I.R.C. § 5000D(a) In General —
There is hereby imposed on the sale by the manufacturer,
producer, or importer of any designated drug during a day described
in subsection (b) a tax in an amount such that the applicable percentage
is equal to the ratio of—
I.R.C. § 5000D(a)(1) —
such tax, divided by
I.R.C. § 5000D(a)(2) —
the sum of such tax and the price for
which so sold.
I.R.C. § 5000D(b) Noncompliance Periods —
A day is described in this subsection with respect to
a designated drug if it is a day during one of the following periods:
I.R.C. § 5000D(b)(1) —
The period beginning on the March 1st
(or, in the case of initial price applicability year 2026, the October
2nd) immediately following the date on which such drug is included
on the list published under section 1192(a) of
the Social Security Act and ending on the earlier of—
I.R.C. § 5000D(b)(1)(A) —
the first date on which the manufacturer
of such designated drug has in place an agreement described in section
1193(a) of such Act with respect to such drug, or
I.R.C. § 5000D(b)(1)(B) —
the date that the Secretary of Health
and Human Services has made a determination described in section 1192(c)(1)
of such Act with respect to such designated drug.
I.R.C. § 5000D(b)(2) —
The period beginning on the November
2nd immediately following the March 1st described in paragraph (1)
(or, in the case of initial price applicability year 2026, the August
2nd immediately following the October 2nd described in such paragraph)
and ending on the earlier of—
I.R.C. § 5000D(b)(2)(A) —
the first date on which the manufacturer
of such designated drug and the Secretary of Health and Human Services
have agreed to a maximum fair price under an agreement described in
section 1193(a) of the Social
Security Act, or
I.R.C. § 5000D(b)(2)(B) —
the date that the Secretary of Health
and Human Services has made a determination described in section 1192(c)(1)
of such Act with respect to such designated drug.
I.R.C. § 5000D(b)(3) —
In the case of any designated drug which
is a selected drug (as defined in section 1192(c) of
the Social Security Act) that the Secretary of Health and Human Services
has selected for renegotiation under section 1194(f) of such Act,
the period beginning on the November 2nd of the year that begins 2
years prior to the first initial price applicability year of the price
applicability period for which the maximum fair price established
pursuant to such renegotiation applies and ending on the earlier of—
I.R.C. § 5000D(b)(3)(A) —
the first date on which the manufacturer
of such designated drug has agreed to a renegotiated maximum fair
price under such agreement, or
I.R.C. § 5000D(b)(3)(B) —
the date that the Secretary of Health
and Human Services has made a determination described in section 1192(c)(1)
of such Act with respect to such designated drug.
I.R.C. § 5000D(b)(4) —
With respect to information that is required
to be submitted to the Secretary of Health and Human Services under
an agreement described in section 1193(a) of
the Social Security Act, the period beginning on the date on which
such Secretary certifies that such information is overdue and ending
on the date that such information is so submitted.
I.R.C. § 5000D(c) Suspension Of Tax
I.R.C. § 5000D(c)(1) In General —
A day shall not be taken into account as a day during
a period described in subsection (b) if such day is also a day during
the period—
I.R.C. § 5000D(c)(1)(A) —
beginning on the first date on which—
I.R.C. § 5000D(c)(1)(A)(i) —
the notice of terminations of all applicable
agreements of the manufacturer have been received by the Secretary
of Health and Human Services, and
I.R.C. § 5000D(c)(1)(A)(ii) —
none of the drugs of the manufacturer
of the designated drug are covered by an agreement under section 1860D-14A
or 1860D-14C of the Social Security Act, and
I.R.C. § 5000D(c)(1)(B) —
ending on the last day of February following
the earlier of—
I.R.C. § 5000D(c)(1)(B)(i) —
the first day after the date described
in subparagraph (A) on which the manufacturer enters into any subsequent
applicable agreement, or
I.R.C. § 5000D(c)(1)(B)(ii) —
the first date any drug of the manufacturer
of the designated drug is covered by an agreement under section 1860D-14A
or 1860D-14C of the Social Security Act.
I.R.C. § 5000D(c)(2) Applicable Agreement —
For purposes of this subsection, the term “applicable
agreement” means the following:
I.R.C. § 5000D(c)(2)(A) —
An agreement under—
I.R.C. § 5000D(c)(2)(A)(i) —
the Medicare coverage gap discount program
under section 1860D-14A of the Social Security Act, or
I.R.C. § 5000D(c)(2)(A)(ii) —
the manufacturer discount program under
section 1860D-14C of such Act.
I.R.C. § 5000D(c)(2)(B) —
A rebate agreement described in section
1927(b) of such Act.
I.R.C. § 5000D(d) Applicable Percentage —
For purposes of this section, the term “applicable
percentage” means—
I.R.C. § 5000D(d)(1) —
in the case of sales of a designated
drug during the first 90 days described in subsection (b) with respect
to such drug, 65 percent,
I.R.C. § 5000D(d)(2) —
in the case of sales of such drug during
the 91st day through the 180th day described in subsection (b) with
respect to such drug, 75 percent,
I.R.C. § 5000D(d)(3) —
in the case of sales of such drug during
the 181st day through the 270th day described in subsection (b) with
respect to such drug, 85 percent, and
I.R.C. § 5000D(d)(4) —
in the case of sales of such drug during
any subsequent day, 95 percent.
I.R.C. § 5000D(e) Definitions —
For purposes of this section—
I.R.C. § 5000D(e)(1) Designated Drug —
The term “designated drug” means any negotiation-eligible
drug (as defined in section 1192(d) of
the Social Security Act) included on the list published under section
1192(a) of such Act which is manufactured or produced in the United
States or entered into the United States for consumption, use, or
warehousing.
I.R.C. § 5000D(e)(2) United States —
The term “United States” has the meaning
given such term by section
4612(a)(4).
I.R.C. § 5000D(e)(3) Other Terms —
The terms “initial price applicability year”, “price
applicability period”, and “maximum fair price”
have the meaning given such terms in section 1191 of
the Social Security Act.
I.R.C. § 5000D(f) Special Rules
I.R.C. § 5000D(f)(1) Coordination With Rules For Possessions Of The United States —
Rules similar to the rules of paragraphs (2) and (4)
of section 4132(c) shall
apply for purposes of this section.
I.R.C. § 5000D(f)(2) Anti-abuse Rule —
In the case of a sale which was timed for the purpose
of avoiding the tax imposed by this section, the Secretary may treat
such sale as occurring during a day described in subsection (b).
I.R.C. § 5000D(g) Exports —
Rules similar to the rules of section 4662(e) (other
than section
4662(e)(2)(A)(ii)(II)) shall apply for purposes
of this chapter.
I.R.C. § 5000D(h) Regulations —
The Secretary shall prescribe such regulations and other
guidance as may be necessary to carry out this section.
(Added by Pub.
L. 117-169, title I, Sec. 11003(a), Aug. 16, 2022, 136 Stat. 1818.)
BACKGROUND NOTES
EFFECTIVE DATE
Pub. L. 117-169,
Sec. 11003(d) provided: “The amendments made by this section
shall apply to sales after the date of the enactment of this Act.”
[Enacted: Aug. 16, 2022].
