INTRODUCTION – In this paper we evaluate the health effects of a large-scale subsidizing program of prescription drugs introduced in Brazil. In 2006 the federal government launched the Aqui Tem Farmácia Popular program (ATFP), a copayment system in partnership with private retail pharmacies. In the ATFP system, the government establishes a reference price for the generic version of each listed medicine. Patients pay for the difference between the retail price and 90% of the reference price – generally resulting in substantially lower prices for the patient at the pharmacy counter. The program expanded fast. A decade later, it had already reached approximately half the total number of private retail pharmacies in Brazil, and nearly 20 million users. More specifically, this paper evaluates the effects of ATFP on mortality and hospitalization by diabetes for individuals aged 40 years or more.