2012 
•AMDT. NO. 2786 
year with respect to any covered entity shall be de-
termined in accordance with the following table: 
With respect to a covered entity’s aggregate branded 
prescription drug sales during the calendar year that 
are: 
The percentage of 
such sales taken into 
account is: 
Not more than $5,000,000 ....................................
0 percent 
More than $5,000,000 but not more than 
$125,000,000.
10 percent 
More than $125,000,000 but not more than 
$225,000,000.
40 percent 
More than $225,000,000 but not more than 
$400,000,000.
75 percent 
More than $400,000,000 .......................................
100 percent. 
(3) SECRETARIAL DETERMINATION.—The Sec-
retary of the Treasury shall calculate the amount of 
each covered entity’s fee for any calendar year under 
paragraph (1). In calculating such amount, the Sec-
retary of the Treasury shall determine such covered 
entity’s branded prescription drug sales on the basis 
of reports submitted under subsection (g) and 
through the use of any other source of information 
available to the Secretary of the Treasury. 
(c) TRANSFER
OF FEES
TO MEDICARE PART B 
TRUST FUND.—There is hereby appropriated to the Fed-
eral Supplementary Medical Insurance Trust Fund estab-
lished under section 1841 of the Social Security Act an 
amount equal to the fees received by the Secretary of the 
Treasury under subsection (a). 
(d) COVERED ENTITY.— 
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•AMDT. NO. 2786 
(1) IN GENERAL.—For purposes of this section, 
the term ‘‘covered entity’’ means any manufacturer 
or importer with gross receipts from branded pre-
scription drug sales. 
(2) CONTROLLED GROUPS.— 
(A) IN GENERAL.—For purposes of this 
subsection, all persons treated as a single em-
ployer under subsection (a) or (b) of section 52 
of the Internal Revenue Code of 1986 or sub-
section (m) or (o) of section 414 of such Code 
shall be treated as a single covered entity. 
(B) INCLUSION
OF
FOREIGN
CORPORA-
TIONS.—For purposes of subparagraph (A), in 
applying subsections (a) and (b) of section 52 
of such Code to this section, section 1563 of 
such Code shall be applied without regard to 
subsection (b)(2)(C) thereof. 
(e) BRANDED PRESCRIPTION DRUG SALES.—For 
purposes of this section— 
(1) IN GENERAL.—The term ‘‘branded prescrip-
tion drug sales’’ means sales of branded prescription 
drugs to any specified government program or pur-
suant to coverage under any such program. 
(2) BRANDED PRESCRIPTION DRUGS.— 
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•AMDT. NO. 2786 
(A) IN
GENERAL.—The term ‘‘branded 
prescription drug’’ means— 
(i) any prescription drug the applica-
tion for which was submitted under section 
505(b) of the Federal Food, Drug, and 
Cosmetic Act (21 U.S.C. 355(b)), or 
(ii) any biological product the license 
for which was submitted under section 
351(a) of the Public Health Service Act 
(42 U.S.C. 262(a)). 
(B) PRESCRIPTION DRUG.—For purposes 
of subparagraph (A)(i), the term ‘‘prescription 
drug’’ means any drug which is subject to sec-
tion 503(b) of the Federal Food, Drug, and 
Cosmetic Act (21 U.S.C. 353(b)). 
(3) EXCLUSION OF ORPHAN DRUG SALES.—The 
term ‘‘branded prescription drug sales’’ shall not in-
clude sales of any drug or biological product with re-
spect to which a credit was allowed for any taxable 
year under section 45C of the Internal Revenue 
Code of 1986. The preceding sentence shall not 
apply with respect to any such drug or biological 
product after the date on which such drug or bio-
logical product is approved by the Food and Drug 
Administration for marketing for any indication 
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•AMDT. NO. 2786 
other than the treatment of the rare disease or con-
dition with respect to which such credit was allowed. 
