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OIG: Feds Paid $43.3 Million for Possibly Ineffective Drugs

 |  By cclark@healthleadersmedia.com  
   August 23, 2010

The Centers for Medicare & Medicaid Services paid $43.3 million in 2006 and 2007 for possibly ineffective prescription drugs that it shouldn't have covered because a faulty computer database did not reject payment, according to a report issued Friday by the Office of Inspector General.

These drugs, approved by the U.S. Food and Drug Administration before 1962 have subsequently been found to be less than effective. 

"Less-than-effective drugs lack substantial evidence of effectiveness for all intended purposes," the OIG report said. "Although the use of less-than-effective drugs may not cause direct physical harm to Part D beneficiaries, reliance on these drugs could be detrimental when they are used instead of drugs whose effectiveness has been verified."

The report added, "Pursuant to federal requirements, Part D should not have covered these drugs."

How the error occurred links back to the CMS' processing system, which routes Advantage Plans' prescriptions to through an "edit" program that is designed to reject the less-than-effective drugs. The program did identify and reject the vast majority of less-than-effective drugs, some 5.3 million prescriptions, but it did not identify and reject this batch valued at $43.3 million "because the Part D program used an incomplete list" of those excluded drugs and there is no definitive list of less-than-effective drugs, the OIG said.

The OIG did not give a list or name any examples of what drugs are now regarded as less-than-effective that CMS inadvertently paid for.

However, it did make two recommendations:

  1. CMS should determine whether it can impose financial adjustments on sponsors that were paid for furnishing less than effective drugs.
  1. CMS should strengthen internal controls to help ensure that drugs covered by Medicare Part D comply with federal requirements by collaborating with the FDA to create and maintain a comprehensive list of such drugs, regularly disseminate this list to all sponsors and use the list to reject payment for these drugs.

In response, then Acting CMS Administrator Marilyn Tavenner wrote the OIG in May that the agency agreed with the first recommendation. "CMS is in the process of determining whether financial adjustments would be appropriate and/or legal given the absence of a list the government can provide to sponsors regarding which drugs are indeed LTE."

But she disagreed with the second OIG recommendation.

"We do not concur that it is our responsibility to publish this comprehensive, up-to-date list of the ...LTE (less-than-effective) drugs and their respective National Drug Codes (NDCs)..." she wrote. "We believe the FDA is in the best position to accomplish this and encourage the OIG to work with FDA in recommending mechanisms to disseminate comprehensive DESI lists to all stakeholders."

The OIG subsequently modified its recommendation saying that the FDA should have a role in identifying those ineffective drugs.

Tavenner added in her letter that "the lack of a complete and accurate listing of all marketed drug products and their NDCs are of ongoing concern to CMS and Part D sponsors since the inception of the Part D program."

The report said that $115 billion for prescription drugs was billed in Medicare Part D Medicare Advantage Plans for these two calendar years.

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