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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 units reported by state(s)
  2. For each NDC, determine the percentage of Total Amount Reimbursed 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.

Resources

Questions regarding the BPD program for Medicaid should be sent to MedicaidBPD@cms.hhs.gov

Disclaimer: Please note that the information provided on this web page does not bind or obligate the Centers for Medicare and Medicaid Services (CMS). The statements included on this web page are intended to provide information on the Medicaid Branded Prescription Drug Fee Program (BPD) and do not in any way revise or modify the requirements set forth in Section 1927 of the Act, the national drug rebate agreement (NDRA), subsequent program releases, or regulations. 

Page last updated on October 30, 2020