Objective: To assess the extent of, exposure to, and medication expenditure trends associated with insulin-treated patients reaching the Medicare Part D standard beneficiary prescription coverage gap (i.e., ‘doughnut hole') and catastrophic coverage. Methods: Patients receiving various insulin formulations and mixtures throughout 2006 were investigated via a prescription transaction-level retrospective database that captured 50% of all retail dispensing activity within the U.S. Analyses focused upon the coverage gap and catastrophic coverage within standard beneficiaries regarding: 1) the number of patients entering; 2) the month of entry; and 3) medication expenditures. Results: Overall, 324,430 Medicare beneficiaries received an insulin regimen in 2006, consisting of 41% dual-eligibles (n=131,611), 32% low-income subsidiaries (n=105,151), and 27% standard beneficiaries (n=87,668). Across all coverage groups, oral antidiabetic agents and insulin comprised 66-72% of monthly drug expenditures. Of those potentially being exposed to a coverage gap, 46% reached the ‘doughnut hole' (12% of all Part D beneficiaries) and 12% entered catastrophic coverage (3% of all Part D beneficiaries). Among the near 55,300 standard beneficiaries (63% of 87,668) enrolling in Part D by March 2006, prescription expenditures peaked in the month prior to entering the coverage gap, followed by an immediate 20-25% drop in the month thereafter. Decreased expenditures broadly corresponded to a decrease in the number of diabetes agents dispensed. Conclusion: This analysis found that 46% of all insulin-treated patients covered by the Medicare Part D standard benefit (12% of all Part D beneficiaries) were exposed to the coverage gap in 2006, characterized by a shifting of full financial responsibility to beneficiaries for outpatient medications. Entry was followed by a 20-25% decrease in expenditures and, more generally, in the number of diabetes agents received. These findings warrant continued evaluation of coverage policies and any subsequent cost-shifting or deferrals in care that may occur, particularly for chronic diseases.