(4) SPECIFIED GOVERNMENT PROGRAM.—The 
term ‘‘specified government program’’ means— 
(A) the Medicare Part D program under 
part D of title XVIII of the Social Security Act, 
(B) the Medicare Part B program under 
part B of title XVIII of the Social Security Act, 
(C) the Medicaid program under title XIX 
of the Social Security Act, 
(D) any program under which branded 
prescription drugs are procured by the Depart-
ment of Veterans Affairs, 
(E) any program under which branded pre-
scription drugs are procured by the Department 
of Defense, or 
(F) the TRICARE retail pharmacy pro-
gram under section 1074g of title 10, United 
States Code. 
(f) TAX TREATMENT OF FEES.—The fees imposed 
by this section— 
(1) for purposes of subtitle F of the Internal 
Revenue Code of 1986, shall be treated as excise 
taxes with respect to which only civil actions for re-
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•AMDT. NO. 2786 
fund under procedures of such subtitle shall apply, 
and 
(2) for purposes of section 275 of such Code, 
shall be considered to be a tax described in section 
275(a)(6). 
(g) REPORTING REQUIREMENT.—Not later than the 
date determined by the Secretary of the Treasury fol-
lowing the end of any calendar year, the Secretary of 
Health and Human Services, the Secretary of Veterans 
Affairs, and the Secretary of Defense shall report to the 
Secretary of the Treasury, in such manner as the Sec-
retary of the Treasury prescribes, the total branded pre-
scription drug sales for each covered entity with respect 
to each specified government program under such Sec-
retary’s jurisdiction using the following methodology: 
(1) MEDICARE
PART
D
PROGRAM.—The Sec-
retary of Health and Human Services shall report, 
for each covered entity and for each branded pre-
scription drug of the covered entity covered by the 
Medicare Part D program, the product of— 
(A) the per-unit ingredient cost, as re-
ported to the Secretary of Health and Human 
Services by prescription drug plans and Medi-
care Advantage prescription drug plans, minus 
any per-unit rebate, discount, or other price 
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•AMDT. NO. 2786 
concession provided by the covered entity, as re-
ported to the Secretary of Health and Human 
Services by the prescription drug plans and 
Medicare Advantage prescription drug plans, 
and 
(B) the number of units of the branded 
prescription drug paid for under the Medicare 
Part D program. 
(2) MEDICARE
PART
B
PROGRAM.—The Sec-
retary of Health and Human Services shall report, 
for each covered entity and for each branded pre-
scription drug of the covered entity covered by the 
Medicare Part B program under section 1862(a) of 
the Social Security Act, the product of— 
(A) the per-unit average sales price (as de-
fined in section 1847A(c) of the Social Security 
Act) or the per-unit Part B payment rate for 
a separately paid branded prescription drug 
without a reported average sales price, and 
(B) the number of units of the branded 
prescription drug paid for under the Medicare 
Part B program. 
The Centers for Medicare and Medicaid Services 
shall establish a process for determining the units 
and the allocated price for purposes of this section 
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•AMDT. NO. 2786 
for those branded prescription drugs that are not 
separately payable or for which National Drug 
Codes are not reported. 
(3) MEDICAID
PROGRAM.—The Secretary of 
Health and Human Services shall report, for each 
covered entity and for each branded prescription 
drug of the covered entity covered under the Med-
icaid program, the product of— 
(A) the per-unit ingredient cost paid to 
pharmacies by States for the branded prescrip-
tion drug dispensed to Medicaid beneficiaries, 
minus any per-unit rebate paid by the covered 
entity under section 1927 of the Social Security 
Act and any State supplemental rebate, and 
(B) the number of units of the branded 
prescription drug paid for under the Medicaid 
program. 
(4) DEPARTMENT OF VETERANS AFFAIRS PRO-
GRAMS.—The Secretary of Veterans Affairs shall re-
port, for each covered entity and for each branded 
prescription drug of the covered entity the total 
amount paid for each such branded prescription 
drug procured by the Department of Veterans Af-
fairs for its beneficiaries. 
