Pharmaceutical Manufacturers Fee
Starting in 2011, companies that either manufacture or import “branded prescription drugs” will be subject to a new fee that is allocated to each individual company as a percentage certain sales once the sales meet designated thresholds. The only sales counted are those to “specified government programs,” which is defined as Medicare Parts B and D, Medicaid programs, Veterans Affairs programs, the Department of Defense programs or the TRICARE retail pharmacy program. Thus, if a drug company’s sales in the private marketplace are not “branded prescription drug sales,” they are excluded in determining the amount of the fee.
Total fees to be collected vary year to year.
2011 – $2.5 billion
2012 – $2.8 billion
2013 – $2.8 billion
2014 – $3 billion
2015 – $3 billion
2016 – $3 billion
2017 – $4 billion
2018 – $4 billion
2019 – after – $2.8 billion.
Note: “branded prescription drugs” are defined as any product approved under Section 505(b) of the Federal Food Drug and Cosmetic Act (“FFDCA”) that bears an Rx legend required by Section 503(b) of the FFDCA; the only exception is an orphan drug approved only for orphan indications. Rx products approved under Section 505(b)(2), of FFDCA, although quasi-generic in nature, are, however, subject to the tax.
Generic drug sales are excluded from the fee, as those drugs are approved under Section 505(j) of the FFDCA.
These fees will not be paid to FDA, but will be transferred by Treasury Department to the Federal Supplementary Medical Insurance Trust Fund set up by PPACA to support health insurance coverage. The tax will first be paid in 2012 for the year 2011.
For more information, Foley Hoag LLP has provided a more extensive overview HERE.
For questions or additional information about the Pharmaceutical Manufacturers Fee email COSE’s advocacy team.
(Note Section 9008: Imposition Of Annual Fee On Branded Prescription Pharmaceutical Manufacturers And Importers)