# ASC 720-50-05: Other Expenses — Fees Paid to the Federal Government by Pharmaceutical Manufacturers and Health Insurers — 05 Overview and Background

Source: FASB Accounting Standards Codification, Basic View

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## ASC 720-50-05: 05 Overview and Background

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##### [720-50-05-1](https://asc.understandingaccounting.org/asc/720/50/#720-50-05-1)

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This Subtopic provides guidance on the annual fees paid by pharmaceutical manufacturers and health insurers to the U.S. Treasury in accordance with the Patient Protection and Affordable Care Act as amended by the Health Care and Education Reconciliation Act (the Acts).

##### [720-50-05-2](https://asc.understandingaccounting.org/asc/720/50/#720-50-05-2)

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The Acts impose annual fees on the pharmaceutical manufacturing industry for each calendar year beginning on or after January 1, 2011, and on the health insurance industry for each calendar year beginning on or after January 1, 2014. An entity's portion of the annual fee is payable no later than September 30 of the applicable calendar year and is not tax deductible.

##### [720-50-05-3](https://asc.understandingaccounting.org/asc/720/50/#720-50-05-3)

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For the pharmaceutical manufacturing industry, the annual fee will be allocated to individual pharmaceutical manufacturers on the basis of the amount of their branded prescription drug sales for the preceding year as a percentage of the industry's branded prescription drug sales for the same period. A pharmaceutical manufacturing entity's portion of the annual fee becomes payable to the U.S. Treasury once the entity has a gross receipt from branded prescription drug sales to any specified government program or in accordance with coverage under any government program for each calendar year beginning on or after January 1, 2011.

##### [720-50-05-4](https://asc.understandingaccounting.org/asc/720/50/#720-50-05-4)

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For the health insurance industry, the annual fee will be allocated to individual health insurers based on the ratio of the amount of an entity's net premiums written during the preceding calendar year to the amount of health insurance for any U.S. health risk that is written during the preceding calendar year. A health insurance entity's portion of the annual fee becomes payable to the U.S. Treasury once the entity provides health insurance for any U.S. health risk for each calendar year beginning on or after January 1, 2014.