Drug prices & Part D
Medicare Drug Plans Paid 587.7 Million Dollars for Prescriptions That Had Already Gone Over the Counter, OIG Finds
A federal audit found that from 2021 through 2023, Part D plans paid hundreds of millions of dollars for five drugs that had already switched from prescription-only to over-the-counter status, because CMS did not update its reference files quickly enough.
By the Goodsurance editorial teamAugust 28, 2026
The HHS Office of Inspector General published a report in August 2026 finding that Medicare Part D prescription drug plans made an estimated 587.7 million dollars in ineligible payments from 2021 through 2023 for five drugs that the FDA had switched from prescription-only to over-the-counter status. Because Part D covers only prescription drugs, payments for medications available over the counter are not eligible under the benefit. The largest share of the spending, roughly 562.1 million dollars, was tied to a topical arthritis pain medication and its generic versions. Those products were prescribed approximately 15.8 million times over the three-year audit period. The OIG identified two root causes: CMS updated its Part D Formulary Reference File using FDA data that still carried outdated prescription-only labeling codes after the drugs had already moved to over-the-counter, and CMS did not set any deadline by which Part D plan sponsors were required to stop paying for drugs sold under obsolete prescription labels. The OIG recommended that CMS create a procedure requiring Part D sponsors to reject payments for drugs that have transitioned to over-the-counter status, even when older prescription-only codes remain in circulation. CMS neither agreed nor disagreed with the recommendation.
OIG: Medicare drug plans paid nearly 588 million dollars for over-the-counter products from 2021 to 2023. CMS was too slow to update its reference records.
In plain words
From 2021 to 2023, Medicare drug plans paid nearly 588 million dollars for drugs that no longer needed a prescription. Those drugs were already on store shelves as over-the-counter products. Medicare should not pay for those. The biggest amount, about 562 million dollars, was for a gel used to treat arthritis pain. Federal auditors say CMS was too slow to update its records after those drugs changed status. CMS was asked to fix the problem but did not say yes or no.
Understand the basics first
Source: OIG
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