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•AMDT. NO. 2786 
(5) DEPARTMENT OF DEFENSE PROGRAMS AND 
TRICARE.—The Secretary of Defense shall report, 
for each covered entity and for each branded pre-
scription drug of the covered entity, the sum of— 
(A) the total amount paid for each such 
branded prescription drug procured by the De-
partment of Defense for its beneficiaries, and 
(B) for each such branded prescription 
drug dispensed under the TRICARE retail 
pharmacy program, the product of— 
(i) the per-unit ingredient cost, minus 
any per-unit rebate paid by the covered en-
tity, and 
(ii) the number of units of the brand-
ed prescription drug dispensed under such 
program. 
(h) SECRETARY.—For purposes of this section, the 
term ‘‘Secretary’’ includes the Secretary’s delegate. 
(i) GUIDANCE.—The Secretary of the Treasury shall 
publish guidance necessary to carry out the purposes of 
this section. 
(j) APPLICATION OF SECTION.—This section shall 
apply to any branded prescription drug sales after Decem-
ber 31, 2008. 
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•AMDT. NO. 2786 
(k) CONFORMING AMENDMENT.—Section 1841(a) of 
the Social Security Act is amended by inserting ‘‘or sec-
tion 9008(c) of the Patient Protection and Affordable 
Care Act of 2009’’ after ‘‘this part’’. 
SEC. 9009. IMPOSITION OF ANNUAL FEE ON MEDICAL DE-
VICE MANUFACTURERS AND IMPORTERS. 
(a) IMPOSITION OF FEE.— 
(1) IN GENERAL.—Each covered entity engaged 
in the business of manufacturing or importing med-
ical devices shall pay to the Secretary not later than 
the annual payment date of each calendar year be-
ginning after 2009 a fee in an amount determined 
under subsection (b). 
(2) ANNUAL PAYMENT DATE.—For purposes of 
this section, the term ‘‘annual payment date’’ means 
with respect to any calendar year the date deter-
mined by the Secretary, but in no event later than 
September 30 of such calendar year. 
(b) DETERMINATION OF FEE AMOUNT.— 
(1) IN GENERAL.—With respect to each covered 
entity, the fee under this section for any calendar 
year shall be equal to an amount that bears the 
same ratio to $2,000,000,000 as— 
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•AMDT. NO. 2786 
(A) the covered entity’s gross receipts from 
medical device sales taken into account during 
the preceding calendar year, bear to 
(B) the aggregate gross receipts of all cov-
ered entities from medical device sales taken 
into account during such preceding calendar 
year. 
(2) GROSS RECEIPTS FROM SALES TAKEN INTO 
ACCOUNT.—For purposes of paragraph (1), the 
gross receipts from medical device sales taken into 
account during any calendar year with respect to 
any covered entity shall be determined in accordance 
with the following table: 
With respect to a covered entity’s aggregate gross re-
ceipts from medical device sales during the calendar 
year that are: 
The percentage of 
gross receipts taken 
into account is: 
Not more than $5,000,000 ....................................
0 percent 
More than $5,000,000 but not more than 
$25,000,000.
50 percent 
More than $25,000,000 .........................................
100 percent. 
(3) SECRETARIAL DETERMINATION.—The Sec-
retary shall calculate the amount of each covered en-
tity’s fee for any calendar year under paragraph (1). 
In calculating such amount, the Secretary shall de-
termine such covered entity’s gross receipts from 
medical device sales on the basis of reports sub-
mitted by the covered entity under subsection (f) 
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•AMDT. NO. 2786 
and through the use of any other source of informa-
tion available to the Secretary. 
(c) COVERED ENTITY.— 
(1) IN GENERAL.—For purposes of this section, 
the term ‘‘covered entity’’ means any manufacturer 
or importer with gross receipts from medical device 
sales. 
(2) CONTROLLED GROUPS.— 
(A) IN GENERAL.—For purposes of this 
subsection, all persons treated as a single em-
ployer under subsection (a) or (b) of section 52 
of the Internal Revenue Code of 1986 or sub-
section (m) or (o) of section 414 of such Code 
shall be treated as a single covered entity. 
