OBJECTIVES: Compare multiple sclerosis (MS) severe relapse rates and total direct and indirect costs over a two-year study period between employees with MS adherent and nonadherent to disease-modifying drugs (DMDs) METHODS: Employees with ≥1 MS diagnosis (ICD-9-CM: 340.x) and ≥1 DMD pharmacy claim January 1, 2002 – December 31, 2006 were selected from a large US administrative claims database. Patients had continuous coverage ≥6 months before (baseline) and ≥24 months after (study period) their index date (first DMD claim). Adherence was measured using the medication possession ratio (MPR) over the 24-month study period. Patients with MPR ≥80% were classified as adherent (n=448) and those with MPR <80% were classified as nonadherent (n=200). Multivariate analyses adjusting for differences in baseline characteristics were used to compare severe relapse rates (inpatient or emergency department visit with MS diagnosis) and costs in 2007 dollars between DMD adherent and nonadherent patients. Direct medical costs were calculated as reimbursements to providers for medical services and prescription drugs excluding DMDs. Indirect costs included disability and medically-related absenteeism costs. RESULTS: DMD adherent patients were on average older (43.5 vs. 41.8 years, P=0.015) and more likely to be male (38.6% vs. 26.0%, P=0.002) compared with nonadherent patients. Adherent patients had lower rate of depression (4.7% vs. 9.5%, P=0.019), higher rate of previous DMD use (49.1% vs. 40.0%, P=0.032), and higher baseline MS-related costs ($4,757 vs. $4,037, P<0.001). After adjusting for differences in baseline characteristics, DMD adherent patients had lower occurrence of severe relapses (12.4% vs. 19.9%, P=0.013) and lower total (direct and indirect) costs ($14,095 vs. $16,638, P=0.048). CONCLUSIONS: Over the two-year study period, DMD adherence was associated with significantly fewer severe relapses and lower total medical costs.