# ASC 720-50: Other Expenses — Fees Paid to the Federal Government by Pharmaceutical Manufacturers and Health Insurers Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/720/50/) Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-10T01:09:07.373Z to 2026-09-10T01:09:23.678Z Record version: sha256:695338e34fdbd05a6f1e98b8a83c5210a84d04628f4267ec4a14ed73c6a05f38 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 720-50: Other Expenses — Fees Paid to the Federal Government by Pharmaceutical Manufacturers and Health Insurers ### Machine-generated study aids ```json { "summary": "ASC 720-50 governs how pharmaceutical manufacturers and health insurers account for the annual, non-tax-deductible fees payable to the U.S. Treasury under the Affordable Care Act (as amended by the Health Care and Education Reconciliation Act). The entire estimated annual fee liability is recognized in full upon the first qualifying event in the calendar year (first branded prescription drug sale, or first provision of U.S. health risk insurance), with an offsetting deferred cost amortized to expense — normally straight-line — over that calendar year. The fee is presented as an operating expense.", "key_points": [ "The Acts impose annual fees on pharmaceutical manufacturers for calendar years beginning on or after January 1, 2011, and on health insurers for calendar years beginning on or after January 1, 2014; the fee is payable no later than September 30 of the applicable year and is not tax deductible (720-50-05-2).", "Each entity's share is allocated by market share: branded prescription drug sales of the preceding year for manufacturers (720-50-05-3), and net premiums written in the preceding calendar year for U.S. health risk for insurers (720-50-05-4).", "The full estimated liability is recorded upon the first qualifying sale (manufacturers) or once qualifying health insurance is provided (insurers) in the applicable calendar year, with a corresponding deferred cost (720-50-25-1).", "The deferred cost is amortized to expense straight-line over the calendar year the fee is payable, unless another method better allocates the fee (720-50-25-1).", "The health insurer fee is not an acquisition cost as defined in Subtopic 944-30 (720-50-25-1).", "The annual fee shall be presented as an operating expense (720-50-45-1).", "The guidance rests on the unique facts and circumstances of these fees; judgment is required before analogizing to other fee arrangements (720-50-15-1)." ], "categories": [ "Recognition", "Presentation", "Industry-specific", "Initial measurement" ], "audience_level": "intermediate", "student_note": "The classic trap is thinking the fee accrues ratably as sales or premiums occur — instead the entire annual liability is booked at the first qualifying sale/coverage, and it is the deferred asset (not the liability) that is amortized straight-line over the year. Also remember the fee is not tax deductible and is not an insurance acquisition cost under 944-30.", "related_topics": [ "944-30", "740", "450", "405", "720-30" ], "key_concepts": [ "annual health care reform fee", "branded prescription drug sales", "net premiums written", "deferred cost amortization", "liability recognition trigger", "operating expense presentation", "non-deductible fee", "market-share allocation" ] } ``` Source downloaded (UTC): 2026-09-10T01:09:07.373Z to 2026-09-10T01:09:07.373Z Record version: sha256:7076fc139f2e5b4a6e499b48f9919a36a42ed5f2c9836373d13157a86eb60bd7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 720-50-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/720/50/#00-status) SEC content: no ##### [720-50-00-1](https://asc.understandingaccounting.org/asc/720/50/#720-50-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:09:07.373Z to 2026-09-10T01:09:07.373Z Record version: sha256:0f1c4809ae0004359a369298ae410efe1d6ba71507c90ecec5d41d57468f0dce Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic. - **Note:** Subtopic title changed by Accounting Standards Update No. 2011-06 on 07/21/11 from _Other Expenses—Fees Paid to the Federal Government by Pharmaceutical Manufacturers_ to _Other Expenses—Fees Paid to the Federal Government by Pharmaceutical Manufacturers and Health Insurers_.
ParagraphActionAccounting Standards UpdateDate
720-50-05-1AmendedAccounting Standards Update No. 2011-0607/21/2011
720-50-05-1AddedAccounting Standards Update No. 2010-2712/16/2010
720-50-05-2AmendedAccounting Standards Update No. 2011-0607/21/2011
720-50-05-2AddedAccounting Standards Update No. 2010-2712/16/2010
720-50-05-3AddedAccounting Standards Update No. 2011-0607/21/2011
720-50-05-4AddedAccounting Standards Update No. 2011-0607/21/2011
720-50-15-1AmendedAccounting Standards Update No. 2011-0607/21/2011
720-50-15-1AddedAccounting Standards Update No. 2010-2712/16/2010
720-50-25-1AmendedAccounting Standards Update No. 2011-0607/21/2011
720-50-25-1AddedAccounting Standards Update No. 2010-2712/16/2010
720-50-45-1AmendedAccounting Standards Update No. 2011-0607/21/2011
720-50-45-1AddedAccounting Standards Update No. 2010-2712/16/2010
720-50-65-1AddedAccounting Standards Update No. 2010-2712/16/2010
720-50-65-2AddedAccounting Standards Update No. 2011-0607/21/2011
