Objective: The standard Medicare Part D benefit includes a “doughnut hole” in coverage. Standard benefit beneficiaries who fall into this gap are responsible for the total costs of their prescription drugs. The objective of this study was to evaluate the impact of doughnut hole on the use of medications by therapeutic classes. Methods: A difference-in-difference (DID) study approach was used. De-identified data from January 1, 2006 to December 31, 2006 were obtained from a pharmacy benefit management database. The study group included standard benefit beneficiaries who reached the doughnut hole in a time period from June 1 to October 31, 2006. The control group included beneficiaries enrolled in commercial prescription drug plans without coverage gaps. Changes in prescription days per month, out-of-pocket costs per month, and generic utilization rates by therapeutic classes were targeted outcome measures. Results: After controlling for demographics, disease conditions and secular trend of drug use, the Part D doughnut hole was found to be associated with reductions in use of antiasthmatics (-3.08 prescription days per month, p <0.0001), antineoplastics (-2.70, p <0.0001), antipsychotics (-1.77, p=0.0630), antidiabetic drugs (-1.63, p=0.0010), anticonvulsants (-1.49, p=0.0042), antidepressants (-1.11, p=0.0011), antihyperlipidemics (-1.09, p<0.0001), but slight increase in use of antivirals (0.08, p=0.9011) and opioid analgesics (0.05, p=0.8503). The Part D doughnut hole was also associated with significant increases in the average out-of-pocket costs for all therapeutic classes and increases in generic utilization rates for all classes except opioid analgesics. Conclusion: Standard Part D beneficiaries in the doughnut hole significantly reduced use of medications for potentially disabling and life-threatening conditions, but increased spending on medications for potentially less life-threatening conditions. This raises concern for an increased risk of adverse health events.