Background: Diffusion of new drugs in the health care market affects patients' access to new treatment options and health care expenditures. We examined how a new drug class for diabetes mellitus, thiazolidinediones (TZDs), diffused in the health care market in Taiwan. Methods. Assuming that monthly hospital prescriptions of TZDs could serve as a micro-market to perform drug penetration studies, we retrieved monthly TZD prescription data for 580 hospitals in Taiwan from Taiwan's National Health Insurance Research Database for the period between March 1, 2001 and December 31, 2005. Three diffusion parameters, time to adoption, speed of penetration (monthly growth on prescriptions), and peak penetration (maximum monthly prescription) were evaluated. Cox proportional hazards model and quantile regressions were estimated for analyses on the diffusion parameters. Results: Prior hospital-level pharmaceutical prescription concentration significantly deterred the adoption of the new drug class (HR: 0.02, 95%CI = 0.01 to 0.04). Adoption of TZDs was slower in district hospitals (HR = 0.43, 95%CI = 0.24 to 0.75) than medical centers and faster in non-profit hospitals than public hospitals (HR = 1.79, 95%CI = 1.23 to 2.61). Quantile regression showed that penetration speed was associated with a hospital's prior anti-diabetic prescriptions (25%Q: 18.29; 50%Q: 25.57; 75%Q: 30.97). Higher peaks were found in hospitals that had adopted TZD early (25%Q: -40.33; 50%Q: -38.65; 75%Q: -32.29) and in hospitals in which the drugs penetrated more quickly (25%Q: 16.53; 50%Q: 24.91; 75%Q: 31.50). Conclusions: Medical centers began to prescribe TZDs earlier, and they prescribed more TZDs at a faster pace. The TZD diffusion patterns varied among hospitals depending accreditation level, ownership type, and prescription volume of Anti-diabetic drugs.