Source downloaded (UTC): 2026-09-10T01:09:10.286Z to 2026-09-10T01:09:10.286Z Record version: sha256:cacf0fcd4a4b0831b2215bcdcf015cd2ea300c746f0c845ea13b6104792a7bd3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 720-50-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/720/50/#05-overview-and-background) SEC content: no ##### [720-50-05-1](https://asc.understandingaccounting.org/asc/720/50/#720-50-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:09:10.286Z to 2026-09-10T01:09:10.286Z Record version: sha256:eb865b57377fbd657af12294e2093ceb09c975d2fed14854c87b51d9f778b3a6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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) Pending content: no Source downloaded (UTC): 2026-09-10T01:09:10.286Z to 2026-09-10T01:09:10.286Z Record version: sha256:d764e4c5d7f3c3787f9bae838e045e9dbc9e2abc2bf691d48beaa7ff22524407 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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) Pending content: no Source downloaded (UTC): 2026-09-10T01:09:10.286Z to 2026-09-10T01:09:10.286Z Record version: sha256:06cc8d080db22fad572ae5c9e9b3e9fb36432172d4a1cacac0bc25dc25568204 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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) Pending content: no Source downloaded (UTC): 2026-09-10T01:09:10.286Z to 2026-09-10T01:09:10.286Z Record version: sha256:f3b291f0c3b8fbb90a4babd61b1d48dfb5ef4d5169ccb10f46c425599106108c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. Source downloaded (UTC): 2026-09-10T01:09:13.443Z to 2026-09-10T01:09:13.443Z Record version: sha256:c0504e497946999ceeb5df15c7d18ee33784c7f0fdb352168e8a0f27b19501d0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 720-50-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/720/50/#15-scope-and-scope-exceptions) SEC content: no ##### [720-50-15-1](https://asc.understandingaccounting.org/asc/720/50/#720-50-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:09:13.443Z to 2026-09-10T01:09:13.443Z Record version: sha256:39fe07f474e8e7c459ead2164d5d1672cd4b5f90c5a7453b7f56eded34a72e08 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic applies to all pharmaceutical manufacturers and health insurers that are subject to the annual fee imposed by the Acts described in paragraphs [720-50-05-1 through 05-4](https://asc.understandingaccounting.org/asc/720/50/#720-50-05-1) . The guidance in this Subtopic is based on the unique facts and circumstances of the fee to be paid by pharmaceutical manufacturers and health insurers in accordance with the Acts; accordingly, an entity should apply judgment when evaluating the facts and circumstances of other fee arrangements before analogizing to the guidance in this Subtopic. Source downloaded (UTC): 2026-09-10T01:09:17.233Z to 2026-09-10T01:09:17.233Z Record version: sha256:0180cd8bc23bf4fc1bfdde6c299a922b6d065f85aadbf2dfb828e6701894d7ec Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 720-50-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/720/50/#25-recognition) SEC content: no ##### [720-50-25-1](https://asc.understandingaccounting.org/asc/720/50/#720-50-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:09:17.233Z to 2026-09-10T01:09:17.233Z Record version: sha256:7f9ba2ad6da544f34c6f3e96cd2bb6bd44096b9dabd3b45ee34aea30838892ce Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The liability related to the annual fee described in paragraphs [720-50-05-1 through 05-4](https://asc.understandingaccounting.org/asc/720/50/#720-50-05-1) shall be estimated and recorded in full upon the first qualifying sale for pharmaceutical manufacturers or once the entity provides qualifying health insurance for health insurers in the applicable calendar year in which the fee is payable with a corresponding deferred cost that is amortized to expense using a straight-line method of allocation unless another method better allocates the fee over the calendar year that it is payable. The annual fee imposed on health insurers does not represent a cost related to the acquisition of policies that is consistent with the definition of an _acquisition cost_ in Subtopic 944-30. Source downloaded (UTC): 2026-09-10T01:09:19.889Z to 2026-09-10T01:09:19.889Z Record version: sha256:fe423645254316e477f2083883990fc8741d6322b3d6066d27702241c68f0689 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 720-50-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/720/50/#45-other-presentation-matters) SEC content: no ##### [720-50-45-1](https://asc.understandingaccounting.org/asc/720/50/#720-50-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:09:19.889Z to 2026-09-10T01:09:19.889Z Record version: sha256:718e2d7a09c28b1fc7cc7b65c409c13d52a4bdc42d7c64de2a0618dde5b60eaf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The annual fee described in paragraphs [720-50-05-1 through 05-4](https://asc.understandingaccounting.org/asc/720/50/#720-50-05-1) shall be presented as an operating expense. Source downloaded (UTC): 2026-09-10T01:09:23.678Z to 2026-09-10T01:09:23.678Z Record version: sha256:7fe3a95e2e153cc4bff33702c038e86adf36270083133317bb444519e50aadc5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 720-50-65: 65 Transition and Open Effective Date Information [Read section](https://asc.understandingaccounting.org/asc/720/50/#65-transition-and-open-effective-date-information) SEC content: no ##### [720-50-65-1](https://asc.understandingaccounting.org/asc/720/50/#720-50-65-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:09:23.678Z to 2026-09-10T01:09:23.678Z Record version: sha256:6c880610d30236a8a9c91be31317633829b5d354877706957eb18fba0a79c0b3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph superseded on 07/14/2011 after the end of the transition period stated in Accounting Standards Update No. 2010-27, _Other Expenses (Topic 720): Fees Paid to the Federal Government by Pharmaceutical Manufacturers._ ##### [720-50-65-2](https://asc.understandingaccounting.org/asc/720/50/#720-50-65-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:09:23.678Z to 2026-09-10T01:09:23.678Z Record version: sha256:84dce3cd470bde75d573b9f93b77979e62a3eca976fc3c205febb82cb5bd19a0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph superseded on 07/02/2014 after the end of the transition period stated in Accounting Standards Update No. 2011-06, _Other Expenses (Topic 720): Fees Paid to the Federal Government by Health Insurers._