OBJECTIVES: This study evaluated the benefits of VNS Therapy on health resource utilization (HRU), epilepsy-related comorbidities, and costs over time in drug-resistant epilepsy patients in a clinical practice setting. METHODS: An open-cohort pre-post analysis was conducted using Medicaid data from FL, NJ, IA, MO, and KS (January 1997-June 2009).  Patients had ≥1 neurologist visit with epilepsy diagnosis (ICD-9 345.xx, 780.3, or 780.39), ≥1 procedure for VNS Therapy implantation, ≥1 anti-epileptic drug (AED), ≥6 months of pre- and post-VNS Therapy continuous enrollment.  The 6-months preceding VNS Therapy implantation was designated as Pre-VNS Therapy period.  Post-VNS Therapy period was designated from the date of VNS Therapy implantation until removal of device, death, or Medicaid disenrollment.  Univariate and multivariate Poisson regressions (incidence rate ratios [IRR] and 95% confidence intervals [CI]) compared HRU and epilepsy-related comorbidities and GLM models estimated cost differences between the pre- and post-VNS Therapy periods.  Costs were adjusted to $2009 using medical care component of the consumer price index. RESULTS: Of the 1655 patients, mean age was 29.4 years and 51.4% were males.  Compared to Pre-VNS Therapy period the incidence of hospitalizations and emergency room (ER) visits decreased over time during Post-VNS Therapy period (Trend: 0.9238, p<.0001 and Trend: 0.9526, p<.0001, respectively).  Generalized tonic-clonic seizure events showed a decreasing trend during Post-VNS Therapy period than Pre-VNS Therapy period (adjusted IRR: 1.23 [CI: 1.03-1.46] in Q1 to 0.17 [CI: 0.11-0.27] in Q12).  During Post-VNS Therapy period, average total health care costs decreased from $42,540 (Q1) to $14,316 (Q12).  After 1.5 years, cost savings in Post-VNS Therapy period started to outweigh total costs of VNS Therapy device and implantation procedures.  CONCLUSIONS: To conclude, VNS Therapy is associated with decreased HRU and common epilepsy-related comorbidities, such as hospitalizations, ER visits and generalized tonic-clonic seizure events, resulting in net cost savings for public payers after about 1.5 years.