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The nature and extent of prescription drug benefits for the elderly are a continuing concern for health-care managers and policy makers. This study examined the impact of increased prescription drug cost-sharing on the drug and medical care utilization and expenses of the elderly.Two groups of well-insured Medicare risk-based members of a large health maintenance organization (HMO) had their copayments increased in different years during a 3-year period. Four 2-year analysis periods were established for comparing these elderly groups. During one analysis period, copayments did not change in either group.Moderate increases of from $1 to $3, from $3 to $5 per copayment, and from 50% per dispensing to 70% per dispensing with a maximum payment per dispensing resulted in lower annual per capita prescription drug use and expenses. No consistent annual changes were observed in either medical care utilization (office visits, emergency room visits, home health-care visits, hospitalizations) or total medical care expenses across analysis periods.No consistent relationships were observed between increased copayments per dispensing and medical care utilization and expense. Future research needs to address the impact on the classes of medications received and related health status, and the impact of larger increases in copayments per dispensing on medical care and health-related factors.