabetic Nephropathy

Inclusion Criteria: * Male and/or female subjects between the ages of 30-80 years with a diagnosis of type 2 diabetes (World Health Organization criteria) * Body mass index (BMI) within the range of 20 and 32. * Incipient or overt diabetic nephropathy (urinary albumin excretion ≥ 100 but ≤ 2000 mg/day). * Glomerular filtration rate (GFR) ≥ 40 ml/min documented in the last 4 months prior to randomization * To be eligible for randomization, patients must fulfill the following criteria: 1. Patients on ongoing hypertensive therapy must have a blood pressure ≥ 135/85 mmHg but lower than 170/105 mmHg at Visit 2 (Day -1) AND patients must be on stable antihypertensive medications for at least 8 weeks prior to Visit 2 (run-in period). 2. Newly diagnosed hypertensive patients must have a blood pressure ≥ 135/85 mmHg but lower than 170/105 mmHg at Visit 2 (Day -1). * Patients must be on stable hypoglycemic medications for at least 8 weeks prior to Visit 2 (Day -1). * Patients must be willing and medically able to discontinue all angiotensin-converting enzyme inhibitor (ACEI), angiotensin receptor blocker (ARB), aldosterone receptor antagonist and potassium sparing diuretic medications for the duration of the study. * Female patients must be postmenopausal, have had a bilateral oophorectomy, or have been surgically sterilized or hysterectomized at least 6 months prior to screening. * Oral body temperature within the range of 35.0-37.5 °C * Able to provide written informed consent prior to study participation. * Able to communicate well with the investigator and comply with the requirements of the study. Exclusion Criteria: * Severe hypertension, Grade 3 World Health Organization (WHO) classification (mean sitting diastolic blood pressure \[MSDBP\] ≥ 110 mmHg and/or mean sitting systolic blood pressure \[MSSBP\] ≤ 180 mmHg) * Acetylsalicylic acid (ASA) treatment \> 1 g/day or regular use of nonsteroidal anti-inflammatory drugs (NSAIDs) * Kidney disease not caused by diabetes or hypertension * Serum potassium \< 3.5 or \> 5.1 mEq/L * GFR \< 40 ml/min/1.73m2 as measured by the Modification of Diet in Renal Disease (MDRD) formula * Serum albumin \< 2.0 mg/dL * History of hypertensive encephalopathy or cerebrovascular accident in the last 12 months prior to Visit 1 * Transient ischemic cerebral attack during the 6 months prior to Visit 1 * Current diagnosis of heart failure (New York Heart Association \[NYHA\] Class II-IV) * History of myocardial infarction, unstable angina pectoris, coronary bypass surgery, or any percutaneous coronary intervention (PCI) during the 6 months prior to Visit 1 * Second or third degree heart block without a pacemaker * Concurrent potentially life threatening arrhythmia or symptomatic arrhythmia * Clinically significant valvular heart disease * Type 1 diabetes mellitus * Uncontrolled type II diabetes mellitus; hemoglobin subtype A1C (HbA1C) \> 11% * History of malignancy including leukemia and lymphoma (but not basal cell skin carcinoma) within the past five years * Participation in any clinical investigation within 4 weeks prior to dosing or longer if required by local regulation. * Donation or loss of 400 mL or more of blood within 8 weeks prior to dosing. * Significant illness within the two weeks prior to dosing. * Any surgical or medical condition which might significantly alter the absorption, distribution, metabolism, or excretion of study drugs including, but not limited to, any of the following: * History of major gastrointestinal tract surgery such as gastrectomy, gastroenterostomy, or bowel resection * Currently active or previously active inflammatory bowel disease during the 12 months prior to Visit 1 * Currently active gastritis, duodenal or gastric ulcers, or gastrointestinal/rectal bleeding during the 3 months prior to Visit 1. * Any history of pancreatic injury, pancreatitis or evidence of impaired pancreatic function/injury as indicated by abnormal lipase or amylase * Evidence of hepatic disease, a history of hepatic encephalopathy, a history of esophageal varices, or a history of portacaval shunt * Current treatment with cholestyramine or colestipol resins * History of immunocompromise, including a positive test result. * History of a positive hepatitis B surface antigen (HBsAg) or hepatitis C test result. * History of drug or alcohol abuse within the 12 months prior to dosing. * Persons directly involved in the execution of this protocol. * Any condition that, in the opinion of the investigator or the Novartis medical monitor, would jeopardize the evaluation of efficacy or safety * History of noncompliance to medical regimens or unwillingness to comply with the study protocol * Known or suspected contraindications to the study medications, including history of allergy to ACE inhibitors and/or to thiazide diuretics or other sulfonamide derived drug * Any surgical or medical condition, which in the opinion of the investigator, may place the patient at higher risk from his/her participation in the study, or is likely to prevent the patient from complying with the requirements of the study or completing the study * Use of any prescription drug or over-the-counter (OTC) medication which is prohibited by the protocol. * Patients who previously participated in any aliskiren study. Other protocol-defined inclusion/exclusion criteria may apply.