OBJECTIVES: Using a sample of adult Medicaid enrollees, this study examined physician prescribing practices associated with MDD. We compared behavioral, physical, and pharmacy service use and cost outcomes associated with different prescribing patterns. Specifically, we examined three cohorts of enrollees: 1) persons with MDD; 2) persons with diabetic peripheral neuropathy (DPN); and 3) persons with MDD and DPN. We compared outcomes for patients prescribed Duloxetine to those prescribed other antidepressant medications. METHODS: The sample included 32,663 patients diagnosed with MDD and or DPN who were enrolled in the Florida Medicaid Program during FY2003-05. Three years of claims data were used to compare demographics, diagnostic characteristics, antidepressant medication use, and service expenditures six months prior to and one year after the index prescription event. RESULTS: Among persons diagnosed with MDD, the majority (84.5%) received SSRIs alone or in combination with other antidepressants, 29.2% received SNRIs alone or in combination, and 15.3% received TCAs alone or in combination. A large majority (86.5%) also received prescription pain medication. Of these patients, more than half received prescription narcotics on a daily basis. Predictors of increased service use and cost following initiation of antidepressant treatment included older age, female gender, and pre-index prescription costs. Results indicated physical health care costs increased after any switches in antidepressants. However, behavioral health costs decreased for all treated patients over time, most dramatically for inpatient service expenditures. Patients receiving Duloxetine reduced their narcotic use following treatment, while patients receiving other antidepressant medications maintained or increased narcotics use. CONCLUSION: Current data indicates many patients with MDD also experience chronic pain conditions requiring narcotics or other pain medications. SNRI's may facilitate a reduction in pain medication use and therefore might be the antidepressant of choice for patients with co-morbid MDD and chronic pain.