According to the Office of Inspector General (OIG) of the Department of Health and Human Services, Medicare overpaid for prescription drugs with new generic versions, because of delays in updating its pricing formula. (Kaiser Network)

For example, Medicare overpaid $6.5 million for the cancer drug irinotecan. A generic version was approved, but new generic prices were not integrated right away. Medicare paid $126 a dose, although generic prices averaged $41.

According to the 20-page report (PDF), Medicare probably is overpaying for other prescription drugs. The OIG suggests, among other things, that Medicare find a way to rectify price discrepancies in a more timely fashion.