Health reform has new drug sales fee

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Washington attorneys Thomas Barker and Barrett Thornhill (Foley Hoag) say in an on-line report that the new healthcare reform law imposes an annual fee on brand-name prescription drug manufacturers and importers, effective on a date chosen by the HHS secretary to be no later than September 30, 2011. The fee is structured to raise $2.5 billion in 2011 and rise to $4.1 billion in 2018 before falling to $2.8 billion in 2019 and years thereafter. The proceeds are to be credited to the Supplementary Medical Insurance Fund.

Barker and Thornhill say the aggregate fee is apportioned among covered entities each year based on each entity's relative market share of “branded prescription drug sales” taken into account in the preceding calendar year. Sale or importation of generic drugs is not subject to the fee, nor are orphan drugs.

To be counted, the sales must be to a specified government program or pursuant to coverage under such a program. Cited in the law are Medicare Parts B and D, Medicaid, Veterans Affairs programs, Department of Defense programs or the TRICARE retail pharmacy program. Thus, the attorneys say, sales in the private marketplace are excluded in determining the fee amount. A graduated structure determines the proportion of a covered entity's drug sales taken into account in determining the fee.

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