OBJECTIVES: CDH benefit plans use financial incentives for plan participants to reduce utilization of health services and are attractive to low utilizers. This study assesses the impact of CDH design on subsequent utilization by controlling for adverse selection with a control group. METHODS: Continuously eligible plan participants of a pharmacy-only CDH plan were analyzed as a study group identified through Caremark 2003-2004 pharmacy claims and eligibility data. A control group matched to the CDH group was drawn from the non-CDH plan participants within the same plan sponsor, using stratified random sampling within 8 groups based on age, health-risk index, prescription count and gross costs. Pharmacy utilization patterns were studied pre-to-post and compared to control. Wilcoxon rank sums test was used to assess significance of differences between groups and over time, using a p-value of 0.05 for significance. RESULTS: The control (N=2403) matched the CDH group (N=2403) in age (29.8 vs. 29.5), HRI score (4.5 vs. 3.9), and prescriptions (5.0 vs. 4.6). No baseline differences were identified (p-values from 0.1751 to 0.4564). Utilization increased between 2003 and 2004 for the control but not for the CDH group. The CDH group increased prescriptions from 4.61 to 4.90, days' supply from 101.89 to 111.60 and gross costs from $171.59 to $190.55, (p=0.7651 to 0.3501), while the control increased prescriptions from 5.03 to 5.99, days' supply from 113.89 to 142.24, and gross costs from $187.56 to $253.44, (p<.0001). Mail utilization increased for both but substantially more for CDH (57% increase vs. 19%, p<0.0001). Generic utilization and formulary compliance did not differ. Medical costs will be presented. CONCLUSION: The CDH benefit plan limited an increase in drug utilization as compared to the traditional plan. Also, mail utilization increased with CDH.