OBJECTIVES: Few assessments of the Medicare Part D Prescription Drug Benefit have been performed. We examined the impact of the drug benefit on drug utilization and out-of-pocket expenditures. METHODS: We used pharmacy claims data from a large national pharmacy to compare drug utilization and out-of-pocket expenditures of Medicare eligible seniors in 2005 to their outcomes in 2006. We used pharmacy customers aged 60-64 during the same period as a control group to capture non-Medicare related trends in drug utilization and costs occurring during the study period. The sample represented approximately 5.1 million unique Medicare beneficiaries aged 65-90 and 1.8 million unique subjects in the control group who filled and obtained at least one prescription in pre-benefit 2005 period. RESULTS: After adjusting for individual characteristics and socio-economic characteristics of subjects' zip code of residence, preliminary analyses suggest subjects' annual drug utilization increased by 5.5% (95% confidence interval [CI] 4.7%-6.2%) and subjects' annual out-of-pocket expenditures decreased by 10.6% (CI 9.6%-11.9%) in 2006 as compared to 2005, net of non-Part D related effects. Dual eligible subjects had little to no increase in drug utilization. However, they had similar declines in out-of-pocket expenditures as the broader beneficiary population. Sensitivity analyses demonstrated that the measured impact was not due to trend differences among different age groups over the study period. CONCLUSION: Modest increases in prescription drug utilization and decreases in out-of-pocket expenditures occurred for these Medicare seniors following the implementation of the Medicare Part D Prescription Benefit. Further work is needed to examine these patterns among other beneficiaries and to evaluate the impact of these changes on health outcomes.