OBJECTIVES: To determine the extent to which Medicare Part D affect diabetes drug use and expenditures among different racial groups in the United States METHODS: The Medical Expenditure Panel Survey data files from 2001 to 2010 were used to examine changes in diabetes drug use and out-of-pocket expenditures after Part D implementation. I employ Difference-in-Difference (DD) methodology to compare racial differences in diabetes drug use and expenditures before and after 2006 for diabetic seniors who are covered by Part D. In other words, I compare people 65 years of age and older before and after Medicare Part D implementation to find the extent to which average diabetes drug use and expenditures have changed. RESULTS: The results demonstrate that after Part D implementation diabetes drug expenditures significantly decreased for all senior participants on average by $199, and average diabetes drugs filled during the year increased by 0.2 but was not significant. Although the results show that overall diabetes drug expenditures significantly decreased for minorities by $159, DD estimates show that Part D increases diabetes drug expenditures and decreases average diabetes drug use among minorities 65 years of age and older compared to whites by $42. CONCLUSIONS: The findings demonstrate that Medicare Part D significantly reduces out-of-pocket expenditures and increases diabetes drug use, however, African-Americans and Hispanics do not benefit from this reduction. In other words, Part D did not reduce racial disparities in diabetes drug expenditures. Additionally, Part D did not have any significant effect on diabetes drug use.