Objective: Evidence has shown important therapeutic outcome differences between dutasteride and finasteride. The objective of this study was to assess the differences in economic costs between these two pharmacologic treatment options within the first year of initiating therapy for Medicare-aged men with benign prostatic hyperplasia (BPH) from a managed care perspective. Methods: A retrospective analysis of medical and pharmacy claims was conducted using the Ingenix Lab Rx proprietary research database within a 3-year period from July 1, 2003 to June 30, 2006. Male patients aged = 65 years with a diagnosis of BPH treated with either dutasteride or finasteride were identified. To minimize potential biases that arose from differential treatment selection, propensity-score-matching methods were used to identify finasteride and dutasteride patients who were similar in terms of their Charlson Comorbidity Index score, Thomson Medstat staging and other background covariates. Average monthly medical costs were defined as the total amount charged for BPH-specific physician visits, inpatient hospitalizations, outpatient hospital care, emergency department visits and other ancillary medical services during the follow-up period for each patient. Results: The matched sample included a total of 4498 patients. Demographics were comparable between the two treatment groups with a mean age of 73.6 years. Patients taking dutasteride had significantly lower medical resource utilization costs per month compared to finasteride-treated patients ($122 vs. $173, P<0.001). The absolute difference in cost is $51 less per month with dutasteride use. The lower costs associated with dutasteride appears to be due to the lower inpatient hospitalization costs ($35.78 vs. $72.29 per month with finasteride). Conclusion: Medicare-aged patients treated with dutasteride consumed significantly lower medical resources due to lower inpatient hospitalization expenditure, showing cost savings of $51 per month per treated patient. This study supports the growing body of real-world evidence indicating the clinical and economic benefits associated with dutasteride.