Question How have second-generation diabetes drugs diffused into clinical practice among Medicare enrollees? Findings In this cross-sectional study including data for 1 & x202f;182 & x202f;233 Medicare enrollees who first received diabetes drugs between 2007 and 2015, a time before second-generation diabetes drugs had demonstrated additional cardiovascular benefits and before they were recommended by clinical guidelines, there was substantial variation in their use across practices, with most of the early use concentrated among a few high-prescribing clinicians and practices. Meaning This finding suggests that there are potential shortfalls of certain traditional cost containment mechanisms and highlights opportunities to improve the value of early diabetes care. Importance Little is known about how new and expensive drugs diffuse into practice affects health care costs. Objective To describe the variation in second-generation diabetes drug use among Medicare enrollees between 2007 and 2015. Design, Setting, and Participants This population-based, cross-sectional study included data from 100% of Medicare Parts A, B, and D enrollees who first received diabetes drug therapy from January 1, 2007, to December 31, 2015. Patients with type 1 diabetes were excluded. Data were analyzed beginning in the spring of 2018, and revisions were completed in 2019. Exposures For each patient, the initial diabetes drug choice was determined; drugs were classified as first generation (ie, approved before 2000) or second generation (ie, approved after 2000, including dipeptidyl peptidase 4 [DPP-4] inhibitors, glucagon-like peptide-1 [GLP-1] receptor agonists, and sodium-glucose cotransporter-2 [SGLT-2] inhibitors). Main Outcomes and Measures The primary outcome was the between-practice variation in use of second-generation diabetes drugs between 2007 and 2015. Practices with use rates of second-generation diabetes drugs more than 1 SD above the mean were considered high prescribing, while those with use rates more than 1 SD below the mean were considered low prescribing. Results Among 1 & x202f;182 & x202f;233 patients who initiated diabetes drug therapy at 42 & x202f;977 practices between 2007 and 2015, 1 & x202f;104 & x202f;718 (93.4%) were prescribed a first-generation drug (mean [SD] age, 75.4 [6.7] years; 627 & x202f;134 [56.8%] women) and 77 & x202f;515 (6.6%) were prescribed a second-generation drug (mean [SD] age, 76.5 [7.2] years; 44 & x202f;697 [57.7%] women). By December 2015, 22 & x202f;457 practices (52.2%) had used DPP-4 inhibitors once, compared with 3593 practices (8.4%) that had used a GLP-1 receptor agonist once. Furthermore, 17 & x202f;452 practices (40.6%) were using DPP-4 inhibitors in 10% of eligible patients, while 1286 practices (3.0%) were using GLP-1 receptor agonists in 10% of eligible patients, and SGLT-2 inhibitors, available after March 2013, were used at least once by 1716 practices (4.0%) and used in 10% of eligible patients by 872 practices (2.0%) by December 2015. According to Poisson random-effect regression models, beneficiaries in high-prescribing practices were more than 3-fold more likely to receive DPP-4 inhibitors (relative risk, 3.55 [95% CI, 3.42-3.68]), 24-fold more likely to receive GLP-1 receptor agonists (relative risk, 24.06 [95% CI, 14.14-40.94]) and 60-fold more likely to receive SGLT-2 inhibitors (relative risk, 60.41 [95% CI, 15.99-228.22]) compared with beneficiaries in low-prescribing practices. Conclusions and Relevance These findings suggest that there was substantial between-practice variation in the use of second-generation diabetes drugs between 2007 and 2015, with a concentration of use among a few prescribers and practices responsible for much of the early diffusion. This cross-sectional study examines patient, prescriber, and practice characteristics associated with first- or second-generation diabetes drug initiation.