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Branded Prescription Drug Fee

08/30/2011 - 7:17am

Summary

This regulation places a tax on brand name drugs. The economic result will be to raise the cost of drugs and to decrease the incentive companies have to produce new drugs.

Details

Obamacare creates a new tax on “branded” (versus generic) drug companies that sell more than $5 million dollars in any year. The tax is a fixed revenue tax, meaning it raises a fixed amount of money each year and each company pays its proportionate share of that fixed amount. The fixed amounts of revenue are as follows:

2011....................$2.5 billion
2012-2013...............$2.8 billion
2014-2016...............$3 billion
2017....................$4 billion
2018....................$4.1 billion
2019....................$2.8 billion

Each company’s share of the tax is calculated by determining the company’s proportionate share of the total branded drug sales[1] from the second preceeding calendar year. So if Company A sells 10% of all branded drugs in 2009 and 20% of all branded drugs in 2010, it would pay $250 million in 2011 and $560 million in 2012.


[1] Not including sales of drugs from companies that sell $5 million dollars or less in a particular year.

Regulation Documents

Date Type Document ID Download Comment Deadline
08/13/2012 Notice of public hearing on notice of proposed rulemaking by cross-reference to temporary regulations; correction. IRS-2011-0025-0023 PDF|Text
08/06/2012 Notice of public hearing on notice proposed rulemaking by cross-reference to temporary regulations. IRS-2011-0025-0022 PDF|Text October 5, 2012 - 11:59pm
09/28/2011 Correction to temporary regulations. IRS-2011-0025-0005 PDF|Text
09/28/2011 Correction to notice of proposed rulemaking by cross-reference to temporary regulations. IRS-2011-0025-0004 PDF|Text
09/28/2011 Correcting amendment. IRS-2011-0025-0003 PDF|Text
08/18/2011 Temporary regulations. IRS-2011-0025-0002 PDF|Text
08/18/2011 Notice of proposed rulemaking by cross-reference to temporary regulations. IRS-2011-0025-0001 PDF|Text November 16, 2011 - 11:59pm