States must, the OIG said, "assure that claims submitted by pharmacists are not for drugs dispensed after the termination date. These should be rejected as invalid since these drugs cannot be dispensed after this date."
"We acknowledge that a pharmacy could potentially bill for an NDC that does not precisely correlate with the product dispensed. However, when a pharmacy bills for a terminated drug, CM should reject the PEDE data, as well as the sponsor's payment, for that drug... CMS is responsible for ensuring that drugs dispensed to Part D beneficiaries are safe and effective."
The OIG report emphasizes that CMS has issued guidance to states prohibiting payment for terminated drugs under Medicaid, but has not issued any such guidance or regulation for Medicare Part D.
Each drug is required by regulation to have an expiration date to ensure the drug meets certain standards, including strength and quality, at the time of its use, so these expiration dates in effect establish a shelf life for each drug.
The OIG audit was based on approximately $115 billion in gross drugs purchased for calendar years 2006 and 2007.