Coverage for OTCs Moves Forward

Several recent news items from PharmacyOneSource.com indicate a positive outlook regarding payment for OTC medications. A new ruling by the IRS and an announcement by Blue Care Network of Michigan have opened the door for health care coverage of OTC medicines. The IRS has reinterpreted an existing law and ruled that expenses for OTC drugs may be paid from health flexible spending arrangements (FSAs), which are classified as pretax spending. The ruling clarified that FSAs may pay for legally obtained medicines, regardless of whether they are prescribed by a doctor. The IRS also indicated that dietary supplements are not included in this ruling by distinguishing between OTCs necessary for medical care (such as antacids, allergy, cold and pain medicines) from others that are merely beneficial to general health. Employers will need to evaluate their health FSAs and determine whether to make the change. In another move noted in Managed Care Weekly Digest, Blue Care Network of Michigan announced that it will now pay for two widely used OTC drugs, Claritin® and Prilosec®. Blue Care indicated that these drugs are cost-effective OTC alternatives to other prescription drugs for the same indications. Both of these announcements are exciting news for patients who have been caught in a financial bind when these medications were switched to OTC status. Return to Top