OBJECTIVES: As oral chemotherapy is becoming more prevalent in treating cancer patients, the cost difference between oral and conventional intravenous (IV) chemotherapy is not clear. The objective of this study was to compare the total costs of oral chemotherapy and IV chemotherapy in insured, low- income patients with breast cancer or colon cancer using South Carolina (S.C.) Medicaid claims data.  METHODS: Patients with breast or colon cancer and receiving oral chemotherapy (capecitabine and oral cyslophosphamide) or conventional IV chemotherapy (5-FU and cyclophosphamide) were identified from S.C. Medicaid for years 2006-2009. Total costs, including inpatient, outpatient and prescription drugs, for one year follow-up period after initiation of chemotherapy were calculated. A multiple linear regression model with log transformation was used to examine the association between total costs and chemotherapy (oral vs. IV).  RESULTS: A total of 1219 patients (857 for breast cancer, 362 for colon cancer) were identified from S.C. Medicaid claims data for years 2006-2009. The unadjusted annual total costs were $45,535(oral) and $59,498 (IV, p<0.001) for breast cancer, and $50,385 (oral) and $56,347 (IV, p=0.274) for colon cancer. Oral chemotherapy was associated with 36% and 43% reduction in cost for Medicaid breast and colon cancer patients respectively after adjusting for confounders.  CONCLUSIONS:  Total cost savings might be achieved in insured, low- income patients receiving oral chemotherapy to treat breast and colon cancers. Further studies are needed to link the costs to clinical outcomes and adverse drug events associated with chemotherapy.