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Senators Propose Prescription Drug Advertising Tax

28 Oct, 2009 Response This Week

WASHINGTON – U.S. Senators Al Franken (D-Minn.), Sherrod Brown (D-Ohio) and Sheldon Whitehouse (D-R.I.) introduced legislation that would eliminate federal tax deduction on advertising for prescription drugs. Legislation S. 1763 would reverse the current tax deduction for all marketing expenses allowed with prescription drugs, possibly to help pay for the cost of the proposed $829 billion national healthcare reform.

If the legislation – currently being called the Protecting Americans from Drug Marketing Act – was approved and perhaps tacked on as an amendment to healthcare reform, its cost savings would amount to about $3.5 billion annually, or 4.2 percent of the national reform.

Several marketing and advertising trade groups are banding together to oppose the legislation including the American Association of Advertising Agencies (4As) and the American Advertising Federation (AAF). These groups claim it would raise the cost of drug ads by 35 percent and ultimately affect the amount of knowledge that reaches the consumer.

The 4As drafted a letter on its Web site, which members could send to their senators, which said that the proposal “would overturn nearly 100 years of tax policy that is central to our net income system of taxation.”

Similarly, the Association of National Advertisers (ANA) sent a letter to Senate which stated “prescription drug advertising provides valuable information to consumers,” calling the legislation “counterproductive” and “more expensive.” In addition, the letter stated, “singling out direct-to-consumer prescription drug advertising for differential tax treatment would be virtually unprecedented and raise very serious First Amendment concerns.”

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