The U.S. Department of Health and Human Services Office of Inspector General released an audit covering calendar years 2021‑2023 that uncovered $587.7 million in payments made by Medicare Part D sponsors for drugs still carrying obsolete prescription‑only labeling.
What the audit revealed
Medicare Part D, the federal prescription‑drug benefit administered through private sponsors, serves roughly 56 million older adults and people with long‑term disabilities. The audit shows the improper payments represent about 0.16% of the $360 billion in total Part D benefits paid during the same period, or roughly $10.50 per enrollee.
The bulk of the payments—$562.1 million—were tied to generic versions of Voltaren, a topical arthritis pain medication, spanning 12 drug codes and nearly 16 million prescription drug events. The remaining $25.6 million involved four other drugs: Pataday and Lastacaft (eye‑drop treatments), Astepro (a nasal spray for hay‑fever symptoms), and Sklice (a lotion for head lice).
Why the payments occurred
CMS relied on FDA data to identify drugs that had transitioned from prescription‑only to over‑the‑counter status. However, the FDA did not establish a specific timeframe for generic manufacturers to update their labeling after a brand‑name switch until a six‑month policy took effect on December 8, 2025. As a result, some manufacturers continued to sell OTC drugs under outdated prescription‑only codes.
“FDA did not set a timeframe until it issued the 6‑month policy effective on December 8, 2025,” said Melissa Rumley, spokesperson for the inspector general’s office. “Consequently, some generic drug manufacturers kept producing and selling OTC drugs as Rx‑only inventories under NDCs associated with obsolete Rx‑only labeling.”
Government response
CMS has not yet issued a deadline for Part D sponsors to stop paying for drugs with outdated prescription‑only codes. Administrator Dr. Mehmet Oz, in a July 20 letter, concurred with the inspector general’s recommendation that CMS issue guidance setting a clear timeframe for sponsors to reject such payments. The recommendation remains open, with an update expected by February 27, 2027.
The audit follows a 2022 settlement in which drug maker Akorn agreed to pay $7.9 million for false Medicare claims related to similar labeling issues.
Looking ahead
The inspector general’s tracker indicates that the policy gap will persist until CMS releases its promised guidance. In the meantime, the $587.7 million in payments will not be recovered because they complied with the guidance that was in place at the time.
Original reporting: KTBS 3 (Shreveport) — read the source article.
