OBJECTIVES: Economic benefits of early initiation of inhaled corticosteroids (ICS) treatment in patients diagnosed with Chronic Obstructive Pulmonary Disease (COPD) were assessed using a large managed care claims database. METHODS: Early initiation was defined as beginning ICS within three months of initiation of regular bronchodilators and was compared with patients who initiated ICS therapy thereafter. To avoid biases due to the treatment selection, a propensity-score-matching technique was used. Exacerbation risks and other resource utilization per person-year were compared between the two groups. A two-part model with multivariate logistic and generalized linear model (GLM) regression was used to estimate differences in medical, pharmacy, and total service costs. RESULTS: A total of 7712 matched COPD patients with comparable background characteristics were identified. Early initiation of ICS was associated with lower exacerbation risks and resource utilization. Patients who started ICS within three months had more ICS prescriptions (3.7 vs. 2.4 prescriptions per year) and higher pharmacy costs ($4077 vs. $3868: mean difference +$209, p<0.05). However, because of lower medical services use, early initiation of ICS could save medical costs ($13,837 vs. $14,925: mean difference -$1.089; p<0.05) and total costs ($17,994 vs. $18,883: mean difference -$889; p<0.05). The same trends were observed for services directly attributable to COPD conditions. CONCLUSION: Initiating ICS earlier than the current clinical guideline recommendation may be beneficial to avoid exacerbations and reduce treatment costs.