OBJECTIVE: Exudative age-related macular degeneration (AMD) is the most common cause of blindness among older Americans in the United States. No substantive information on costs for exudative AMD was found in the literature. This study estimates incremental costs for the disease. METHODS: Seven years (1994-2000) of 5% sample of Medicare medical claims data from the Standard Analytical File (SAF) was used. We followed AMD and control patients with an index date starting in 1996 for two years. Incremental cost was defined as the excess cost for exudative AMD cohort over that of an age-gender-matched non-exudative-AMD group based on Medicare reimbursed expenditures. We also estimated the 10-year projected cost using Medical Price Index. Cost from AMD related comorbid conditions, such as depression which could worsen as the result of the progression in exudative AMD, were evaluated individually. RESULTS: A total of 3059 wet AMD patients were identified and a cohort of non-wet-AMD with same size was also created. Two years' incremental medical cost for wet AMD patients compared to the controlled cohort is $2689, including $485 (18%) for inpatient hospital, $1132 (42%) for outpatient hospital, and $1034 (38%) for office visits. The 10-year projected cost was $16,148, including $6,795 for outpatient hospital and $6,207 for office visit. Incremental cost of depression almost doubled 1 year after the diagnosis of wet AMD, increasing from $64/year to $118/year. CONCLUSION: Excess cost for wet AMD after initial diagnosis was substantial. This research does not incorporate Medicaid covered expenses and out of pocket costs. With the aging population and people living longer, the economic burden of this disease will increase. This information may help researchers and policy makers in assessing benefit and increase use of approved AMD therapies, such as Macugen (pegaptanib sodium) to help determine the clinical and economic benefits to patients and society.