A new study from the Office of the Inspector General has discovered that Medicaid may be paying for drugs it shouldn't.
The study found that 38 percent of Medicaid drug reimbursement has been used to pay for medications not listed in the National Drug Code Directory issued by the Food and Drug Administration.
The OIG's study found that 62 percent of drugs paid for by Medicaid in 2008 had an approved application number in the National Drug Code directory. These drugs accounted for 75 percent of total Medicaid expenditures for prescription drugs in 2008. The remaining 38 percent either did not have an approved application number listed or were not in the NDC directoryl, the study found.
The FDA's system for collecting and maintaining drug product and approval information from manufacturers is known as the Drug Registration and Listing System (DRLS). As part of the DRLS, the FDA maintains a publicly accessible database of currently listed drugs called the National Drug Code directory. The NDC directory contains the name, the NDC (i.e., a numeric drug identifier) and the approved application number for each listed drug. The DRLS also includes nonpublic files of pending and discontinued NDCs.
To qualify for federal payments under Medicaid, drugs generally must be approved by the FDA, with certain exceptions.
In 2008, the OIG received a Congressional letter expressing concern that Medicaid pays for drugs that do not meet this criterion and requesting that the OIG examine the FDA approval status of drugs paid for by Medicaid. Previous OIG reports found problems with the accuracy and completeness of the FDA's NDC directory, which assists in determining whether drugs can be paid for under Medicaid.
OIG researchers said the new study used 2008 Medicaid use data for prescription drugs, approval and listing data from the FDA and a targeted manual review to determine the FDA approval status of drugs paid for by Medicaid.
The OIG found no approved application numbers in the FDA's NDC directory for thousands of drugs paid for by Medicaid. Twelve percent of the NDCs under review were listed in the NDC directory but did not have an approved application number, and an additional 26 percent were not listed in the NDC directory at all. As a result, Medicaid could potentially be paying for drugs that are not approved by FDA.
"Without accurate approval and listing information, it is impossible to determine whether these drugs were paid for appropriately," the OIG said.
The OIG is recommending that the FDA improve the NDC directory by conducting frequent reviews to ensure its completeness and accuracy. The OIG also recommended that the FDA work with the Centers for Medicare and Medicaid Services and Congress to seek a legislative or regulatory change that compels manufacturers to list all approved products with the FDA before they become eligible for Medicaid payment.
FDA officials said they generally agree with the OIG's recommendation to improve the completeness and accuracy of the NDC directory and are working on several strategies for evaluating and correcting drug-listing data.