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Medication adherence has been identified as a major factor influencing health outcomes in patients with type 2 diabetes.We assessed the relationship between initial adherence to oral antihyperglycemic medications and subsequent health outcomes.This was a retrospective cohort study of 40,082 patients enrolled in Korea's national health insurance program, who were 20 years of age or older and first diagnosed with type 2 diabetes in 2004. The patients were followed up for 3 years using claims data to measure adherence to oral antihyperglycemic medications for the initial 2 years after diagnosis and to investigate hospitalization, mortality, and healthcare costs in the third year of follow-up.After adjusting for confounders, nonadherence in the first 2 years after prescription increased the risk for hospitalization in the third year compared with adherence over the same period [odds ratio (OR)=1.26, 95% confidence interval=1.08-1.47]. Nonadherence in at least one of the 2 years increased the risk for hospitalization compared with adherence in both years. In addition, nonadherence during both the first and second years was associated with statistically significantly greater risks for mortality during this period than was adherence (odds ratio=1.40, 95% confidence interval=1.01-1.95). Medication adherence decreased healthcare costs compared with nonadherence (β=−0.127; P<0.001).Because improved medication adherence can produce better health outcomes for diabetes patients and also save national healthcare resources, government-sponsored healthcare policies to improve medication adherence among newly diagnosed diabetes patients are urgently required.