(B) INCLUSION
OF
FOREIGN
CORPORA-
TIONS.—For purposes of subparagraph (A), in 
applying subsections (a) and (b) of section 52 
of such Code to this section, section 1563 of 
such Code shall be applied without regard to 
subsection (b)(2)(C) thereof. 
(d) MEDICAL DEVICE SALES.—For purposes of this 
section— 
(1) IN GENERAL.—The term ‘‘medical device 
sales’’ means sales for use in the United States of 
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•AMDT. NO. 2786 
any medical device, other than the sales of a medical 
device that— 
(A) has been classified in class II under 
section 513 of the Federal Food, Drug, and 
Cosmetic Act (21 U.S.C. 360c) and is primarily 
sold to consumers at retail for not more than 
$100 per unit, or 
(B) has been classified in class I under 
such section. 
(2) UNITED STATES.—For purposes of para-
graph (1), the term ‘‘United States’’ means the sev-
eral States, the District of Columbia, the Common-
wealth of Puerto Rico, and the possessions of the 
United States. 
(3) MEDICAL DEVICE.—For purposes of para-
graph (1), the term ‘‘medical device’’ means any de-
vice (as defined in section 201(h) of the Federal 
Food, Drug, and Cosmetic Act (21 U.S.C. 321(h))) 
intended for humans. 
(e) TAX TREATMENT OF FEES.—The fees imposed 
by this section— 
(1) for purposes of subtitle F of the Internal 
Revenue Code of 1986, shall be treated as excise 
taxes with respect to which only civil actions for re-
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•AMDT. NO. 2786 
fund under procedures of such subtitle shall apply, 
and 
(2) for purposes of section 275 of such Code, 
shall be considered to be a tax described in section 
275(a)(6). 
(f) REPORTING REQUIREMENT.— 
(1) IN GENERAL.—Not later than the date de-
termined by the Secretary following the end of any 
calendar year, each covered entity shall report to the 
Secretary, in such manner as the Secretary pre-
scribes, the gross receipts from medical device sales 
of such covered entity during such calendar year. 
(2) PENALTY FOR FAILURE TO REPORT.— 
(A) IN GENERAL.—In the case of any fail-
ure to make a report containing the information 
required by paragraph (1) on the date pre-
scribed therefor (determined with regard to any 
extension of time for filing), unless it is shown 
that such failure is due to reasonable cause, 
there shall be paid by the covered entity failing 
to file such report, an amount equal to— 
(i) $10,000, plus 
(ii) the lesser of— 
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•AMDT. NO. 2786 
(I) an amount equal to $1,000, 
multiplied by the number of days dur-
ing which such failure continues, or 
(II) the amount of the fee im-
posed by this section for which such 
report was required. 
(B) TREATMENT OF PENALTY.—The pen-
alty imposed under subparagraph (A)— 
(i) shall be treated as a penalty for 
purposes of subtitle F of the Internal Rev-
enue Code of 1986, 
(ii) shall be paid on notice and de-
mand by the Secretary and in the same 
manner as tax under such Code, and 
(iii) with respect to which only civil 
actions for refund under procedures of 
such subtitle F shall apply. 
(g) SECRETARY.—For purposes of this section, the 
term ‘‘Secretary’’ means the Secretary of the Treasury or 
the Secretary’s delegate. 
(h) GUIDANCE.—The Secretary shall publish guid-
ance necessary to carry out the purposes of this section, 
including identification of medical devices described in 
subsection (d)(1)(A) and with respect to the treatment of 
gross receipts from sales of medical devices to another cov-
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•AMDT. NO. 2786 
ered entity or to another entity by reason of the applica-
tion of subsection (c)(2). 
(i) APPLICATION OF SECTION.—This section shall 
apply to any medical device sales after December 31, 
2008. 
SEC. 9010. IMPOSITION OF ANNUAL FEE ON HEALTH INSUR-
ANCE PROVIDERS. 
