Eliminating tax breaks for pharmaceutical company advertising (Rep. Dan Lipinski)
In recent years, a steady stream of investigations, reports, books, and articles has documented the pharmaceutical industry’s efforts to boost sales by spending billions of dollars to influence doctors, researchers, and the public.
What hasn’t received much attention is that the American taxpayer is effectively subsidizing the drug makers’ strategy. Under the tax code, pharmaceutical companies can write off their expenses to advertise, market, and promote their products. The cost to taxpayers has been estimated at $6.3 billion annually.
It’s time to end this giveaway and devote the money to helping to pay for urgently needed health care reforms that will benefit millions of Americans. That’s why I have introduced H.R. 2917, a bill that would eliminate the tax deduction for both the advertising of prescription drugs and pharmaceutical companies’ promotional expenses, including entertainment, amusement, recreation, gifts, and travel.
Today’s drug makers are marketing machines. Spending on consumer advertising has quadrupled since 1996, and one recent study estimates that pharmaceutical companies spend more on promotion than they do on research and development – a clear example of misplaced priorities. This flood of advertising has generated persistent concerns about the accuracy of the information the public is receiving, the potential to increase demand for newer drugs before adverse side effects become known and the encouragement of overuse or misuse.
As familiar as the drug companies’ direct-to-consumer advertising has become, the industry spends far more on promotional efforts aimed at physicians, according to the Kaiser Family Foundation. This also presents cause for concern.
The Institute of Medicine, which has been called “the nation’s most influential medical advisory group,” recently issued a sobering report titled Conflict of Interest in Medical Research, Education, and Practice. It found that “physician acceptance of gifts and meals from industry representatives is commonplace” and that “research on industry gifts and other financial relationships has generated troublesome findings.”
As the Institute points out, common sense tells us that it is “unlikely that companies would give such gifts to physicians if they did not believe that they would benefit the company in some way.”
What all this goes to show is that the pharmaceutical industry neither needs nor deserves to have its marketing expenditures subsidized by taxpayers. Drug companies have more than enough incentive to advertise. The dollars they spend touting their medications to the public and cozying up to physicians return to them many times over in the form of increased prescriptions and sales.
Over the decades, pharmaceutical companies have helped millions of people by investing in research and development and bringing effective new drugs to market. But with each passing year, it seems they drift further and further away from what should be their core mission and purpose. It’s time for them to get back to basics. My bill encourages them to do so while also providing a fresh source of funding for the health care reform America desperately needs.
“Spending on consumer advertising has quadrupled since 1996.” This comes from the Kaiser Family Foundation. http://www.kff.org/rxdrugs/upload/3057_07.pdf
“One recent study estimated that pharmaceutical companies spend more on promotion than they do on research and development – a clear example of misplaced priorities.” This comes from a pair of researchers at York University in Canada. http://www.sciencedaily.com/releases/2008/01/080105140107.htm
The Institute of Medicine, which has been called “the nation’s most influential medical advisory group,” http://www.nytimes.com/2009/04/29/health/policy/29drug.html?scp=1&sq=institute%20of%20medicine%20conflict%20of%20interest&st=cse
“This flood of advertising has generated persistent concerns about the accuracy of the information the public is receiving, the potential to increase demand for newer drugs before adverse side effects become clear and the encouragement of overuse or misuse.” This is a restatement of background information in a New England Journal of Medicine article that cites a number of prior studies. The article is called A Decade of Direct-to-Consumer Advertising of Prescription Drugs.
“The sad truth is that the dollars they spend touting their products to the public and cozying up to physicians return to them many times over in the form of increased prescriptions and sales.” (This comes from Rep. Stupak’s opening statement of the subcommittee hearing on “Direct-to-Consumer Advertising: Marketing, Education or Deception?” May 8, 2008. He stated every $1 spent on DTC advertising results in up to a $6 increase in sales, and one study demonstrated that every $1,000 spent in DTC advertisements resulted in 24 new prescriptions.)