Medicare Part D plans made millions in payments for drugs that were ineligible under the program, according to a new federal audit.
The Department of Health and Human Services Office of Inspector General (OIG) estimated that plans made $587.7 million in ineligible payments between 2021 and 2023 tied to five drugs that were labeled as prescription only despite being shifted to over-the-counter labeling by the Food and Drug Administration.
OIG concluded that the improper payments were made because the Centers for Medicare & Medicaid Services used obsolete FDA data on prescription-only medications, and that the agency did not set a timeline for Part D plans to reject payments that would go toward over-the-counter drugs that are labeled inaccurately.
"We conducted this nationwide audit to determine whether CMS oversight of Medicare Part D sponsors ensured compliance with Federal requirements for preventing payment for OTC drugs sold under obsolete Rx-only labeling," OIG wrote in the report.
OIG said that FDA released a policy in December that required generic drugmakers to update their labeling within six months once a drug is approved for over-the-counter use rather than prescription only.
The agency recommended that CMS issue guidance that would direct plans to reject payments for drugs that have shifted from prescription-only to OTC. CMS said it concurred with the recommendation.
OIG said that the audit was conducted after a drugmaker agreed in 2022 to $7.9 million in relation to claims submitted to Part D plans under obsolete labeling for drugs that had moved OTC.