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," Grassley said. "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," said FDA compliance lawyer Michael Levy. "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 medications and dozens of companies. Typically, the agency orders manufacturers 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 in."

"These are drugs that don't require an FDA approval," said Bill Peters, chief financial officer of Hi-Tech Pharmacal in Amityville, N.Y. "These are products with active ingredients that have been on the market for a long time." The company is moving away from older products, Peters said, and its new market offerings are FDA-approved.

Levy said the FDA is skeptical that any drugs now being sold are entitled to "grandfather" status. To qualify, they would have to be identical to medications sold decades ago in formulation and other important aspects.

The agency 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.

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 medicines 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 medicines.

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

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On the Net:

FDA's unapproved drugs page: tinyurl.com/4tv2sb