OBJECTIVES: Outcomes in asthmatic patients may vary depending on the controller medication used. Observational studies of outcomes of asthma therapy are needed to understand the implications of choice of controller in different populations. This study compared asthma-related health care costs and medication compliance between patients newly started on montelukast compared to low-dose fluticasone propionate as controller therapy in Medicaid-enrolled asthmatic patients previously using only short-acting beta-agonists. METHODS: Using data from the North Carolina Medicaid program, we identified continuously enrolled asthmatic patients starting either fluticasone propionate 44 mg (FP 44), an inhaled corticosteroid,(n=353) or montelukast 5 and 10 mg, an oral leukotriene modifier, (n=525) in the year 1998. Patients were followed for 1-year pre and post controller initiation for health care service utilization, medication refill patterns, and costs. A mixed modeling procedure with indicator variables to adjust for potential confounders was used to determine the adjusted cost impact of therapy initiation. RESULTS: The average asthma-related health care costs were $1199 ($1180 for FP, $1212 for montelukast) in Year 1. These costs increased to $1342 ($1235 for FP, $1415 for montelukast) in Year 2. There were no significant differences in the adjusted asthma-related health care costs. In both groups, physician visits were significantly higher in Year 2 (50% increase for FP, 23% for montelukast, both p<0.01). However, even after allowing for a wider compliance range for FP (50-150%) compared to montelukast (80-120%), we found montelukast users to be more compliant with therapy in Year 2 (RR: 1.97; 95% CI: 1.25, 3.13) CONCLUSIONS: Although there were no cost or health care utilization differences between the two groups in the post-controller initiation year, montelukast use was associated with significantly better treatment compliance than FP use, which could have significant implications for long-term patient outcomes and costs in Medicaid-enrolled asthmatic patients.