OIG identifies $587.7 million in Part D payments involving obsolete prescription labeling

What happened

An OIG audit issued August 31 and posted September 2, 2026 found $587.7 million in ineligible Part D payments for five drugs during 2021–2023. Sponsors continued paying more than a year after the corresponding brand-name products switched to over-the-counter use, while generic products retained obsolete prescription-only labeling. Part D does not cover products that can be purchased without a prescription. The audit concerns the five identified drugs and period; the amount is an audit finding, not a newly imposed sponsor fine or a report of money already recovered.

OIG identified two oversight gaps: CMS's formulary reference file relied on obsolete FDA prescription-status data, and CMS had not set a timeframe for sponsors to reject these payments after an Rx-to-OTC switch. OIG recommended CMS issue such timeframe guidance, and CMS concurred. The report also describes FDA's December 2025 manufacturer policy requiring labeling updates as early as possible and within six months of the brand switch. That manufacturer-labeling period is distinct from the sponsor-rejection guidance OIG recommended; the audit does not itself create a universal six-month Part D rejection deadline.

Why it matters

Drug-status reference data can lag regulatory changes. Manufacturer labeling duties and sponsor claim-eligibility instructions require separate monitoring.

Sources

• Part D payments for OTC drugs under obsolete prescription labelingOfficial · HHS OIG · 2026-09-02 · Source review 2026-09-06