Purpose: This IRM provides an awareness and understanding of the Branded Prescription Drug (BPD) Fee process for employees who may receive BPD inquiries. It also provides information to employees about the BPD Fee imposed by section 9008 of the Affordable Care Act (ACA). This provision of the ACA did not amend the Internal Revenue Code.

Audience: Frontline employees from all operating divisions and functions that may receive BPD inquiries.

Policy Owner: LB&I Policy under the Strategy, Policy and Governance office in the Assistant Deputy Commissioner Compliance Integration organization and LB&I Enterprise Activities Practice Area.

Program Owner: ACA Team, under Enterprise Activities Practice Area, Financial Institutions and Products, Actuaries and ACA.

Primary Stakeholders: The primary stakeholders are organizations with whom the BPD team collaborates.

Contact Information: To recommend changes or to make any other suggestions to this IRM section, contact the IRM author or see SPDER’s IMD Contacts list by referencing guidelines provided in IRM 1.11.6.5, Providing Feedback About an IRM Section - Outside of Clearance. A request or inquiry can also be made using the LB&I Policy Gateway.

Covered entities may provide information relevant to the determination of the BPD fee by submitting Form 8947, Report of Branded Prescription Drug Information, and providing the information specified by the form and instruction.

Information requested on Form 8947 includes:

For each fee year, a covered entity that chooses to submit Form 8947 reporting information for the sales year must file the form by November 1 of the preceding year. If the due date falls on a Saturday, Sunday, or legal holiday, Form 8947 is due on the next business day. The term "legal holiday" means any legal holiday in the District of Columbia. For a list of legal holidays, refer to Pub 509. For example, for the 2025 fee year, a covered entity must submit its Form 8947 reporting information for the 2023 sales year by Friday, November 1, 2024 . A covered entity must submit its Form 8947 to:

All Form 8947 data received is transcribed onto the BPD application system.

Data perfection is performed as necessary to perfect data in the system.

Due diligence is performed to determine proper NDC, orphan drugs, and rebate information reported.

A list of BPDs by NDC will be compiled from all transcribed Forms 8947.

The list of BPDs by NDC (described in IRM 25.21.1.3 (4) above) and a request for sales data by NDC and by program will be forwarded to the contact person for each of these agencies:

All sales data from agencies are input into the BPD application system by NDC and by covered entities.

The annual applicable fee amount is apportioned among the covered entities based on the ratio between a covered entity’s BPD sales taken into account during the sales year and the aggregate BPD sales taken into account during the sales year for all covered entities.

BPD sales are sales of BPDs to the government programs identified in IRM 25.21.1.1.1 (1). BPD sales do not include orphan drug sales. See IRM 25.21.1.1.6 (1) for definition of an orphan drug.

A covered entity’s BPD sales taken into account during the calendar year are as follows:

In addition to the allocated fee for the fee year, there will also be an adjustment calculation starting for each fee year after 2011.

The adjustment calculation reflects the difference between:

For each sales year, the IRS will notify a covered entity of its preliminary fee calculation.

The notification will include the following:

Upon receipt of the preliminary fee calculation, each covered entity will have an opportunity to dispute the calculation by submitting an error report to the IRS by May 15 of each fee year. There are two types of errors:

The final fee calculation for a fee year will be sent to each covered entity no later than August 31 of each fee year.

The final fee calculation will be based on the preliminary fee calculation as adjusted pursuant to the dispute resolution process.

A covered entity’s final fee may differ from the covered entity’s preliminary fee calculation because of changes made pursuant to the dispute resolution process. There may be a difference in a covered entity’s fee even if the covered entity did not submit an error report because the fee is an allocated fee.

Each covered entity must pay its final fee by September 30 of the fee year. If the due date for payment falls on a Saturday, Sunday, or legal holiday, the fee may be paid on the next business day. The term "legal holiday" means any legal holiday in the District of Columbia. For a list of legal holidays, refer to Pub 509.

The fee must be paid by electronic funds transfer.

For a controlled group, the payment must be made using the designated entity’s EIN as reported on Form 8947. All covered entities within a controlled group are jointly and severally liable for the fee.

Section 9008(f)(2) of the ACA provides that for purposes of IRC 275, the BPD fee shall be considered to be a tax described in IRC 275(a)(6).

A claim for refund of the fee must be made by the entity that paid the fee.

The claim must be made on Form 843, Claim for Refund and Request for Abatement.

A claim for refund of the fee cannot be processed in the usual way and must be routed to the following address for special handling:

The final fee calculation, after application of the adjustment amount, may result in an amount owed to a covered entity.

A systems-generated check will be mailed to a covered entity in 4-6 weeks from the date of the final fee letter unless the payment is offset because a covered entity owes other federal debts. According to IRM 3.17.79.3.6(2)(e), any refund of $100 million or more must be issued as a manual refund. Refunds under $100 million are systemically generated on Integrated Data Retrieval System (IDRS) with a posted transaction code, TC 846, unless a manual refund is required for another reason.

For an overpayment over $100 million, a BPD analyst will mail a letter to a covered entity. The letter should outline the options to receive overpayment via Automated Clearing House (ACH) Direct Deposit or paper check. For ACH Direct Deposit, a covered entity must provide the following: (Refer to IRM 3.17.79.3.10.1 for additional information on electronic deposit of overpayment.)

When the BPD analyst receives the covered entity’s response to the letter of options to receive overpayment via ACH Direct Deposit or paper check, the BPD analyst will send a manual refund request to TS AM. A manual refund request should include: a copy of Letter 4658, name of covered entity, EIN, Tax Period, MFT, amount of overpayment, Line number=99 and method of deposit letter from a covered entity. TS AM will prepare Form 3753 and process the request to Accounting function.

In accordance with the Accounting IRM 3.17.79.3.7 procedural guidelines, the Manual Refund team will notify the Treasury in advance whenever a single overpayment or several overpayments with an aggregate total of $50 million or more has been received for processing.