Branded Prescription Drug Fee Program

Section 9008 of the Affordable Care Act set forth the Branded Prescription Drug Fee Program (BPD). In general, the government drug programs specified in section 9008, including Medicaid, are required to report drug sales information to the Department of Treasury each year so that the fees can be accurately calculated.

The Secretary of the Treasury determines the amount of the fee to be paid by each manufacturer according to the manufacturer’s share of branded prescription drug sales to specified government programs. The specified government programs are Part B and Part D of Medicare, Medicaid, and TRICARE as well as programs operated by the Department of Veterans Affairs (VA) and the Department of Defense (DOD).

Each year, the law requires that the Secretary of Health and Human Services provide information on branded prescription drug sales for each manufacturer to the Secretary of the Treasury. The annual fees must be paid no later than September 30th of the payment year.

The Medicaid sales formula for each quarter of each BPD fee year is as follows:

  1. Calculate total dollars per branded NDC using the following formula:
    AMP-URA x total units1 reported by state(s)
  2. For each NDC, determine the percentage of Total Amount Reimbursed2 that is the Medicaid portion of that reimbursement. For example, if Total Amount Reimbursed is $100,000, and Medicaid Amount Reimbursed is $20,000, then the percentage equals 20%.
  3. Multiply the percentage of the Medicaid amount of that reimbursement (in the example above, 20%) by the dollar figure derived from Step 1 (AMP-URA x units) to get the new adjusted sales dollar totals.

1 This calculation would apply to Medicaid utilization reported by states for any of the four quarters of each BPD fee year.

2 The Medicaid sales formula for each quarter of the BPD program includes the percentage of the Total Amount Reimbursed, however, the original sales formula did not take into account that zero may be a valid value in the MCO Medicaid Amount Reimbursed and Total Amount Reimbursed Fields. Because zeros are now permissible in these fields, MCO records received from states with zero reimbursement values will be calculated with a proxy amount of .01 in both the Medicaid Amount Reimbursed and the Total Amount Reimbursed fields. This proxy amount will not be reflected in DDR or, but will be used in the methodology to derive each manufacturer’s calculated fee.