OBJECTIVE: Measure the effect of non-adherence to oral antidiabetic medications on total and diabetes-attributable health care costs in a managed care population. METHODS: Using a large managed care administrative claims database, all patients with a prescription for an oral antidiabetic from January, 2000 through June, 2001 were selected (n=54,505) from among continuously eligible patients age 18 years and older. Total and diabetes-attributable costs were computed during one year of follow-up. A non-adherence variable, the total number of days that each patient was without antidiabetic medication, was computed. The computation allowed for stashing of antidiabetics within classes but not across classes (alpha-glucosidase, metformin, other secretagogues, sulfonylureas, thiazolidinediones). Multivariate log-linear regressions were estimated for costs using adherence, diabetes severity, overall comorbidity burden, hospitalization in prior six-months, concomitant insulin use, patient initiating antidiabetic therapy, insurance plan, and demographic variables. RESULTS: Overall, total and diabetes-attributable costs decreased with worsened adherence to oral antidiabetics. However, for the most costly patients (top 40%, median annual costs of $9391), there was a 1.66% increase in total costs for each 30 additional days without oral medication. Only patients with the top 10% of attributable costs had increased diabetes-attributable costs with worsening adherence. After excluding the cost of prescription antidiabetic medications, non-adherence increased costs in all but the lowest-cost patients (bottom 30%). The top 40%, with median non-drug attributable costs of $1339, realized a 6.38% cost increase with each 30 days without medication and the middle 30%, with median of $741, realized a 3.76% increase. CONCLUSIONS: During one year of follow-up, non-adherence to oral antidiabetics increased total and diabetes-attributable costs for the most resource-intensive patients but did not increase average costs for the population overall. For the 70% of patients with the highest diabetes-attributable costs, worsening adherence increased the medical services portion of diabetes-attributable costs.