The IRS now has a secure method of communicating with feepayers electronically – IRS Secure Messaging. You will now be able to send and receive messages and digital documents related to your BPD Fee securely and easily. Contact an ACA BPD analyst at it.bpd.fee@irs.gov to get started.
If you have already registered, access the Secure Messaging System here.
Note: Preliminary and Final Fee Letters will not be sent through Secure Messaging.
Section 9008 of the Patient Protection and Affordable Care Act (ACA), Public Law 111-148 (124 Stat. 119 (2010)), as amended by section 1404 of the Health Care and Education Reconciliation Act of 2010 (HCERA), Public Law 111-152 (124 Stat. 1029 (2010)), imposes an annual fee on each covered entity engaged in the business of manufacturing or importing branded prescription drugs, to be paid not later than September 30 th of each year. On July 24, 2014, the Internal Revenue Service (IRS) issued final regulations PDF (26 CFR Parts 51 and 602) on the fee. The final regulations describe the rules related to the fee, including how the IRS computes it and how covered entities pay it. The fee applies to calendar years beginning after December 31, 2010. On July 24, 2017, the IRS issued final regulations that define the term controlled group for purposes of the branded prescription drug fee.
In general, the fee is imposed on each covered entity with aggregated branded prescription drug sales of over $5 million to specified government programs or pursuant to coverage under such programs.
Branded prescription drug (BPD) means (1) any prescription drug the application for which was submitted under section 505(b) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355(b)); or (ii) any biological product the license for which was submitted under section 351(a) of the Public Health Service Act (42 U.S.C. 262(a)).
Covered entity means any manufacturer or importer with gross receipts from BPD sales, including a single-person covered entity or a controlled group.
Specified government programs (Programs) are the Medicare Part B program, the Medicare Part D program, the Medicaid program, any program under which BPDs are procured by the Department of Veterans Affairs (VA), any program under which BPDs are procured by the Department of Defense (DOD), and the TRICARE retail pharmacy program.
Sales data for the fee is generally provided by the Centers for Medicare and Medicaid Programs of the Department of Health and Human Services (CMS), VA and DOD (Agencies). In addition, each covered entity may provide information relevant to the determination of the fee by annually submitting Form 8947, Report of Branded Prescription Drug Information PDF . Submission of Form 8947 is voluntary.
Generally, covered entities may report the National Drug Code (NDC) of each BPD that the covered entity sold to the Programs (or pursuant to coverage under those Programs), Medicaid state rebate information, section 45C orphan drug information, members of controlled groups, and designated entity information on Form 8947.
For each fee year, a covered entity that chooses to submit Form 8947 reporting information for the sales year must file the form by November 1 of the preceding year. For example, for the 2015 fee year, a covered entity must submit its Form 8947 reporting information for the 2013 sales year by Monday, November 3, 2014 (after applying § 7503).
Controlled group means a group of two or more persons, including at least one person that is a covered entity, that is treated as a single employer under section 52(a), 52(b), 414(m), or 414(o).
Designated entity means the person that acts for a controlled group regarding the fee by (i) filing Form 8947; (ii) receiving IRS communications about the fee for the group; (iii) filing an error report for the group, if applicable; and (iv) paying the fee to the IRS.
Orphan drug means any branded prescription drug for which any person claimed a credit under Internal Revenue Code section 45C and that credit was allowed for any taxable year, but does not include (i) any drug for which there has been a final assessment or court order disallowing the full section 45C credit taken for the drug; or (ii) any drug for any sales year after the calendar year in which the Federal Drug Administration (FDA) approved the drug for marketing for any indication other than the treatment of a rare disease or condition for which a section 45C credit was allowed, regardless of whether a section 45C credit was allowed for the drug either before, in the same year as, or after this FDA designation.
For a complete list of terms and definitions, please see 26 CFR §51.2.
The fee for each covered entity is calculated by determining the ratio of (i) the covered entity’s BPD sales taken into account during the sales year to (ii) the aggregate BPD sales taken into account for all covered entities during the same year, and applying this ratio to the applicable amount.
Applicable amount means the aggregate fee amount each year for all covered entities under section 9008(b)(4). The applicable amounts for fee years are: