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News
A federal audit reveals Medicare's Part D program paid nearly $588 million over three years for drugs that had already switched to over-the-counter status — meaning they were never eligible for coverage. The HHS Office of the Inspector General blamed CMS for relying on outdated FDA data and failing to notify plans to stop reimbursing these drugs. CMS has agreed to issue corrective guidance.
Medicare's prescription drug program has a costly blind spot. A new audit from the HHS Office of the Inspector General found that Medicare Part D paid $587.7 million between 2021 and 2023 for five drugs that had already been switched from prescription-only to over-the-counter (OTC) status — a category Part D explicitly doesn't cover. And the tab grew every year, from $184M in 2021 to $209M in 2023.
The biggest culprit? Generic versions of Voltaren, the topical arthritis pain reliever, which alone accounted for $562.1 million of the improper payments across 15.8 million prescriptions. The OIG blamed CMS for using stale FDA data to update its drug formulary lists and for never setting a deadline for plans to stop paying for newly OTC drugs.
The FDA has since issued a policy requiring generic manufacturers to update labeling within six months of an OTC switch. CMS has agreed to issue parallel guidance to Part D sponsors — though it hasn't said when.
By the Numbers:
Why it matters: With Medicare already facing a looming insolvency crisis and rising drug costs, hundreds of millions in avoidable waste is a problem the program can't afford to ignore. This audit adds pressure on CMS to modernize its oversight systems before the financial strain deepens further.
