Taxpayers have shelled out at least $200 million since 2004 for meds that have never been reviewed by the government for safety and effectiveness but are still covered under Medicaid, according to an Associated Press analysis of federal data. And millions of private patients are also taking the drugs.

The availability of unapproved prescription drugs to the public may create a dangerous false sense of security. Dozens of deaths have been linked to them. The med date back decades, before the FDA tightened its review of drugs in the early 1960s. The FDA says it is trying to squeeze them from the market, but conflicting federal laws allow Medicaid to pay for them, the AP writes.

The AP analysis found Medicaid paid nearly $198 million from 2004 to 2007 for more than 100 unapproved drugs, mostly for common conditions such as colds and pain. Data for 2008 were not available but unapproved drugs still are being sold. The AP checked meds against FDA databases, using agency guidelines to determine if they were unapproved. The FDA says there may be thousands of such drugs on the market.

Medicaid officials acknowledge the problem, but say they need help from Congress to fix it. The FDA, meanwhile, has yet to compile a master list of unapproved drugs, and Medicaid - which may be the biggest purchaser - keeps paying. “I think this is something we ought to look at very hard, and we ought to fix it,” Medicaid chief Herb Kuhn tells the AP. “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.”

The FDA estimates unapproved drugs account for 2 percent of all prescriptions filled by US pharmacies, about 72 million scrips a year. Private insurance plans also cover them. And the Medicaid payments amount to an unplugged leak in the system, which the US Senate Finance Committee has asked the HHS inspector general to investigate (back story).

The roots of the problem go back in time, tangled in layers of legalese, the AP writes. It wasn’t until 1962 that Congress ordered the FDA to review all new meds for effectiveness. Thousands of drugs already on the market were also supposed to be evaluated. But some drugmakers claimed their meds were “grandfathered” under earlier laws, and even under the 1962 bill.

In the early 1980s, a safety scandal erupted over one of those medications. E-Ferol, a high potency vitamin E injection, was linked to serious reactions in some 100 premature babies, 40 of whom died. In response, the FDA started a program to weed out drugs it had never reviewed scientifically. Yet some medications continued to escape scrutiny, according to the AP.

Sometimes, the meds do not help patients. In other cases, the FDA tells the AP, the drugs have made people sicker, maybe even killed them. This year, for example, the FDA banned injectable versions of a gout drug called colchicine after receiving reports of 23 deaths. Investigators found the unapproved drug had a very narrow margin of safety, and patients easily could receive a toxic dose leading to complications such as organ failure.

Critics say the FDA’s case-by-case enforcement approach is not working. “The FDA does not appear to have a systematic mechanism to report these drugs out,” Jon Glaudemans, senior vp of Avalere Health, tells the AP, “and there doesn’t seem to be a systematic process by which health insurance programs can validate their status. And everyone is pointing the finger at someone else as to why we can’t get there.”

In most cases, doctors, pharmacists and patients are not aware the drugs are unapproved. “Over the years, they have become fully entrenched in the system,” Patti Manolakis, a Charlotte, North Carolina, pharmacist who has studied the issue, tells the AP. Only a few unapproved drugs are truly essential and should remain on the market, she added.

Tackling the problem is made harder by confusing - and sometimes conflicting - laws, regulations and responsibilities that pertain to different government agencies, the AP writes. Medicaid officials said their program, which serves the poor and disabled, is allowed to pay for unapproved drugs until the FDA orders a specific medication off the market. But that can take years.

Compare that with Medicare, the health care program for older people. Medicare’s prescription program is not supposed to cover unapproved drugs. Medicare has purged hundreds of such medications from its coverage lists, but continues to find others, according to the AP.

It might be easier to sort things out if the FDA compiled a master list of unapproved drugs, but the agency hasn’t, the AP reports. FDA officials say that would be difficult because many drugmakers do not list unapproved products with the agency. Yet, the AP found many that were listed - a possible starting point for a list.

Among the drugs the AP’s research identified were Carbofed, for colds and flu; Hylira, a dry skin ointment; Andehist, a decongestant, and ICAR Prenatal, a vitamin tablet. Medicaid data show the program paid $7.3 million for Carbofed products from 2004 to 2007; $146,000 for Hylira; $4.8 million for Andehist products, and $900,000 for ICAR.

Grassley said the system is failing taxpayers and consumers. “The problem I see is bureaucrats don’t want to make a decision,” he tells the AP. “There is no reason why this should be such a house of mirrors when so much public money is being spent.” Grassley is considering introducing legislation to ensure that consumers are told when a medication is unapproved.

FDA officials say they tell Medicaid and Medicare when the agency moves to ban an unapproved drug, so the programs can stop paying. “The situation is complicated by the fact that Medicaid and Medicare have a different regulatory regime than FDA does,” FDA compliance lawyer Michael Levy tells the AP. “There are products that we may consider to be illegally marketed that could be legally reimbursed under their law.”

The FDA began its latest crackdown on unapproved drugs two years ago and has taken action against nine types of meds and dozens of companies. Typically, the AP writes, the FDA orders drugmakers to stop making and shipping drugs, and it also has seized millions of dollars’ worth of medications. But federal law does not provide fines for selling unapproved drugs, and criminal prosecutions are rare.

Some manufacturers of unapproved drugs say their products predate FDA regulation and are “grandfathered.” “These are drugs that don’t require an FDA approval,” Bill Peters, chief financial officer at Hi-Tech Pharmacal, tells the AP. “These are products with active ingredients that have been on the market for a long time.” Although, he adds Hi-Tech is moving away from older products and its new meds are FDA-approved.

Levy tells the AP that the FDA is skeptical any drugs now being sold are entitled to “grandfather” status. To qualify, they would have to be identical to meds sold decades ago in formulation and other important aspects. The FDA is targeting drugs linked to fraud, ones that do not work and, above all, those with safety risks. While the crackdown has helped, it does not appear to have solved the problem, according to the AP.

The gout drug banned by the FDA this February is not the only recent case involving safety problems. Last year, the FDA banned unapproved cough meds containing hydrocodone, a potent narcotic. Some had directions for medicating children as young as age 2, although no hydrocodone cough products have been shown to be safe and effective for children under 6.

In a 2006 case, the agency received 21 reports of children younger than 2 who died after taking unapproved cold and allergy medications containing carbinoxamine, an allergy drug that also acts as a powerful sedative. Regulators banned all products that contained carbinoxamine in combination with other cold meds.

“We as Americans have a belief that all the prescription drugs that are available to us have been reviewed and approved by the FDA,” Manolakis, the pharmacist, tells the AP. “I think the presence of these drugs shows we have a false sense of security.”

Source: The Associated Press