Objective: In early 2006, 18,820 vulnerable Medicare beneficiaries with RA or MS participating in a biologic drug demonstration program (MRDD) transitioned into Medicare Part D plans. We compared the types of biologic drug coverage offered by Part D plans. Methods: We examined Part D plans' cost structure (e.g. premium, deductible, cost sharing) for the specialty biologic drugs offered during the MRDD: adalimumab, etanercept, anakinra (for RA), interferon beta 1a and 1b, glatiramer acetate, and HP acthar gel (for MS). For MRDD and Part D plans, we compared beneficiaries' average out-of-pocket costs (OOPC). Results: Beneficiaries enrolled in 1061 stand-alone (SA) and 705 Medicare Advantage (MA) Part D plans. All SA plans and all but one MA plan covered etanercept, interferon beta 1b, and glatiramer acetate. The proportion covering the other drugs varied between 38–92%. MA plans were more likely to cover anakinra, interferon beta 1a, and HP acthar gel than SA plans (p<0.05). All plans used co-insurance as the preferred form of cost sharing; average co-insurance ranged from 25-31% of the drug price. The majority of plans assumed >75% of the cost sharing for each drug dispensing during the initial coverage period, but only 2% of plans offered coverage during the coverage gap. On average, beneficiaries' OOPC were greater under Part D than the standard benefit-structured MRDD. Patients with a MRDD subsidy were significantly less likely to receive a Part D subsidy (p<0.0001), because assets were considered in addition to income in the granting of subsidies under Part D. Conclusion: Many Part D plans assume some costs for specialty biologic drugs to treat RA and MS. Beneficiaries still find themselves facing high OOPC due to drug price, plans' preference for co-insurance, and scant coverage during the coverage gap.