Branded Prescription Drug Fee Program Disputes

The Internal Revenue Service (IRS) issues guidance for those manufacturers that wish to dispute the Branded Prescription Drug Fee Program (BPD) sales data provided by the government drug programs. All disputes must be sent to IRS, in the form and manner prescribed by their guidance. In some instances, where manufacturer disputes are based on alleged Medicaid data inaccuracies (e.g., state units reported, unit rebate amount calculation), the IRS will forward such disputes to Centers for Medicaid and CHIP Services (CMCS) for review and resolution.

For Medicaid, state utilization data impacts the methodology for calculating the annual BPD fees. As a result, the accuracy of the state utilization data is essential to ensuring that Medicaid’s drug sales information is reported correctly to the Department of Treasury. Prior to the annual calculation of the Medicaid sales amounts, all states and manufacturers receive information from the Centers for Medicare & Medicaid Services (CMS), instructing them to ensure that the state utilization data is accurate and reminding them that, if utilization data inaccuracies exist, manufacturers should contact the state and copy CMS to ensure any discrepancies can be corrected before the time CMCS calculates the BPD sales fee.

Additional Tips for Complete & Responsive Medicaid BPD Disputes

Based on the Medicaid BPD disputes received through IRS to date, the following information is offered to help manufacturers understand what dispute data will generally be considered non-responsive. In order to avoid using ineffective data to try and substantiate Medicaid BPD disputes, manufacturers should:

Provide a similar level of detail and supporting documentation for suspected understated utilization data as for overstated utilization data. Lack of detailed data for all disputed national drug codes (NDCs) may result in inadequate time to respond to the manufacturer’s entire dispute.
Exclude non-federal Medicaid units (e.g., state-only Medicaid utilization, State Pharmacy Assistance Program utilization) in disputes to IRS. This utilization data is not included in the Medicaid BPD sales calculation; therefore, disputes of such data may result in inadequate time to respond to the manufacturer’s entire dispute.
Exclude any supplemental rebate units in Medicaid BPD sales disputes to IRS. Manufacturers report supplemental rebates separately to IRS for purposes of the BPD program; therefore, disputes related to supplemental rebates will be addressed by the IRS during the dispute process.
Remember that drugs terminated or deleted from the Medicaid Drug Rebate Program (MDRP) prior to any part of the BPD fee year may still have been paid for by a state within the calculated fee year. Therefore, disputes solely on the basis that a drug was terminated or deleted prior to the BPD fee year will usually not warrant further CMS Medicaid review.

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