Osteoporosis is a significant public health problem in the U.S. It not only affects the physical well-being of the older women but also creates a substantial financial burden for the health care system. The mainstay of osteoporosis medications is bisphosphonate treatment of which alendronate and risedronate are the most commonly prescribed in clinical practice. However, there have been no head-to-head randomized controlled trials (RCTs) evaluating the effects of these two bisphosphonates on fracture outcomes. In the absence of RCTs, observational studies are necessary to provide alternative evidence on the comparative effectiveness between alendronate and risedronate on fracture outcomes. However, existing observational studies have provided inconclusive results partially due to residual confounding from unobserved variables such as patients’ health status or behavior. IV analysis may be one method to address unmeasured confounding bias in observational studies. While it has not been applied in bisphosphonate research, it has been used in research on a variety of other prescription medications. In this dissertation, we applied the IV approach with an IV, date of generic alendronate availability, to evaluate the comparative effectiveness between alendronate and risedronate using observational data. This dissertation improved current research in several ways. First, we extended the IV approach to research on bisphosphonates. Second, compared with the current observational studies on bisphosphonates, this dissertation may more accurately estimate the relative effects between alendronate and risedronate because IV analysis is not subject to unmeasured confounding bias. Third, the study results extended the current evidence of the comparative effectiveness between the two most commonly prescribed bisphosphonates. Finally, we proposed and provided empirical evidence of a new IV that might be used for future prescription drug research. The finding of this dissertation can be summarized from three aspects. First, we found that the evidence supported the validity of the date of generic availability as an IV in the study of bisphosphonates. Second, applying IV approach to study the comparative effectiveness of alendronate and risedronate, we found that alendronate and risedronate were comparable to reduce the risk of 12-month non-vertebral fractures in older women. Since generic alendronate is availability on the market while generic risedronate is not, promoting the use of alendronate may help reduce the healthcare cost and not sacrifice the clinical effectiveness. Finally, by comparing the proposed IV with a popular IV-physician preference, we found that both the calendar time IV based on the date of generic availability and the physician preference appeared to be valid. It might be practically easier to use the calendar time IV than the physician preference IV.