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Healthy Skepticism Library item: 15883

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

 

Publication type: news

Arnold M.
Lawmakers eyeing tax deductions on drug ads
Medical Marketing & Media 2009 Jun 24
http://www.mmm-online.com/Lawmakers-eyeing-tax-deductions-on-drug-ads/article/138977/?DCMP=EMC-MMM_Consumer


Full text:

Drug and advertising industry advocates are sounding the alarm over congressional threats to tax drug advertising.

The Advertising Coalition, whose members include PhRMA as well as advertising and media industry trade groups, yesterday urged members to contact their senators and urge them to reject any measure that would tax advertising as part of a healthcare reform package.

“Our concern is grounded in the First Amendment,” said Jim Davidson, executive director of the Advertising Coalition. “When government is extracting this from you, it has the effect of taxing and thereby restricting speech.”

Currently, drug companies, like any others, can consider the cost of advertising fully deductable as a necessary business expense. But back in the fall, then-House Majority Leader Rahm Emmanuel, now President Obama’s chief of staff, told advertisers and agencies that the industry would have to choose between tax deductions for consumer advertising or for R&D. Then last week, a key Democrat, House Ways and Means Committee Chair Rep. Charlie Rangel (D-NY), told reporters: “one thing that’s not off the table is you can pick up $37 billion knocking out the deduction for advertising.”

It wasn’t clear where Rangel’s $37 billion figure came from, though that would presumably far exceed the cost of deductions for consumer advertising of prescription drugs, for which pharmas spent around $4.3 billion in measured media last year, according to Nielsen Company data.

Pulling the tax exemption was among options discussed in PhRMA’s recent talks with the White House and Senate Finance Committee Chair Max Baucus (D-MT). PhRMA last week agreed to make $80 billion in cost-savings on drugs sold in the US, including selling medicines half-price to seniors in the Medicare Part D “donut hole” coverage gap. Other details of the agreement have yet to be finalized, pending scoring by the Congressional Budget Office.

Either way, it’s clear that the deductions are on the menu as lawmakers look for ways to pay for healthcare reform.

“PhRMA’s put $80 billion on the table,” said John Kamp, executive director of the Coalition for Healthcare Communication. “If you’re in the buffet of revenue options, you’re in it until the bill is passed, and when you’re looking at [a cost-savings target of] $1 trillion-$2 trillion, $37 billion is a nice number.”

The month of July will be make-or-break for healthcare reform legislation, said Kamp, noting that a markup is expected in the Senate around mid-month. Key members of Congress will include senators and representatives from pharma- and advertising-dependent New York and New Jersey, including Rep. Rangel and Sens. Charles Schumer (D-NY) and Robert Menendez (D-NJ).

Taxing advertising would make it prohibitively expensive for many drug companies. That might suit some of the largest pharmas fine for the moment, as a broad drop-off in advertising would largely freeze market share, serving those that field many category-leading brands well. But in the ever-changing environment of prescription pharma, with breadwinners losing patent protection and new drugs launching constantly, the long-term impact on the industry could be enormous.

 

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Far too large a section of the treatment of disease is to-day controlled by the big manufacturing pharmacists, who have enslaved us in a plausible pseudo-science...
The blind faith which some men have in medicines illustrates too often the greatest of all human capacities - the capacity for self deception...
Some one will say, Is this all your science has to tell us? Is this the outcome of decades of good clinical work, of patient study of the disease, of anxious trial in such good faith of so many drugs? Give us back the childlike trust of the fathers in antimony and in the lancet rather than this cold nihilism. Not at all! Let us accept the truth, however unpleasant it may be, and with the death rate staring us in the face, let us not be deceived with vain fancies...
we need a stern, iconoclastic spirit which leads, not to nihilism, but to an active skepticism - not the passive skepticism, born of despair, but the active skepticism born of a knowledge that recognizes its limitations and knows full well that only in this attitude of mind can true progress be made.
- William Osler 1909