IRS modifies guidance on annual fee for prescription drug sales; filing date extended

The IRS issued on Friday 14 January, 2011, Notice 2011-9, which modifies previous guidance (Notice 2010-71) on the annual fee imposed by section 9008 of the Affordable Care Act on certain manufacturers and importers (covered entities) of branded prescription drugs. The modifications affect the information requested from covered entities and the preliminary fee calculation for 2011.

The health care act passed in 2010 imposes an annual, nondeductible, fee on any "covered entity" engaged in the business of manufacturing or importing branded prescription drugs or biologics for sale in the U.S. beginning in calendar year 2011. Under Section 9008 of the Patient Protection and Affordable Care Act (P.L. 111-148), as amended by section 1404 of the Health Care and Education Reconciliation Act of 2010 (P.L. 111-152), "covered entities" subject to such tax are defined as entities engaged in the business of manufacturing or importing branded prescription drugs and that have gross receipts from branded prescription drug sales exceeding $5 million.