The Internal Revenue Service has issued guidance to manufacturers and importers of branded prescription drugs on the annual fee imposed by the health care law.
Notice 2010-71 provides guidance regarding the annual fee imposed by Section 9008 of the Patient Protection and Affordable Care Act on manufacturers and importers of branded prescription drugs that sell these drugs to or pursuant to coverage under Medicare Part B and D programs, Medicaid, the Department of Veterans Affairs, the Department of Defense, and TRICARE.
This notice includes a proposed methodology for calculating the fee, an explanation of how this methodology will be used to provide a preliminary 2011 fee calculation, and a request for comments on the notice.
There are two years relevant to the calculation of the section 9008 fee – the calendar year in which the fee must be paid and the calendar year of the branded prescription drug sales, which will be used to determine the amount of the fee.
The IRS and the Treasury Department are proposing to use the second calendar year preceding the fee year as the sales year for purposes of calculating the Section 9008 fee. An adjustment amount will also be calculated.
The IRS and the Treasury Department have determined that, although the Department of Defense and the Department of Veterans Affairs are expected to have complete data on branded prescription drug sales for the calendar year immediately preceding the fee year within the time frame necessary to administer the fee, the Centers for Medicare and Medicaid Services is not expected to have comparable data because it cannot complete its data processing within the necessary time frame.
Accordingly, the IRS and the Treasury Department will calculate the fee based on the branded prescription drug sales data provided by the agencies for the second calendar year preceding the fee year.
Because the use of the second preceding year, rather than the immediately preceding year, as the sales year may affect the amount of the fee paid by any particular covered entity, the fee due in every year after 2011 will include an adjustment amount.
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