Abstract Purpose This study introduces a novel approach to address unmeasured confounding in terminal event studies using the prior event rate ratio (PERR) method. The proposed approach PERR_{proxy} used a proxy event to replace the original terminal event in the pre-exposure period, enabling the application of PERR in terminal event settings. Additionally, we also applied difference in difference (DID) regression, which is conceptually analogous to PERR to estimate the standard errors and confidence intervals of PERR_{proxy}. Methods We conducted numeric simulations to evaluate the validity of PERR_{proxy} approach and assessed its performance under varying levels of unmeasured confounding effects, baseline hazard ratios, and the correlation between the proxy and terminal events. To demonstrate its practical applicability, we also performed an empirical analysis to investigate the impact of severe hospitalized COVID-19 on circulatory system disease mortality using the PERR_{proxy}. Results In simulation studies, PERR_{proxy} effectively reduced the unmeasured confounding effects compared to the conventional methods. The performance of PERR_{proxy} was influenced by the strength of unmeasured confounding, baseline hazard ratios, and the correlation between the proxy and terminal outcomes. In addition, difference in difference (DID) regression had much faster computational speed for estimating standard errors and confidence intervals compared to bootstrap. In the empirical analysis, PERR_{proxy} identified that severe hospitalized COVID-19 as a significant risk factor for the circulatory system disease mortality and reduced the unmeasured confounding effects. Conclusions The PERR_{proxy} approach extends the applicability of the original PERR method to terminal event studies, offering a promising solution for addressing unmeasured confounding. Additionally, the DID regression framework provides a computationally efficient alternative for parameter estimation in PERR-based studies. However, careful consideration is still required in PERR_{proxy} for proxy events selection and other underlying assumptions of the PERR method to ensure valid results. Keywords: prior event rate ratio, unmeasured confounding, proxy event, terminal event study, observational study, electronic health records