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A new federal watchdog audit found a careless and costly gap in how Medicare Part D paid for drugs. The HHS Office of Inspector General says Part D plans paid about $587.7 million for products that had already become over‑the‑counter (OTC) but were still billed under old prescription‑only codes. The payments happened during calendar years 2021 through 2023 and, for now, the money won’t be clawed back because the plans followed the rules that were on the books at the time.
What the OIG audit found — big bill, familiar names
The audit matched prescription drug events to drug codes and found roughly 16.8 million fills tied to five drugs that had gone OTC. The lion’s share — about $562.1 million — was for generic versions of Voltaren (diclofenac). The rest involved common allergy and lice treatments. Spread across roughly 56 million Part D enrollees, the total works out to about $10.50 per person. That math makes the mistake look small per enrollee, but $587.7 million is still real money heading out the door for drugs you can buy off the shelf.
How it happened — FDA timelines and CMS silence
The OIG traced the problem to two basic failures: the Food and Drug Administration didn’t have a firm deadline for generic makers to update their labeling after a brand name drug went OTC, and the Centers for Medicare & Medicaid Services hadn’t told Part D plans when to stop paying under obsolete prescription codes. FDA later set a six‑month expectation for generic labeling updates, and CMS has said it will issue guidance. But the payments already happened because government data and guidance lagged behind reality.
No recovery now — and a weak fix on the way
The OIG declined to demand repayment because Part D sponsors followed the CMS Formulary Reference File and guidance in place at the time. CMS told the inspector general it agreed with the recommendation to give plans a deadline to reject outdated prescription codes. That’s fine — in theory. In practice, agencies love to “concur” and then file away the work. There is precedent where enforcement hit a manufacturer that kept selling under old labels, but for these audited years the money stays paid and officials promise future fixes instead of immediate accountability.
Opinion: Tiny cost, big problem — and who will pay the price?
Yes, $10.50 per enrollee sounds trivial. But the real issue is the attitude: a tangle of bureaucracy that lets predictable waste slide because “that’s how the rules read.” If regulators can’t keep drug codes up to date, then someone needs to answer for sloppy systems and slow policy. Here’s the practical fix: enforce the FDA six‑month rule, make CMS set clear cut‑off dates, and require plans to hard‑block obsolete prescription NDCs in claims systems. If that sounds like common sense, it’s because it is. The public deserves agencies that act faster than they write polite memos promising to act later. Until then, taxpayers and patients pay the bill for government’s timetable.
