Objective: To examine the changes in Medicare Part B drug utilization and expenditures associated with the reduction in physician reimbursement for Part B drugs between 2003 and 2005 and availability of drug alternatives through Medicare Part D in 2006. This study specifically focuses on Part B biologics for rheumatoid arthritis(RA) since they faced both these changes introduced by the Medicare Modernization Act(MMA) of 2003. Methods: We used the 2002 to 2006 Medicare 5% files which contain fee-for-service claims and enrollment data for a 5% random sample of the Medicare population. We examined beneficiaries with an RA diagnosis(ICD-9-CM 714.xx) in each year. Infliximab, the only Part B covered RA biologic available pre-MMA, was identified using HCPCS codes. We tracked national trends in its prevalence of use, number of claims, and total payments(in 2004 dollars) across 2002 to 2006. Multivariate regressions with standard errors corrected for repeated observations were estimated. Results: We identified 0.65 to 0.81 million RA patients in 2002 to 2006. The prevalence of infliximab use increased from 4.6% to 5.8% between 2002 and 2004 and then declined to 5.0% in 2005 and 5.2% in 2006(p<0.05). The number of infliximab claims per user increased from 2002 to 2004(p<0.05); however, there was no significant change across 2004 to 2006. As expected, the average payment per claim reduced by 10% from 2004 to 2005. As a result, total payments for infliximab declined from $512 million in 2004 to $459 million in 2005. Total payments per user reduced from $12,443 in 2004 to $11,194 in 2005(p<0.05). There was no significant difference in any payment measure between 2005 and 2006. Adjusted analyses confirmed these findings. Conclusion: Infliximab use and expenditures declined modestly after the introduction of the average sales price based reimbursement system in 2005. No changes were observed after the introduction of Medicare Part D in 2006.