OBJECTIVES: To compare dual-eligible patient out-of-pocket costs, adherence (medication possession ratio), persistence, and average number of gap days in therapy before and after Medicaid patients enrolled in Medicare Part D. METHODS: This study employed a quasi-experimental, repeated measures design. Study population included 1734 Texas dual-eligible beneficiaries who had prescriptions filled in Texas independent community pharmacies between January 2005 and September 30, 2006. RESULTS: Average patient out-of-pocket costs increased from $0.39 per claim under Medicaid to $13.36 per claim under Medicare Part D. Patient MPR increased from 75.71% during the Medicaid period to 79.37% during the Medicare period. Linear mixed model analysis showed that patient’s MPR increased by 3.66% when patients were enrolled under Medicare. Patients were persistent to their drug therapy for an average of 151.76 days under Medicaid and days of persistence increased to 159.75 days during the Medicare period. Linear mixed model analysis showed that patients were persistent for 7.99 extra days after they were enrolled in Medicare Part D. Average number of gap days in therapy during the Medicaid period was 11.91 days and decreased to 8.38 days during the Medicare period. Linear mixed model analysis showed that average number of gap days in therapy decreased by 3.52 days when patients were enrolled in Medicare Part D. Linear mixed model analysis and linear regression analysis showed that as patient out-of-pocket costs increased, patient medication possession ratio and persistence increased and average number of gap days in therapy decreased. CONCLUSIONS: These results suggest that dual-eligible beneficiary’s medication utilization increased after implementation of Medicare Part D. Based on these results it can be concluded that higher out-of-pocket costs for dual-eligible beneficiaries under Medicare Part D did not have a negative impact on their drug adherence and persistence.