(a) IMPOSITION OF FEE.— 
(1) IN GENERAL.—Each covered entity engaged 
in the business of providing health insurance shall 
pay to the Secretary not later than the annual pay-
ment date of each calendar year beginning after 
2009 a fee in an amount determined under sub-
section (b). 
(2) ANNUAL PAYMENT DATE.—For purposes of 
this section, the term ‘‘annual payment date’’ means 
with respect to any calendar year the date deter-
mined by the Secretary, but in no event later than 
September 30 of such calendar year. 
(b) DETERMINATION OF FEE AMOUNT.— 
(1) IN GENERAL.—With respect to each covered 
entity, the fee under this section for any calendar 
year shall be equal to an amount that bears the 
same ratio to $6,700,000,000 as— 
(A) the sum of— 
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•AMDT. NO. 2786 
(i) the covered entity’s net premiums 
written with respect to health insurance for 
any United States health risk that are 
taken into account during the preceding 
calendar year, plus 
(ii) 200 percent of the covered entity’s 
third party administration agreement fees 
that are taken into account during the pre-
ceding calendar year, bears to 
(B) the sum of— 
(i) the aggregate net premiums writ-
ten with respect to such health insurance 
of all covered entities that are taken into 
account during such preceding calendar 
year, plus 
(ii) 200 percent of the aggregate third 
party administration agreement fees of all 
covered entities that are taken into account 
during such preceding calendar year. 
(2) AMOUNTS
TAKEN
INTO
ACCOUNT.—For 
purposes of paragraph (1)— 
(A) NET
PREMIUMS
WRITTEN.—The net 
premiums written with respect to health insur-
ance for any United States health risk that are 
taken into account during any calendar year 
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•AMDT. NO. 2786 
with respect to any covered entity shall be de-
termined in accordance with the following table: 
With respect to a covered entity’s net premiums writ-
ten during the calendar year that are: 
The percentage of net 
premiums written that 
are taken into account 
is: 
Not more than $25,000,000 ..................................
0 percent 
More than $25,000,000 but not more than 
$50,000,000.
50 percent 
More than $50,000,000 .........................................
100 percent. 
(B) 
THIRD
PARTY
ADMINISTRATION 
AGREEMENT FEES.—The third party adminis-
tration agreement fees that are taken into ac-
count during any calendar year with respect to 
any covered entity shall be determined in ac-
cordance with the following table: 
With respect to a covered entity’s third party adminis-
tration agreement fees during the calendar year that 
are: 
The percentage of 
third party adminis-
tration agreement fees 
that are taken into ac-
count is: 
Not more than $5,000,000 ....................................
0 percent 
More than $5,000,000 but not more than 
$10,000,000.
50 percent 
More than $10,000,000 .........................................
100 percent. 
(3) SECRETARIAL DETERMINATION.—The Sec-
retary shall calculate the amount of each covered en-
tity’s fee for any calendar year under paragraph (1). 
In calculating such amount, the Secretary shall de-
termine such covered entity’s net premiums written 
with respect to any United States health risk and 
third party administration agreement fees on the 
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•AMDT. NO. 2786 
basis of reports submitted by the covered entity 
under subsection (g) and through the use of any 
other source of information available to the Sec-
retary. 
(c) COVERED ENTITY.— 
(1) IN GENERAL.—For purposes of this section, 
the term ‘‘covered entity’’ means any entity which 
provides health insurance for any United States 
health risk. 
(2) EXCLUSION.—Such term does not include— 
(A) any employer to the extent that such 
employer self-insures its employees’ health 
risks, or 
(B) any governmental entity (except to the 
extent such an entity provides health insurance 
coverage through the community health insur-
ance option under section 1323). 
(3) CONTROLLED GROUPS.— 
(A) IN GENERAL.—For purposes of this 
subsection, all persons treated as a single em-
ployer under subsection (a) or (b) of section 52 
of the Internal Revenue Code of 1986 or sub-
section (m) or (o) of section 414 of such Code 
shall be treated as a single covered entity (or 
employer for purposes of paragraph (2)). 
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