The OIG has issued a report that examined Medicare Part B drug pricing when a new generic drug enters the market, based upon an examination of Medicare payment for irinotecan, an injectable cancer drug.  The FDA approved the first generic version of irinotecan on February 20, 2008. The OIG looked at the difference between the Medicare payment amount and manufacturer-reported sales prices during March 2008, when the generic version was available for purchase but yet reflected in the Medicare average sales price because of a two-quarter lag in the payment system. The OIG found that the Medicare payment amount for irinotecan was more than double the OIG-calculated average manufacturer sales price. The OIG noted that CMS’s current authority to address such payment disparities is limited, since time is needed for the OIG to collect payment data, and any resulting pricing changes would not take effect until the quarter after OIG provides the data to CMS. The OIG therefore recommends CMS explore alternative options to address pricing discrepancies arising from newly available generic drugs, which may include seeking a legislative change. CMS concurred with the OIG’s recommendation.