This study compared drug coverage and prescription drug use by race and Hispanic ethnicity for Medicare beneficiaries with three chronic conditions: diabetes, hypertension, or heart disease. We found that among beneficiaries without any drug coverage black persons and Hispanics used 10 to 40 percent fewer medications, on average, than white persons with the same illness, and spent up to 60 percent less in total drug costs. Having drug coverage somewhat lessened these differences although the effect was consistent with only M + C prescription benefits. Substantially lower medication use remained for dually eligible black beneficiaries and Hispanics with employer-sponsored drug benefits.