OBJECTIVES: Outcomes in patients with type 2 diabetes may vary according to the type of pharmacotherapy. The study examined the differences in medication adherence and the total health care costs in patients with type 2 diabetes who switched from oral anti-diabetic medications (OAD) to insulin vial/syringe therapy vs. those who converted from OAD to insulin pen therapy. METHODS: The study comprised of patients with type 2 diabetes who were enrolled in the North Carolina Medicaid program from September 24, 2001 to July 18, 2006. Patients who switched from OAD to syringe (n=1162) were pair-matched with those who switched from OAD to pen group by age, total health care costs and diabetes related costs. All included patients had complete enrollment for 24 months of follow up. Multiple linear regression models were used to predict the impact switching therapies on individual outcomes (i.e. total health care costs and medication adherence) for each cohort using propensity scores as covariates. The adjusted means were calculated to determine the group differences across different outcomes. RESULTS: Medication adherence was comparable for patients who switched to pen vs. syringe (53% vs. 50% respectively). The total health care costs for patients on pen therapy was significantly lower than those on syringe insulin (($14,857.42 vs. $31,764.78 respectively; p <0.001). considerable costs savings with pen therapy were reflected in hospital costs (1,195.93 vs. 4,965.31 respectively; p<0.01), clinic costs ($1,086.80 vs. $3,685.17 respectively; p<0.05), diabetes related costs (7,324.37 vs. 13,762.21 respectively; p<0.01) and outpatient costs (7,795.98 vs. 13,103.51 respectively; p<0.01). CONCLUSION: Even though medication adherence was similar in both the groups, switching to pen therapy reflected significant reduction in health care services utilizations and associated costs. Health care professionals and policy makers should consider initiating pen therapy in patients who fail to respond to OADs.