During 2004-2006, two hypomethylating agents (HMAs) were approved for the treatment of myelodysplastic syndromes (MDS) in the United States. We assessed the impact of HMAs on the cost of care and survival of MDS patients, by constructing a cohort of patients who were diagnosed during 2001-2007 (n=6556, age ≥66.5 years) and comparable non-cancer controls. We assessed MDS patients' and controls' Medicare expenditures to derive MDS-related cost. We evaluated the two-year survival of patients as a group and by major subtypes. Taking into account the survival probabilities of MDS, the expected MDS-related 5-year cost was $63,223 (95% confidence interval: $59,868-66,432 in 2009 dollars), higher than the reported comparable cost for any of the 18 most prevalent cancers in the United States. Compared with MDS patients diagnosed in the earlier period (January 2001-June 2004) who received no HMAs, patients diagnosed later (July 2004-December 2007) who received HMAs had a significantly higher 24-month cost ($97,977 vs. $42,628 in 2009 dollars) and an improved 24-month survival (especially among patients with refractory anemia or refractory anemia with excess blasts). The magnitude of the cost of care underscores a need for comparative cost-effectiveness studies to reduce the clinical and economic burden of MDS.