Medicaid Paid Nearly A Lot For Unapproved Drugs

Ruzanna Harutyunyan's picture

Medicaid paid nearly $198 million from 2004 to 2007 for more than 100 unapproved prescription drugs for beneficiaries, according to an Associated Press analysis of federal data, the AP/San Francisco Chronicle reports.

The drugs in question, most of which are used to treat common conditions such as colds and pain, have been on the market before the early 1960s when FDA enhanced restrictions on pharmaceuticals. The drugs have not been evaluated by FDA for safety or effectiveness and could put beneficiaries at risk of adverse events or, in some cases, death.

For the report, AP checked medications covered by Medicaid from 2004 to 2007 against FDA databases and used agency guidelines to determine if the medications had been approved. Data for 2008 were not available. According to AP, unapproved drugs comprise about 2% of those sold in the U.S., or about 72 million prescriptions each year. In most cases, doctors, pharmacists and patients are not aware that these drugs are not approved. "Over the years, they have become fully entrenched in the system," Patti Manolakis, a North Carolina pharmacist, said.

FDA has implemented a program to "weed out drugs it had never reviewed scientifically," but many have "continued to escape scrutiny," and "conflicting federal laws" allow Medicaid to continue paying for them, the AP/Chronicle reports. FDA estimates there could be thousands of drugs sold in the U.S. that never have been approved. Many manufacturers claim their drugs were "grandfathered in" under earlier laws and exempt from FDA regulation. However, FDA compliance lawyer Michael Levy questioned the grandfather status of unapproved drugs, saying that to qualify, the drugs would have to be exactly the same in formulation and other aspects as medications sold decades ago.



Critics say that FDA's "case-by-case approach" is ineffective and that the agency must create a comprehensive list of drugs that have not been approved to ensure that Medicaid and private insurers do not pay for them, according to the AP/Chronicle. Jon Glaudemans, senior vice president of Avalere Health, said, "FDA does not appear to have a systematic mechanism to report these drugs out, and there doesn't seem to be a systematic process by which health insurance programs can validate their status," adding, "And everyone is pointing the finger at someone else as to why we can't get there."

The agency says it would be difficult to create such a list because drugmakers do not list unapproved products with the agency. The analysis found that some of the drugs are listed, which could provide a "possible starting point" for such a list, the AP/Chronicle reports. Levy said, "The situation is complicated by the fact that Medicaid and Medicare have a different regulatory regime than FDA does," adding, "There are products that we may consider to be illegally marketed that could be legally reimbursed under their law."

Medicaid officials say Congress needs to step in to help address the matter. Medicaid Chief Herb Kuhn said, "I think this is something we ought to look at very hard, and we ought to fix it." He added, "It raises a whole set of questions, not only in terms of safety, but in the efficiency of the program -- to make sure we are getting the right set of services for beneficiaries." Senate Finance Committee ranking member Chuck Grassley (R-Iowa) has asked the HHS Office of Inspector General to investigate the issue. Grassley said, "The problem I see is bureaucrats don't want to make a decision.

There is no reason why this should be such a house of mirrors when so much public money is being spent" (Alonso-Zaldivar/Bass, AP/San Francisco Chronicle, 11/24).

Reprinted with permission from You can view the entire Kaiser Daily Health Policy Report, search the archives, and sign up for email delivery at . The Kaiser Daily Health Policy Report is published for, a free service of The Henry J. Kaiser Family Foundation. © 2007 Advisory Board Company and Kaiser Family Foundation. All rights reserved.